Legal tip 132. Less charges by Banks when change of entity and early repayment
Thursday, September 3, 2009 @ 12:05 PM
Banking Law in Spain has already been reducing the rights of banks that did not have any economic basis and therefore is setting good precedents for a good pro-consumer era.
Costs by (1) change of entity and (2) early repayment of part or all the capital.
1) Due to change of entity or lender subrogation (1)
The origin entity will charge a fee for the withdrawal of the client. This amount, according to the law, can never be greater than:
Mortgage Loans formalized until the April 27, 2003
1% of outstanding capital for mortgage loans with variable interest
Mortgage Loans formalized between the 27th of April 2003 to December 9th , 2007
0.50% of outstanding capital for mortgages with variable interest
Mortgage loans or credit formalized by an individual after 9 December 2007:
If within the first 5 years of mortgage: 0.5% of the outstanding capital.
If it is after the first 5 years of mortgage: 0.25% of outstanding capital.
2) For partial or total early repayment within the entity
Mortgage Loans formalized before December 9, 2007
The commission will be negotiated with a limit of 1% if interest is variable, there being no limit for fixed interest operations
Mortgage Loans or credits formalized from December 9, 2007
If within the first 5 years of mortgage: 0.5% of the early repaid capital.
If it is after the first 5 years of mortgage: 0.25% of early repaid capital.
As for other amounts that Bank charges for interest rate risk, the Act 41/2007 established that this amount will be charged only if the origin entity does not generate any capital increase following the operation. In addition there will be no entitlement to this charge if the change of entity or the total or partial early repayment occurs within an interest review period which duration does not exceed twelve months.
