MORTGAGES

This section details the Notary services that we lend in our Notary of Barcelona related to Mortgages and a description of them.

Mortgage loans

In this article we will explain the documentation that will have to be provided to carry out a mortgage loan deed, although most will have to be provided to the bank, and the one required from the notary is normally provided directly by the bank.  

1- Documentation to provide for the granting of the mortgage loan from the bank

The first thing you will have to do to process a mortgage loan is to contact the bank and provide all the documentation that the bank itself requests. In the article What documentation do I need to provide to request a mortgage? We explain in detail the documentation that they will ask for, which is normally:

1. Photocopy of the ID of the holders on both sides.
2. The last two complete payrolls.
3. The last tax return or the withholding certificate stamped and / or signed.
4. A working life of not less than 6 months old.
5. Registry data or simple note of the home to be mortgaged.

2- Notarial act prior to the formalization of the mortgage loan

Once the bank has granted the mortgage loan and all the documentation is prepared, send this documentation to the Notary Public. The notary who will carry out the mortgage loan deed is chosen by the borrower (the consumer). In this article we explain the customer's choice in mortgage loans. 

The first thing that will have to be done at the Notary's Office is the notarial certificate prior to the formalization of the mortgage loan. This act, regulated by article 15 of the Law 5/2019, of March 15, regulating real estate credit contracts, aims to meet the requirement of material transparency. It is a notarial document that guarantees that the person or persons who are going to sign the mortgage loan have received all the documentation and information necessary to understand the scope of the obligations they are assuming. 

Therefore, the first thing the mortgagor will have to do is go to the Notary's Office so that they individually explain the conditions of the mortgage loan that they are going to subscribe, and clarify any doubts they may have. The guarantors and non-debtor mortgagers will also have to go to the notary. In this preliminary act, the Notary Public will explain to the borrowers the documentation provided by the bank. In the article What documentation will the Notary have to inform me of in the transparency act? We explain in detail the documentation that the Notary Public will explain to you, which is normally:

FEIN (European Standard Information Sheet).  

It is the document that records all the information regarding the loan, and that will be considered a binding offer during the time it is established in it. The FEIN must include, among others:

• • The general information of the bank granting the mortgage
  • Documentation about the credit intermediary if there is one
  • The main characteristics of the loan such as the total amount of the loan, the interest rate that is applied and how it is deducted from the capital through the amortization tables
  • Information regarding the periodicity and number of total loan payments
  • The amount of the monthly installments and their variation depending on the interest rate
  • Data on the conditions of the early repayment
  • Information on how and where you can claim
  • The consequences of not complying with the provisions of the loan

THE FIAE (Standardized Warning Sheet).

It is a complementary document to the FEIN that has the objective of expanding information in relation to the most relevant and important clauses. Among others, the clauses relating to the limitation of the lowering of interest rate variability (the famous floor clauses), the possibility of early maturity and the costs it would entail, the implications on the monthly fee of a rise in the interest rate if or the risks of loans in foreign currency. 

Document that makes special reference to periodic installments in different interest rate evolution scenarios.

This document will be provided in the case of a variable interest rate loan. It is a separate document with a special reference to the periodic payments to be paid by the borrower in different scenarios of interest rate evolution, a simulation of the mortgage payments according to the evolution of the interest rate in different scenarios. 

A copy of the draft contract.

It must reflect the content of the information expressed in the three documents explained above. It must also include all the expenses associated with signing the contract. 

Conditions of insurance guarantees.

If the credit institution requires the consumer to contract an insurance policy to guarantee compliance with the obligations of the contract, or to subscribe to a damage insurance with respect to the property subject to the mortgage and the rest of the insurance provided for in the market regulations mortgage, must deliver to the borrower in writing the conditions of the insurance guarantees required. 

Document that breaks down the expenses that correspond to the lender and those that correspond to the borrower.

In general, the expenses related to the notarial fees, management and registration of the guarantees in the property registry will be assumed by the bank. The borrower will have to assume the costs of the property appraisal and the appropriate copies of the public deed. 

To have more information in relation to the documentation that must be provided to formalize a mortgage loan, click here. 

Warning: the documentation to be provided in each deed may vary depending on the particularities of each case. We recommend that you contact our notary for personalized information.

Notary fees

Notary fees are the means by which the notarial function is remunerated and the system with which preventive legal security is financed.

3- Notarial deed of the mortgage loan

In Catalonia, the notarial mortgage loan deed can be signed when fourteen days have passed since the bank provided the documentation to the consumer. Between the previous act and the mortgage loan deed, a day must pass. 

