Thinking of buying a house? Then you are interested in knowing everything related to the new mortgage law.
Before applying for any type of mortgage financing it is important that you know all the details about real estate taxes and the reform of the Mortgage Law. This mortgage regulation was recently approved for the purpose of protecting applicants for mortgage loans.
If you want to have more details of the reform, keep reading! We will immediately detail the most notable changes:
1. Consumer protection in the new Mortgage Law
Consumer protection is a premise in the reform of the mortgage law . For this reason, banking institutions are obliged to give you all the information related to the mortgage.
In this way, legally at least 10 days prior to the protocolization of the agreement, you should receive a copy of the contract, the standardized information sheet and the standardized warnings.
Likewise, these documents must explain the details of the risks and effects of the mortgage clauses. Likewise, it is possible to clarify with the notary any doubt about the contractual clauses.
In general, this process is carried out in a mandatory visit that takes place the day before the signature. In addition, the notary is responsible for verifying that there are no clauses that harm you.
2. Possibility of early amortization
If you opt for the early repayment of the mortgage, partially or totally, you will pay less compensatory commission.
Similarly, the commission can only be collected by the bank if the advance payment causes financial loss. This means that commissions are significantly reduced for people who want to pay in advance and therefore you can reduce expenses by advancing payments.
3. 12 defaults minimum before garnishment
One of the measures of this Mortgage Law highlights that the banking institution will not be able to start a garnishment process for non-payment, unless the following occurs:
- In the first half of the term: That the delay does not exceed 3% of the amount awarded or the limit of 12 unpaid installments is reached.
- In the second half of the term: That the percentage of the unpaid amount exceeds 7%, while the minimum delay fees reach 15.
Likewise, the law establishes a default interest no greater than 3 points, above the remunerative interest. The default interest is an additional interest to the usual ones that are paid, to compensate for the delay in the payment of a mortgage payment.
4. You are not obliged to contract linked products
When you take out a mortgage, no bank can force you to contract binding products like insurance. However, in case you wish to acquire them by your will, they must have beneficial conditions for you.
This is because there are limitations with regard to insurance policies.
5. Commissions are reduced in the Mortgage Law
In the reform of the Mortgage Law, banks may only charge a single opening commission. Also, the anticipated repayment for fixed-rate mortgages will be 2% in the first 10 years. After this period the interest will drop to 1.5%.
In this way, in the case of variable mortgage loans, a commission will be charged for the first 3 years. This charge will be 0.25% and in the first period the commission will be 0.15%.
6. More facilities to switch to fixed mortgages
The new reform reduces the costs to switch from variable rate mortgages to fixed rate mortgages. Either the agreement is made with the same bank or a creditor subrogation is made to change banks.
In general, the commission to be paid in this regard will be 0.15%. Only if the change is in the first 3 years of the term of the mortgage loan, if it is after, nothing is paid.
7. The Mortgage Law regulates Financial Intermediaries
The 2019 Mortgage Law regulates the financial intermediaries that grant mortgage loans. This is done through a registry of financial intermediaries, which is processed by the Bank of United States.
In addition, private lenders may not have a criminal record, or that they have been declared bankrupt. Likewise, they cannot cover up the commission for processing the mortgage loan, outside of the calculation of the APR rate.
Take this reform into account when requesting your mortgage loan. Regardless of whether you apply online or in a physical entity, the security of online loans is essential.