For months the Euribor interest rates set by the European Central Bank have not stopped rising. To this must be added inflation. All this has caused the entity to change its monetary policy and abandon its position on the price of money. This directly affects operations that include interest such as loans, investment funds or mortgages. Hence the importance of knowing the advice of the Bank of Spain to pay less on the mortgage.
High economic inflation and the change in the cycle have made the situation of years ago contrast with the current one: the Euribor, the majority reference index for mortgage loans, was at zero or even negative. On the contrary, months ago an escalation began that has not yet come to an end, and that has had an obvious impact on the monthly mortgage bill.
Throughout the last year, the benchmark for variable mortgages in Spain has been increasing and the Euribor closed at 3.75% in April: the monthly rate for May is 3.82%. In addition to this, the process surrounding a mortgage can be somewhat complex, which sometimes leads to mistakes. And, since this is of vital importance in the financial panorama of families, the Bank of Spain clarifies the documentation and procedures that must be followed to manage these loans.
Tricks from the Bank of Spain to avoid paying more on the mortgage
To formalize a mortgage, the first thing to do is face a stage of documentation, records and payments. In this phase, it is common for banks to request a provision of funds, that is, an advance of money that covers certain costs associated with the process. Therefore, it is best to ensure that the sum corresponds to previous estimates.
The implementation of the Real Estate Credit Law has brought with it a reduction in the amount of the provision of funds: the client is now only responsible for paying the appraisal of the property and its respective copy of the deed. However, banks tend to overestimate the amount needed for this provision, to ensure the availability of funds throughout the process.
As explained by the Bank of Spain, the financial institution must provide proof of the settlement made, as well as the invoices for the expenses covered with the advance money. Once the documents are reviewed, the entity has to repay the excess amount: the time for this varies and may take longer than desired. Although some customers often forget to request it, it is essential to be aware of it.
What can be done so that the mortgage receipt does not rise?
One of the options that clients can consider is subrogating the mortgage to another bank or renegotiating the conditions. But, before opting for this, you have to pay attention to certain aspects, such as how it affects the increase in the Euribor and what is the best way to avoid an increase in the receipt after the review.
Thus, the first thing to do is make sure of the type of mortgage you have and whether it is a fixed or variable rate: while the former are not affected by market volatility and rate rises, the interest that is applied during The useful life of the loan to the latter changes depending on the interest rate that the Euribor has at the time of the review. In addition, it is convenient to check the bonuses requested by the banks according to the degree of involvement of the client with the entity.
Once all this is known, an improvement in the differential can be negotiated with the bank or, conversely, change the variable mortgage to a fixed rate. Although it is less well known, another option is to process the subrogation of the entire mortgage to another bank that offers better conditions.