Buying a home can be one of the most important economic decisions in our lives. An investment that will require more or less effort according to the type of house, location, status and the savings that we already dispose of. In any case, given the importance of the operation, we should remember a few things to consider before signing the loan and even if we are already mortgaged.
I have seen lots of information in internet about what to do and what not to do when someone is going to purchase a property. I have made long lists, I have rubbed out what I don´t understand or considered to be unnecessary and voila…these info below is what I consider it may be of some practical use to you readers.
Did you know that it is not compulsory to have mortgage insurance?
You should know that there is no legal obligation to take out insurance with a mortgage. In fact, the Mediation Act of Private Insurance and Reinsurance says "Private Insurance and reinsurance undertakings shall not directly or indirectly impose a contract of insurance." The Dirección General de Seguros (DGSFP) under the Ministry of Economy says: "credit institutions too often makes the granting of the loan compulsory to taking on insurance on damages to the property or more generally, a comprehensive insurance for the home, in case of housing suffer any blight."
There's only obligation for housing have insurance for damages in the event that the entity will require having the mortgage notarized, and questions whether such insurance should be contracted by the client or by the bank itself. Similarly, the right of withdrawal is recognized and should be accessible to all, being able to cancel policies without explanation within 30 days for life insurance and 14 days for the rest.
Did you know that the default interest is limited?
Should delays occur in mortgage payments, default interest is generated, an additional amount prescribed as "penalty". This interest is higher than ordinary interest rate and the way it is calculated must be expressly in writing on the loan or mortgage contract. But it can never "be more than three times the legal interest" and can only "accrued on the principal outstanding", as established by the Mortgage Law.
Did you know that you can have an abusive ground clause?
Successive judgments have confirmed the invalidity of the so called “ground clauses”, (the minimum interest that banks can charge you in case general interest rates fall below a specific amount) lack of information and transparency in their inclusion in the mortgage loan, have caused many savers demand the repayment of amounts overcharged at the time that the Euribor fell below this limit. You have to identify if our mortgage contains one of these provisions and if you have to prove that we were not familiar with it and appeared well "camouflaged" in the contract between all other conditions of the mortgage.
If the declaration of nullity is achieved, you can claim back those amounts already paid. For the moment, as ruled by the Supreme Court, banks will only have to return the amounts collected more from 9 May 2013 onwards. The European Union, however, has spoken in favour of all money paid over since the start of the credit is reinstated. But it is only a report. One hopes that the attorney general of the European Union issued an opinion.
Did you know that the Euribor is at minimums low?
November-the Euribor rate at which are referenced most mortgages in Spain has touched its lowest level, breaking the barrier of 0.1% and stood at 0.079% after months of steady decline. This causes a series of repercussions, good for those who have been paying a mortgage, they will see how they benefit from declines in their mortgage payments, and worse for new mortgagees, that although their first payments are low if a rise in Euribor occurs in the future, mortgage payments will be higher and therefore monthly payments may increase considerably in the future.
Of course you know that you can negotiate your existing mortgage?
It is important to know that a mortgage is not an immovable or unopened product: negotiation is not only possible, but is highly recommended. Dialogue with the bank and get better terms in the level of commissions, interest rates that are applied is critical for a better contract. Under no circumstances should you sign something that is not fully understood, analysed and studied in detail, obviously it is always wiser to obtain advice from a solicitor or professional experts on the matter.