Help for paying your mortgage when interest rates rise

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1. It creates a new Code of Good Practices, voluntary for lenders and lasting twenty-four months, to help mortgage debtors at risk of vulnerability whose main home costs at most 300,000 euros and whose loan was signed by December 31, 2022. The specific conditions and measures (such as extending terms or setting fixed payments) will be developed by an Agreement of the Council of Ministers.
2. Lenders that join must inform all their mortgage customers about the code within one month, and notary and registry fees for the contract changes are paid by the creditor with a 75 percent discount. If a debtor requests the measures without meeting the requirements, they are liable for the resulting damages and costs.
3. It strengthens the 2012 Code of Good Practices for vulnerable debtors: the principal grace period becomes five years (two if the mortgage burden rises less than 1.5 times and there is no special vulnerability), the term can be extended up to forty years, and the interest rate during the grace period drops to EuriborEuríbor The index to which most variable-rate mortgages in Spain are tied; when it rises, the monthly payment rises. minus 0.10. In addition, the deadline to request a deed in lieu of payment is extended to twenty-four months, and debtors may request a second restructuring plan.
4. Deeds formalizing contract changes under these codes are exempt from the gradual fee for notarial documents under the tax on Documented Legal Acts.
5. It improves the mortgage market: fees for early repayment or switching to a fixed rate on variable-rate loans are suspended until December 31, 2023, the fee for switching to a fixed rate in the first three years is reduced from 0.15 percent to 0.05 percent, the Bank of Spain will publish a guide and simulators for debtors, and transparency in lender subrogation is improved.
6. It authorizes state guarantees of 321 million euros in favor of the European Commission, and 100 million euros each for operations of the BIRF and the BERD with Ukraine. It also extends until December 31, 2023 the deadline to grant guarantees to self-employed workers and companies affected by the war, and makes it easier to justify grants funded with European funds.

Who it affects

• Families with a mortgage on their main home at risk of vulnerability due to rising interest rates.: They can request debt restructurings from lenders that join the new code.
• Vulnerable debtors already covered by the 2012 Code.: They get better terms: longer grace period, longer term and lower interest, plus more time to request a deed in lieu of payment.
• Lenders and mortgage credit providers.: They may join the codes voluntarily; if they do, they take on information and debtor protection duties, with penalties for non-compliance.
• People who want to repay their variable-rate mortgage early or switch it to a fixed rate.: They will pay no fees for this until December 31, 2023, and afterwards the fee for switching to a fixed rate will be lower.
• Recipients of grants funded with European funds.: They will have more time to fix defects in their justification documents and may submit additional documents.

Words worth knowing

Euríbor

The index to which most variable-rate mortgages in Spain are tied; when it rises, the monthly payment rises.

Carencia (grace period)

A period in which the debtor pays only interest or no principal, to lower the monthly payment.

Dación en pago (deed in lieu of payment)

Handing the home over to the bank in exchange for canceling the debt.

Novación (novation)

Changing the terms of the mortgage with the same lender, without switching banks.

Subrogación de acreedor (lender subrogation)

Moving the mortgage to another financial institution that takes over the loan.

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