Bank charges for mortgage holders to be cut
24 October 2006, MADRID – A new law to cut charges for cancelling mortgages is to come into action in the New Year.
24 October 2006
MADRID – A new law to cut charges for cancelling mortgages is to come into action in the New Year.
David Vegara, secretary of state for the economy, said on Tuesday the Mortgage Law could cut charges from 1 percent to 0.5 percent.
At present if a mortgage holder owes EUR 300,000 but wants to pay it all back, banks can charge EUR 3,000.
But this will be halved.
The law will also reduce costs of notaries, who administer mortgages.
It is not going to be retroactive.
The legislation will relate to variable and fixed mortgages.
In the case of fixed interest mortgages, this 0,5 percent will be only raised in the case of the interest rates being above the interest rate of which the mortgage was taken in the moment of cancelling the mortgage.
Vegara said at present, in the case of fixed interest rate mortgages, banks and building societies have a "freedom of commissions".
The new law will mean the original commission agreed with the bank and the customer will still apply only if changing it would result in losses to the bank or building society.
Otherwise the bank or building society will have to reduce it to 0.5 percent.
The law is also going to cut notary costs and property registration costs when there are cancellations, innovations and additions to the mortgages.
In the case of subrogations (when a person buys a property and keeps the same mortgage as the sellers, simply changing the name of the mortgage taker with the bank) the bank can charge commission for up to 75 percent of the amount of the mortgage.
But this will fall to 10 percent.
Notary fees will be charged not per EUR 1,000 of the mortgage, as at present.
Now it will be changed to a fixed reduced rate.
[Copyright EFE with Expatica]
Subject: Spanish news