The notarial deed of the mortgage loan must include, as a minimum: 

1. A simple informative note of the property that is mortgaged. 
2. The descriptive and graphic cadastral certificate of the property that is mortgaged
3. A document that establishes the price at which the farm is appraised.  

Normally, the mortgage loan is made on the same day as the sale of the property, so that the simple note of the property and the cadastral certificate will have already been provided by the mortgagee to carry out the deed of sale. In relation to the appraisal document, it will have to be provided by the bank. 

To obtain information regarding the documentation necessary to carry out a sale, click here. 

Warning: the documentation to be provided in each deed may vary depending on the particularities of each case. We recommend that you contact our notary for personalized information.

Cancellation of mortgage

Pay off a mortgage in the registry usually requires a notarial process whose cost is known as mortgage cancellation fees. We are going to explain to you the ways to carry out the mortgage registration cancellation.

The mortgage is a guarantee in favor of a creditor. The creditor -usually a financial institution- can foreclose when the lender fails to pay the loan. Once the obligation has been fulfilled, the debtor has the right to cancel the guarantee, that is, to cancel the mortgage.

How is a mortgage canceled when the creditor is a bank?

There are several ways that we will discuss below.

Request mortgage cancellation from the bank

The most general way is to ask the bank for cancellation. The bank usually charges a commission and management and registration expenses. From the Bosch Notary of Barcelona, We can arrange for you to contact the bank and grant the cancellation deed.

This procedure is cheaper than if you decide to go to the bank and ask the bank to do it for you. At the end of this process, the notary authorizes the deed signed by the bank where he gives the loan payment letter and lifts the mortgage on the property.

Once the deed is signed, it is settled as exempt from the Property Transfer Tax and Documented Legal Acts and is registered in the Property Registry, ending the process with the liquidation of the provision of funds to the client. In this case, it can be stated that the cancellation requires notarial processing.

Cancel mortgage without public deed

Exceptionally, the public deed is not necessary since Article 82 of the Mortgage Law when "the term indicated in the applicable civil legislation for the prescription of actions derived" from the mortgage guarantee has elapsed.

The term is 20 years. How is the time counted? The starting day is "the day on which the provision whose fulfillment is guaranteed should have been paid in full according to the Registry". That is, the amortization date provided for in the contract.

Are there any exceptions to this computation? Yes, provided that within the following year the Registry does not show that they have been renewed, the prescription interrupted or the mortgage foreclosed. In this case, it is not necesario that the notarial deed of mortgage cancellation be granted since it is considered that for the years that have elapsed it is not necessary.

Remember these tips

The cancellation of a mortgage is an operation that usually requires a notarial procedure.

Contact with the Bosch Notary of Barcelona to clarify all your doubts about mortgage cancellation.

If you wish, you can make an online consultation to the notary or request an appointment to have a videoconference with the notary and ask about any questions. This type of online notarial service is ideal when it is not required to prepare documents. Click on the following link: online notary to request information. 

Another online service that we can offer you is the request fast simple copies online. Fill in the form on the page and you can request your simple copy electronically.

Property Sale Deed

Previous procedures Deed of Sale

Before granting a notarized deed of the sale of a home, the parties usually go to the perfection of a private contract between seller and buyer. This is also called pre-contract or colloquially earnest money.

By virtue of the freedom in the form of contract that the Civil Code grants us, the private contract is perfectly valid. So, by expressing the Declaration of will of the parties in wanting to establish a legal relationship of sale, that contract is perfected and obliges the parties to comply with it.

Because the private contract already produces legal effects, it is recommended to be previously advised by a Notary to find out about its content. At the Notary Bosch & Bages we have the legal advice service, contact us.

In this step, it is crucial to check if the house is free of encumbrances, has a mortgage, is repossessed, if there is any type of lien on the land ...

The Notary in the sale

As a right that is recognized to the buyer (see here the Law of consumers and users), he will proceed to choose a notary.

Although the document already has effects on the sale, It is highly recommended to go to the notary to deed the sale of the home. By granting the public document, it produces effects that are superior to the private one, while providing legal security and legality in its content. So that the public deed will become the vehicle that will introduce the contract of sale to the Property Registry.

Before a notary, the parties will declare their will to grant the sale, together with their clauses or agreements. These declarations will be given Faith, that is, they will be reliable (the private document is not).

The notary, apart from giving Faith, gives legal certainty to the Act. It will proceed to verify the Identity (with ID or passports), capacity and legitimacy of the buyer and seller (in the case that they act on behalf of others, as proxy, represent a minor or a legal person).

The property deed of the land or home will also be accredited, based on a Deed, judicial sentence or a Public Administration Act.

