One of the most common ways of acquiring a home of one’s own today is through institutions dedicated to financing. These institutions, usually banks, tend to require, as a guarantee of payment, the possibility that the entity may take ownership of the property should the applicant be unable to meet the payments on time.
In this way, banks create mortgage loan contracts, made up of a series of clauses that will condition how the parties perform their commitments. In turn, it is important for anyone seeking financing to understand the financial consequences of such commitments.
For this reason, at BBMabogados we are at your disposal to give you the best advice before signing this type of contract and becoming bound by such obligations.
What are bank loans?
They are financing operations between a financial entity, known as the lender, which provides sums of money in favour of private individuals, known as borrowers, on condition that they be repaid within a set period. This type of agreement also entails the payment of interest, or in other words, the lender’s profit.
WHY DO BANKS USUALLY REQUIRE A MORTGAGE?
The mortgage, which consists of the possibility of taking ownership of the property acquired by the debtor with the money provided, is a guarantee of payment. In this way, banks protect themselves against the possibility that the debtor may lose their ability to pay, which is why they rely on this special guarantee to recover the money lent.
Mortgage contract and everything you need to know before signing one in Santander
Acquiring a property through financing represents a very significant commitment. The debtor will have to make a series of partial payments over a fairly long period, for which it is essential to make provision for how they will manage their budget.
Experts recommend, for example, that the payment instalment should not exceed 35% of periodic income. This is the limit that would allow the individual to meet their day-to-day living expenses and continue to keep up with the loan payments.
Likewise, it is recommended to read the clauses of the mortgage contract in detail and to sign it only when there is full certainty as to the meaning of each of the commitments to be taken on. This is precisely where the need arises to have a lawyer who can explain to the person taking on the contract the consequences they are assuming.
Among the clauses that require the greatest care before signing them are:
– All those relating to the interest rate, from its calculation to its potential variation and limits.
– The grounds for early termination, that is, those that set out how the bank may demand full early repayment of the debt.
– The mortgage liability, which refers to the additional payments the debtor will make in the event of default.
Unfair and null clauses in mortgages in Santander
Mortgage loans are liable to contain clauses that break the proper balance between the contracting parties, by lacking transparency to the detriment of the person receiving the loan. In this respect, the borrower must know which types of obligations are considered unfair, as well as the legal mechanisms available to maintain the balance of the negotiation.
Among the most common unfair clauses are:
THOSE THAT ALLOW THE CAPITALISATION OF INTEREST
These clauses require that the default interest generated by the borrower’s possible non-payment be added to the amount lent, which implies an increase in the remaining outstanding instalments.
This type of provision is considered unfair because it mixes distinct concepts such as the capital owed and the outstanding default interest. In turn, this situation forces the borrower to pay more than is actually owed.
FLOOR CLAUSES
These set a minimum limit on variable interest rates and often the debtor is not told that, if the reference indices experience sharp falls or even reach negative levels, they would not benefit from such reductions.
THOSE THAT LINK THE INTEREST TO THE IRPH ARBITRARILY
The IRPH has been a frequent reference index in mortgages. The courts, following the case law of the Court of Justice of the European Union, have analysed whether the bank marketed it with the required transparency; when the consumer did not receive clear information on how it was calculated and its foreseeable evolution, the clause may be declared unfair.
THOSE THAT ASSIGN THE MORTGAGE SET-UP COSTS TO THE BORROWER
Previously, the notarial or registry costs of the loan were borne by the debtor. Today it is considered that the financial entity must also bear those costs.
LAWYERS WHO EMPATHISE WITH THEIR CLIENTS IN DIFFICULT MOMENTS
We protect our clients’ rights with the utmost dedication and diligence, placing special emphasis on personal attention.
