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GLOSSARY |
A
Amortización
(
Repayment)
Repayment of the initial loan amount by means of a scheme
of instalments, including a repayment of capital borrowed
and an amount for the interest charged. According to the
type of mortgage, these instalments can be fixed for the
whole life of the loan or vary with interest rate fluctuation.
C
Cancelación anticipada
( Early Repayment
or Early Redemption) This means the total or partial repayment
of the borrowed amount before maturity. In par tial repayments,
you can choose to reduce the monthly payment and keep
the agreed final maturity date, or keep the same amount
of instalment but shorten the term.
Cancelación registral
(Register Discharge)
Once the mortgage has been repaid, the encumbrance has
to be released from the Land Register. This involves costs
of Notary, Register and Solicitor.
Carga
(Encumbrance
or Registered Charge) Legal charges regarding a determined
property entered in the Land Register, i.e. mortgages,
usufructs etc.
Cédula de habitabilidad
(Occupancy Certificate)
This document certifies that the home meets minimum occupancy
conditions. You will need to produce this document when
contracting utilities such as water, electricity and gas.
Comisión de apertura
(Opening
Fee or Loan Arrangement Fee) This is a percentage of the
loan discounted from the total amount when it is paid
into your account, for services rendered in granting and
processing the mortgage.
Comisión de cancelación anticipada
(Early
Repayment Fee) This fee, indicated in the mor tgage contract
as a percentage of the repaid amount, compensates the
lender for the loss of interest payments expected for
the period between the early redemption and the agreed
maturity.
D
Diferencial
(Margin) This is a set value throughout the term of the
mortgage which is usually expressed in percentages or
fractions and which is added to the value of the reference
rate to calculate the interest rate for each revision
for variable rate capital repayment mortgages.
E
Escritura pública de compraventa
(Deed of Sale) This
document legalises the purchase and shall be signed by
both contracting parties and by the notary. The purchaser
obtains a first copy of the deed once all taxes have been
paid and the corresponding inscription in the Property
Register has been done.
EURIBOR
European Inter-Bank Offered Rate, an index based on the
interest rate for deposits in Euros at 12 months that
is published by the European Central Bank and commonly
used as reference rate for variable rate mortgages.
G
Gestoría
The
professional adviser who looks after dealings with the
Register and the payment of taxes to the Tax Authority.
H
Hipoteca
(
Mortgage) A legal charge entered in the Property Register
when a real estate property is assigned to be collateral
for a mortgage loan.
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I
Impuesto actos jurídicos documentados, AJD
(Transfer Tax)
This tax is payable on sales transactions subject to
VAT and mortgage loans, at a rate of 0.5%-1,5% on total
coverage of the mortgage or on the deed amount in the
case of sales subject to VAT.
Impuesto sobre el valor añadido, IVA
(V
alueA dded T ax, VAT ) Sales made directly by a developer
(newly built homes) are subject to VAT. The current
standard rate is 7% on the sales value in case of private
use and 16% in case of commercial use. In some autonomous
regions like in the case of the Canary Islands the rate
might var y.
Impuesto sobre transmisiones patrimoniales, ITPc
(Capital Transfer Tax) This tax is payable instead
of the VAT when the property is not newly built. In
this case, the standard rate of 7% is independent
of the assigned use of the property, but there are
regional differences.
Indice de referencia
(Reference
Rate) This base rate is, on variable rate mortgages,
used to calculate the new interest rate when it is reset.
Our advice: Pay attention to the fact that the reference
rate, together with the margin, determines the amount
of the future instalments.
Interés ordinario
(Ordinary
Interest) That is the nominal interest rate. It has
to be specified in the contract whether the rate is
fixed or variable throughout all or part of the loan.
IRPH Índice de Referencia de Prestamos Hipotecarios
= Similar to the EURIBOR, this rate is used as reference
for variable rate mortgages and published by the Banco
de España. It represents an average rate for
mortgages offered by all Spanish financial entities.
M
Mortgage4spain
Well known and respected mortgage broker in Spain.
N
Notario
(
Notary) The Notary acts as the public official when
signing the public deeds, such as the sales or mortgage
loan agreement. He is obliged to ensure that current
legislation is fulfilled and to defend the interests
of the parties, particularly the borrower’s interests.
O
Oferta vinculante
(Binding
Quotation) An overview of the financial terms of loans
on property offered by financial institutions. The Ministerial
Ordinance of May 5th, 1994 regarding transparency of
mortgage loans, stipulates the obligation of making
a binding quotation for each mortgage loan, which meets
the following specifications:
- The borrower must
be an individual person.
- The collateral must be a privately used home.
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- The amount must not exceed €150,000. The binding
quotation must indicate that if the borrower accepts the
quotation, he will have the right to examine it at the
notary’s office, for three working days before the
signing of the mortgage contract.
P
Periodicidad de las revisiones
(Resetting
Frequency) This means the frequency of interest rate resetting
on variable rate mortgages, which are usually carried
out once or twice a year.
Plazo de amortización
(Term or Repayment
Period) The period of time during which the loan capital
and the corresponding interest have to be repaid.
Préstamo hipotecario
(Mortgage
Loan) Usually known simply as Hipoteca (mortgage), this
is a loan granted by a lender and backed by a property.
R
Registro de la propiedad
(Land
Register and Land Registry) The Land Register contains
all acts, contracts or legal charges referring to a property,
such as ownership or encumbrances. Registro de la propiedad
is also the local department responsible for maintaining
the Land Register, i.e. the Land Registry.
S
Subrogación
(Remortgaging
with another lender) If you have already a mortgage, but
another lender offers you better terms and conditions
for your mortgage, you can remortgage, i.e. transfer the
mortgage and all the corresponding rights to this new
lender. This transaction is tax-free.
Subrogación de deudor
(Remortgage
of the debtor) This is a substitution of the debtor´s
mortgage. That is to say, when the person who buys a mortgaged
property takes responsibility for all debts and encumbrances
that the seller had towards the financial institution
that conceeded the mortgage.
T
Tasa anual equivalente, TAE
(A
nnual P ercentage R ate, APR) This represents the effective
cost of a loan calculated as if it were paid as one single
repayment each year. It has to be indicated on any loan
offer to make it easy to compare different loan offers
with different characteristics (interest rate, commissions,
reference rates, margins, etc.).
Tasación
(
Valuation) An independent surveyor company carries out
the valuation of the property in order to determine the
current value of the home within the property market and
to specify the maximum amount that can be financed. The
valuation is valid for six months after the date of issue.
V
Verificación
registral (Land Register Check) That is the examination
of the Land Register records of a property, verifying
the legal owner and the existence of charges, such as
mortgages, encumbrances etc. The document where all this
is reflected and that must be presented to the bank is
the “Nota simple de cargas”.
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