On the other hand, the seller will be required to certify in the deed that the home is free of leases and occupants. The notary, prior to the contract of sale, will require from the Registry a note verifying who is the owner, that the land is free of encumbrances, and that there is no mortgage or seizure.

Regarding the cadastral data, it will be required in the deed that the cadastral reference number of the house be accredited, which will be deducted from the last IBI receipt that the seller must deliver. A descriptive and graphic cadastral certificate will also be requested, which will be incorporated into the deed, in order to verify the coincidence or discrepancy between the Public Deed and the Registry.

On the other hand, the Energy Efficiency Certificate, the Certificate of habitability and the Verification of the means of payment will be requested.

Special cases

Profit scheme or family residence

The notary will check from the document provided of the ownership of the land, if the house constitutes a habitual family home. In the case that is thus constituted, the consent of the spouse of the selling party will be required.

On the other hand, in matrimonial agreements, the marriages that constitute their joint property regime, the spouse of the selling party must consent to said sale.

Official Protection Housing

In the event that the sale is constituted on an Officially protected home, the notary will notify the maximum price for which that property can be sold, and that it may never exceed the amount marked. The buyer must submit to the obligations required to buy this type of housing.

3. Purchase and sale expenses

The taxes that the parties will have to pay are 5. If it is not agreed who pays each expense in the private contract, or if it is indicated that the expenses will be made according to Law, the selling party will pay the capital gain, and most of the writing. The purchasing party will be charged the other part of the deed (copies), registration fees and transmission taxes.

In the event that the seller is a real estate developer, it is forbidden for the buying party to assume costs that by law belong to the selling party. It would be an example, Municipal capital gain, the expenses of declaration of new construction and horizontal division, or cancellation of mortgages.

4. Property Registry

At the end of the deed of sale, it must be registered through a telematic procedure. The notary can be done if this means is requested.

It is a highly recommended option, since it represents a guarantee against other documents that enter the Registry.

The Deed can also be presented by means of a copy authorized by the notary and delivered in the registry.

Query any information about deeds in our Notary in Barcelona.

Among our notary services we also have the possibility of making an online consultation. Or if you prefer, you can make an appointment to make a videoconference with the notary and ask your question. This online notarial service is suitable when the preparation of documents is not required. Click this link: online notary to request information. 

We also have another type of online service such as the request fast simple copies online. Fill in the form on the page and you can request your simple copy electronically.

Documented Legal Acts

The documented legal acts, usually abbreviated as AJD, are regulated in articles 27 to 44, of Royal Legislative Decree 1/1993, of September 24. It is approved in the Consolidated Text of the Law on Property Transfer Taxes and Documented Legal Acts. It is a tax that comes from the Public Administration and is collected by the Autonomous Community as an indirect way of financing the institution.

This tribute will be applied in the notarial documents, commercial documents and administrative documents, that reflect patrimonial transfers burdensome, operations corporate and documented legal acts. it is also known as mortgage tax.

In notarial documents there are two types of liens:

1. Fixed fee: used for matrices and copies of deeds and notarial deeds. Also for the use of testimonies, which must be done with stamped paper (except simple copies).

2. Variable fee. The first copies of deeds and notarial acts, when their object is a valuable quantity or thing, have acts or contracts that can be registered in the Property, Commercial, Industrial Property and Real Estate Registries.

What Is the legal act documented in a home equity loan?

It is the tribute that encumber a home equity loan and that is based on the capital, interest and costs that are guaranteed with the mortgage. Payment of the Documented Legal Acts Tax (AJD) is required once the public deed has been granted. The tax is state, and is currently managed and collected by the relevant Autonomous Community where the mortgage is made, as we remember that taxes of this type are currently a transferred competence.

Legislation

The encumbrance of Documented Legal Acts in the matter of loans with mortgage guarantee, has not ceased to be a controversial issue since the modification of the Law on taxes  ITP (Property transfer tax) and AJD (Documented legal act), both subject to the same legal text.

The plenary session of the Contentious-Administrative Chamber of the Supreme Court issued contradictory judgments on this matter. In the end, he maintained the interpretation that the tax had to be paid by the Bank's client, that is, the borrower. Finally, Royal Decree-Law 17/2018, of November 8, modifies the Consolidated Text of the Law on Tax on Patrimonial Transmissions and Documented Legal Acts, approved by Legislative Royal Decree 1/1993, of September 24.

With this modification, article 68.2 of the Tax Regulations on Patrimonial Transmissions and Documented Legal Acts, which at that time established that the borrower was the taxpayer who paid the amount of the tax on his account, was subject to reform.

