The new Mortgage Law (March 2008)

The reform of the Mortgage Law is not yet a reality since it must first pass through the Council of Ministers and, subsequently, through the Spanish Congress but it is expected to bring about important changes to the current mortgage legislation.

The change, which is highly necessary since the law has not been reformed since 1946, proposes alternatives with respect to the notary and registration fees as well as the commissions for cancellation, subrogation, and novation – these will be reduced by up to 40%.

The new regulations will also allow more sophisticated products to be put on the market such as reverse mortgages and combinations.

In general terms, the most important changes to the law can be summed up as follows:

- 40% reduction of the notary and registration fees for cancellation, subrogation, and novation.

- Implementation of reverse mortgages for persons over 65 years of age.

- R eduction of the commission for premature loan cancellation to 0.5%.

- Expert appraisers will have to be more independent.

- Banks will have to provide detailed information about their products.

The reform seeks to improve the Mortgage Law of 1946 and the changes should coincide with the increases in interest rates that have been occurring since the start of the current year.