New rules for taking out and paying a mortgage

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1. The law protects individuals who take out loans secured by a mortgage on residential property, whether or not they are consumers, and requires a creditworthiness assessment before the loan is granted.
2. Before signing, the lender must give you the loan paperwork at least ten calendar days in advance: the European standardized information sheet, a standardized warnings sheet, the draft contract and the breakdown of costs.
3. A notary of your choice must advise you free of charge and check that deadlines and information requirements were met before authorizing the deed. Otherwise, the loan cannot be signed.
4. You can repay the loan early, in full or in part. Compensation can only be charged in the first years, capped at 0.15% or 0.25% on variable-rate loans and 2% or 1.5% on fixed-rate loans.
5. The lender can only demand full early repayment of the loan if the default is significant: at least 3% of the capital or twelve monthly payments in the first half of the loan, or 7% or fifteen payments in the second half, and after demanding payment with at least one month's notice.
6. Default interest is set at the normal interest rate plus three percentage points, charged only on overdue principal and never compounded. These rules cannot be waived by contract.
7. Real estate credit intermediaries must be registered in a public registry, hold insurance or a bank guarantee, and meet honorability, training and guarantee requirements. They are supervised by the Bank of Spain or the regional government.
8. For loans in foreign currency, you have the right to convert the loan into the currency in which you receive your income, and the lender must periodically inform you of how the debt is evolving.

Who it affects

• People taking out a mortgage on a home or other residential property: They get more information before signing, free notary advice, and limits on fees and early termination of the loan.
• Guarantors and co-signers: They also have the right to notary advice and to the protections of the law.
• Banks and real estate lenders: They must assess creditworthiness, deliver pre-contract paperwork on time, and bear the cost allocation set by the law.
• Real estate credit intermediaries: They must register, hold insurance or a bank guarantee, and meet training and honorability requirements.
• Borrowers with foreign-currency loans: They can convert the loan to the currency of their income and receive regular updates on the debt.

Words worth knowing

TAE

Tasa Anual Equivalente: the total cost of the loan expressed as an annual percentage, used to compare offers.

FEIN

Ficha Europea de Información Normalizada: a standard document with the personalized terms of the loan before signing.

Vencimiento anticipado

Early termination: the lender demands full repayment of the loan at once because the borrower has not paid enough.

Interés de demora

Default interest: extra interest charged when a payment is made late.

Subrogación

Subrogation: moving the mortgage to another bank, or a buyer taking over the seller's mortgage debt.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries