The bank will extend the term of the mortgage if it rises 30% due to the rise in rates for vulnerable families

The bank takes a step in its purpose requested by the Government to help families who are going to suffer when it comes to paying their mortgage due to the rise in interest rates.

Thomas Osborne
Thomas Osborne
19 October 2022 Wednesday 09:32
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The bank will extend the term of the mortgage if it rises 30% due to the rise in rates for vulnerable families

The bank takes a step in its purpose requested by the Government to help families who are going to suffer when it comes to paying their mortgage due to the rise in interest rates. Financial institutions have proposed extending the term of mortgages in those cases in which the loan becomes more expensive by at least 30%, after its review due to the rise in Euribor and provided that household income does not exceed 24,318 euros per year, reports Efe .

By lengthening the term of the mortgage loan, the installment to be paid month by month is reduced and alleviates the financial burden, according to the draft of the royal decree in which the measure will be reflected and will be included in the Code of Good Practices. At the end of the mortgage payment, more will have been paid, but the aim is to ensure that the mortgage payment does not drown the most vulnerable families in the coming months of recession.

Another requirement is that the mortgage loan, once the rebound of the Euribor has been reviewed, consumes at least 40% of the family's income, which is classified as "high level of indebtedness", higher than the recommended 30-33%. .

The idea of ​​the Ministry of Economy, led by Nadia Calviño, is that this measure be included in the Code of Good Practices, to which the banks that want to adhere, regardless of whether any bank goes further with its clients.

Both the mortgaged party and the bank itself can request that this relief measure be included in a public deed by means of a mortgage novation. The cost of registering this change will be borne by the person requesting it. Of course, the financial entity that carries out this change will have to notify the Bank of Spain. Under the royal decree, the payment of the tax on documented legal acts (which is now paid by the bank) will be exempt. While the notarial and registry fees will be borne by the bank, but will be discounted at 50% if the change is made with a novation.

The financial entities that avail themselves of the new measure will have to respond to their clients within 45 days from the date of presentation of the request together with the documentation that each bank establishes to verify the situation of financial vulnerability of the client.