This is how mortgages will be from now on
In recent weeks the mortgage and banking market has been revolutionized by the regulatory changes of the Government. The AJD of the new mortgages will be paid by the bank, as approved by a Royal Decree Law the Executive, which has in its hands the reform of the mortgage law. A regulation that will also bring changes in the new loans.
Changes in mortgage expenses
By Royal Decree Law it has been established that the bank must pay the AJD for the mortgages. But it will not be the only expense he will assume. In the reform of the mortgage law, whose entry into force is already a delay of more than two years, is expected to also pay the expenses of the deed, the agency and the notary fee, while the client will only have to pay the appraisal of the house you are going to buy and the copies of the deeds that you request.
The client will save between 85% and 93% of mortgage expenses, according to the idealist / mortgage simulator. However, this saving is minimal compared to all the expenses that have to be assumed when buying a house. In fact, that the bank pays the mortgage expenses will suppose a saving for the mortgaged one of 1% and 2% on the price of purchase of the property. And is that buying a house involves the payment of taxes, such as VAT (if it is new work) or the ITP (if it is a used house), as well as the notary, the registry and the agency to deed the sale.
The final text of the regulations continues to be negotiated in the Congress of Deputies and continues to include important changes regarding the project announced by Luis de Guindos when he was in charge of the Ministry of Economy. For example, the time when the bank can foreclose and seize the home due to non-payment will be delayed. This is what is known as the early termination clause, a provision that allows the entity to foreclose the mortgage at the time the client stops paying the mortgage payment.
In this way, the bank can only activate this clause if the mortgagee has stopped paying more than 12 mortgage payments or an amount equivalent to 3% of the loan during the first half of the mortgage life. After that time, the term is 15 monthly payments or 7% of the loan amount.
The bank will pay the expenses, but will make the mortgages more expensive
By assuming the mortgage expenses, the bank will have to pass on this measure to the price of the mortgages so that the concession is profitable. Let's see with an example: mortgage of 120,000 euros, 30 years, with an interest rate the first year of 1.89% and a subsequent interest rate of Euribor plus 0.89% in Catalonia. No opening fees or early cancellation.
For a loan of these conditions, the monthly payment of the first year amounts to 442.94 euros, and from the 2nd year, if we assume that the Euribor rises to 0% (from the negative level of -0.15% today), the fee would go down to 387.06 euros. In the first 5 years (more interest is paid than capital is amortized), the interest income for the bank (with which it has to cover its financial and operational costs and supposedly obtain a profit margin), amounts to 6,158 euros.
On the other hand, the bank must pay the AJD of the example loan which is 2,700 euros, plus notary (792 euros), plus Land Registry (384 euros), plus agency (400 euros). In total, you must pay 4,276 euros in expenses for a loan of 120,000 euros. That is, if your expenses (6,158 euros) we subtract these expenses (4,276 euros), you will have a margin of 1,882 euros or 376 euros per year, which is equivalent to 0.31% of the loan amount. And to these 376 euros you have to subtract the operating expenses. Therefore, the margin of the banks in the first 5 years is nothing or negative.
The bank will be able to recover the impact of the mortgage expenses during the following years of life of the loan, but it runs the risk of not gaining anything with the mortgages that are canceled in advance or are signed to a short term. Therefore, these loans are foreseeably expensive to buy a house.
It is still possible to claim the AJD paid in the last four years
The Government has left the door open for taxpayers to claim the AJD paid to the Treasury in the last four years. And it is the Royal Decree Law that establishes that the bank pays the AJD has modified the taxpayer, but not the taxable event, which means that for legal purposes it should always be the bank that paid this tax and not the mortgaged .
José María Salcedo, partner at the legal Attic office, is forceful: "the Royal Decree Law did not modify the condition of taxpayer in the AJD of mortgage loans, but only clarified it." Therefore, it must always be the bank that paid this tribute. Now taxpayers can claim from the Treasury the refund of the tax paid in the last four years.