Who is the taxpayer in the tax of documented legal acts?

From new modification of the Law approved by the Government, the passive subject will become the lender, that is, the bank that agreed to the mortgage loan contract. Thus, the borrower ceases to be the borrower, as was the case with the previous regulation.

How long do I have to pay the tax on documented legal acts?

The passive subject will have a period of one month to tax this tribute in the State coffers. If the term allowed for payment is exceeded, the subject will respond with default interest, that is, interest on interest.

To know more about this information, consultation what you need in our Notary in Barcelona.

If you wish, you can make an online consultation to the notary or request an appointment to have a videoconference with the notary and ask about any questions. This type of online notarial service is ideal when it is not required to prepare documents. Click on the following link: online notary to request information. 

Another online service that we can offer you is the request fast simple copies online. Fill in the form on the page and you can request your simple copy electronically.

Mortgage with interest at a fixed or variable rate?

To choose which mortgage loan interests you the most, whether fixed rate or variable rate, you will have to understand and analyze the characteristics of each one, and take into account the conditions they offer. In addition to what each interest rate means, it is also important to know that different conditions are offered depending on the interest rate of choice. To make the right choice, you will need to take into account factors such as the term and fee, your financial prospects, and your personal situation. 

Fixed rate interest

The fixed interest is the one that maintains the constant interest rate throughout the term of the mortgage loan and does not depend on external indices. Therefore, it will be the same throughout the life of the loan. 

and advantages interest at a fixed rate are multiple. The mortgager will know from the moment he signs how much he will have to pay each month, since the monthly installments will always be the same, so he will not risk having to pay more if the reference index rises. In addition, interest is currently very attractive. 

However, fixed-rate interest also has drawbacks. Normally, banks offer a rate higher than that established at that time for variable-rate mortgages. Currently the Euribor is in negative numbers, so the fixed-rate interest is also very low. However, among the conditions that are established, the repayment terms are usually shorter, since they are not usually more than 30 years, and in general the fixed-rate mortgage has more commissions. For example, the early repayment of the loan is usually more expensive. 

Variable rate interest

Variable interest is the one that is reviewed periodically and adjusted to market conditions at any given time in accordance with some reference index, which is normally the Euribor. Therefore, being linked to a changing benchmark, interest will rise or fall based on market value. The rate will be reviewed annually or every six months, depending on what was contracted in the granting of the mortgage loan. 

Variable rate interest has advantage. At the time of contracting, the initial interest rate is usually lower than that of fixed-rate mortgages. It is convenient if the index trades low, as the Euribor currently does, which is in negative numbers. In addition, the conditions are usually more favorable, since longer repayment terms are usually offered, up to 30 years or more, and they have fewer commissions. 

However, the variable rate also has inconveniences, since if the interests rise, there is a risk of having to pay a higher fee. The installments are unstable, since as the interest depends on the Euribor, they can change in each review. Therefore, there is a danger that in the long term they may be more expensive, since if the Euribor rises a lot, the installments become more expensive, and this may mean having to pay more than with fixed interest. 

What do I have to base my choice on?

As we have described before, each type of mortgage has its advantages and disadvantages, so you will have to choose, based on your personal situation and your economic perspectives, which one will benefit you the most. In short, you will have to take into account objective aspects, such as the conditions of the mortgage or the predictions of the Euribor, and other more subjective ones, such as the degree of security that you require to be calmer. 

In the end, the decision will have to be made based on the tolerance you have for risk and the uncertainty you can withstand. If you are a person who does not want to risk and who prioritizes stability, the fixed-rate mortgage will give you the certainty without changes that you need, even if it means paying more interest in principle. If, on the other hand, you want to pay less interest, you don't mind taking risks and you are able to assume a significant rise in installments if the Euribor rises in the future, your best option may be a variable mortgage. In fact, forecasts suggest that the Euribor will remain low for a minimum of five years, so if what interests you is to return the money in a relatively short time, ten or fifteen years, currently the best option could be variable rate. 

In the end, the economic, social, family and psychological profile of the mortgagor plays a very important role. For example, an experienced entrepreneur who has the capacity to generate income on an increasing basis and intends to save and invest and make partial amortizations periodically, the variable rate may be more suitable. On the other hand, a couple of civil servants with a conservative investment profile could be an ideal candidate for a fixed-rate mortgage loan, since it offers the security of knowing what will be paid each month during the decades that the debt with the bank is maintained. 

If you want to have more information about the formalization of a mortgage loan, you can read our transparency act article or about the documentation needed to formalize the loan. 

Information on mortgages.