THE NEW MORTGAGE MARKET.
The ESIS is the European Standard Information Sheet, which must include all the specific and personalised information related to the contracted mortgage. The SWC is the Standardized Warning Card, which includes information on the most delicate clauses, including how interest is calculated if interest is variable, how multi-currency loans operate, cases in which interest is variable and has no ceiling, and cases of early termination and operability.
Within a period of ten days before the signing of the mortgage deed, the bank must make all this information available to clients via the e-notary collaboration platform, so that clients may access and check the information, and raise and resolve any doubts or questions that may arise. If the mortgage is signed before this period has elapsed, it will be declared void.
Having signed this notarial act in the presence of the notary, the client and the bank may sign the mortgage as from on the eleventh day after receiving all the information on the notary platform. So the client or their agent must go to the notary twice. Once to sign the notary test and again to sign the mortgage deed.
As we can see, notaries are now subject to new requirements to provide information at no additional cost to the client or the bank. The expenses that have to be paid by the customer are also regulated. In principle, these will be the valuation, although there are already banks that assume this cost, and the arrangement fee, which is not a charge prohibited by law. The bank assumes the cost of stamp duty and expenses corresponding to the notary, registration and processing.
The law has prohibited banks from connecting or linking other products to the mortgage, although banks get around this prohibition by subsidising or partially reducing the rate of the mortgage loan, depending on the products that the client contracts. Home insurance is still a requirement, but the bank cannot oblige the client to take out home insurance with a particular company.
Although the purpose of the law is to protect users/consumers and provide them with more information, with a view to stimulating more contracts involving properties, it seems that until the application and implementation of the law builds trust in lenders, it may result in limiting familys’ access to mortgage loans.
At the moment, currency fluctuations and the weakness of certain currencies is leading to greater restrictions on mortgage loans for foreign buyers/investors, so we need to be careful before informing our foreign clients – outside the Euro Zone – about free accessibility to mortgage loans for acquiring a second home, and to mention to clients that they should consider where to establish their place of residence, where they generate their income, and the currency in which this income is received, in order to provide them with a realistic assessment of their situation that allows them to take well- informed and secure decisions when planning their investments.