In Spain, it will be possible to extend the amortisation term of a mortgage for free thanks to an agreement reached by the Spanish Ministry of the Economy and Justice, a measure which is included in the Government's emergency plan to stimulate the economy.
The initiative is aimed at private individuals who have taken out a mortgage loan for the construction, refurbishment or purchase of a primary home issued by a credit entity, in other words, banks, savings banks, credit cooperatives and financial credit establishments.
The modification is, in actual fact, a renewal. In other words, it is a change to the original terms and conditions of the mortgage loan that the client agreed with the entity, more specifically, the terms and conditions regarding the amortisation period.
The client will be able to extend this period at no additional cost and with no nota ry fees, register charges nor Tax on Documented Legal Acts.
The measure will remain in force for a period of 2 years.
That said, extending a mortgage implies other factors that must be taken into consideration. By reducing the monthly repayments, one will be paying back the loan over more years, with more interest included.
Furthermore, if the financial situation of the client improves in the future and they decide to cancel the loan early, this must also cover the costs incurred by the new operation.
Before beginning the process to extend a loan, the Spanish Ministry for the Economy recommends prudence and advises that you speak with the financial entity in question and reach an agreement with them.
If the client finally chooses to opt into this initiative, the following steps must be taken. This information has also been included in a guide published by the Spanish Ministry for the Economy to explain the proposal.
The steps are:
1. Study the current situation of the mortgage loan with your financial entity.
2. Reach a mutual agreement.
3. Amend the term of the mortgage in a Notarised Deed.
4. Record the amendment with the Properties Register as a note in the margin.
The initiative is aimed at private individuals who have taken out a mortgage loan for the construction, refurbishment or purchase of a primary home issued by a credit entity, in other words, banks, savings banks, credit cooperatives and financial credit establishments.
The modification is, in actual fact, a renewal. In other words, it is a change to the original terms and conditions of the mortgage loan that the client agreed with the entity, more specifically, the terms and conditions regarding the amortisation period.
The client will be able to extend this period at no additional cost and with no nota ry fees, register charges nor Tax on Documented Legal Acts.
The measure will remain in force for a period of 2 years.
That said, extending a mortgage implies other factors that must be taken into consideration. By reducing the monthly repayments, one will be paying back the loan over more years, with more interest included.
Furthermore, if the financial situation of the client improves in the future and they decide to cancel the loan early, this must also cover the costs incurred by the new operation.
Steps for extending a mortgage
Before beginning the process to extend a loan, the Spanish Ministry for the Economy recommends prudence and advises that you speak with the financial entity in question and reach an agreement with them.
If the client finally chooses to opt into this initiative, the following steps must be taken. This information has also been included in a guide published by the Spanish Ministry for the Economy to explain the proposal.
The steps are:
1. Study the current situation of the mortgage loan with your financial entity.
2. Reach a mutual agreement.
3. Amend the term of the mortgage in a Notarised Deed.
4. Record the amendment with the Properties Register as a note in the margin.
