Mortgages
Mortgage your house, but do not put at risk your rights.
If you are resident in the EU, Iceland, Liechtenstein or Norway, the European legislation establishes basic consumer rights for when you apply for credit, when you open a bank account, make a transfer or take out insurance. Before signing your mortgage with your bank, make sure you know your rights.
Mortgage loans are a service offered by banks, real estate credit entities, and other loan societies, and are usually guaranteed by the real estate property itself. These loans normally have a lower interest rate and longer repayment period in comparison to consumer credit. Nevertheless, if you do not meet your repayment terms and your mortgage has been guaranteed by your property, the lending institutions may seize the property and resell your house to settle the loan. In any case, the banks are at liberty to accept or reject your mortgage application. However, it is important that you are aware that you may obtain a mortgage from an entity whose head office is in another EU country (in this case, the 28 Member States of the EU, Iceland, Liechtenstein and Norway); although the country in which you reside, work or in which the property is found may influence the way in which your application is assessed by the lending institution.
If you consider that a bank has engaged in discrimination against you, you may:
- Contact the bank (or their complaints office) to obtain a written response laying out the exact reasons as to why the credit was refused.
- Depending on the written answer from the bank, you may seek advice and assistance at FIN-NET
(the financial dispute resolution network), which acts as a mediator in financial conflicts between consumers and financial service providers, such as banks.
In accordance with EU regulations, the lending institution or credit broker must offer you a minimum period of seven days in which to study the offer. National legislation in some EU countries may grant longer time periods.
Depending on the country in which you apply for the loan, you may have:
Credit life insurance comes into play if you have to deal with circumstances which prevent you from repaying the loan (death, illness or loss of employment).
You may be offered a policy together with the mortgage loan contract, but it must never be a condition to obtaining the loan.
You will always be at liberty to look for better conditions in other insurance companies, as long as the level of cover offered by the different policies is equivalent to that offered by the lending institution.
The bank may, nevertheless, oblige you to open a current or savings account with them, through which you should pay the loan.
European legislation
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Directive 2014/92
/EU of the European Parliament and of the Council of 23 July 2014 on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features. -
Regulation (EU) No 260/2012
of the European Parliament and of the Council of 14 March 2012 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009.
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Directive 2008/48
/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC.
Spanish legislation. Laws
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Law 16/2011
of 24 June, of consumer credit contracts.
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Law 22/2007
of 11 July, on distance commercialization of financial services for consumers.
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Law 16/2009
of 13 November, of payment services.
-
Royal Decree-Law 8/2014
of 4 July, of approval of urgent measures for growth, competitiveness and efficiency.
