How a mortgage works in Spain: Ley 5/2019 explained

Who the law protects

Article 2 of Ley 5/2019 applies to loans made by a professional lender where the borrower, guarantor or surety is an individual and the loan is secured by a mortgage or another real right on a residential property. Garages and storage rooms that serve a domestic function count as residential. It also covers loans taken to acquire land or buildings when the borrower is a consumer. The text does not make nationality or residence a condition, so a non-resident buying a flat is in the same position as a resident. Anyone who guarantees the loan is covered too: article 15.4 extends the notary appearance and the protections to every individual guarantor.

The documents you must receive

Under article 14.1 the lender (or a credit intermediary) must give you, at least ten calendar days before signing:

• the FEIN (Ficha Europea de Información Normalizada, European Standardised Information Sheet), which the law treats as a binding offer for the agreed period, and that period must be at least ten days;
• the FiAE (Ficha de Advertencias Estandarizadas, standardised warnings sheet), which flags relevant clauses: the official reference indices used, any minimum rate, the possibility of early maturity after non-payment and its costs, how costs are shared, and whether the loan is in a foreign currency;
• for a variable-rate loan, a separate document showing the instalments under different interest-rate scenarios;
• a copy of the draft contract, with all signing costs itemised;
• clear information on which costs fall on the lender and which on you (see the guide on who pays the costs);
• the written terms of any insurance the lender requires.

You also sign a statement that you received the documents and that they were explained to you. Article 14.2 obliges the lender to answer your questions, with worked examples of the financial clauses under different economic scenarios.

Free advice from a notary

You choose the notary. Article 15 requires you to appear in person before that notary during the waiting period. The notary checks that the deadlines were met, records your questions and the advice given in a prior notarial record (acta notarial), commonly called the acta de transparencia, and must comment individually on the specific clauses of the FEIN and FiAE, “sin que sea suficiente una afirmación genérica”. You also answer a test in the notary’s presence. You, or your representative, must appear at the latest the day before the deed is signed (art. 15.3), and article 15.8 says the record carries no notarial fee. If the documents were not delivered in time and form, or you do not appear, the notary notes it and “no podrá autorizarse la escritura pública de préstamo” (art. 15.5). Registrars may not register a loan deed that lacks the reference to this record (art. 22.2).

Rules on the loan itself

• Valuation. Article 13 requires an adequate valuation before the contract, by an approved valuer independent of the lender; see the guide on valuation for a mortgage.
• Tied sales. Article 17.1 states: “Quedan prohibidas las prácticas de venta vinculada de préstamos”. The main exception lets the lender require an insurance policy guaranteeing repayment and a damage policy on the mortgaged property, but it must accept equivalent policies from other providers, both at the start and at each renewal, and may not charge for analysing them (art. 17.3). Combined sales are allowed if the lender also offers the products separately (art. 17.7).
• Opening fee. If one is agreed, it is charged once and covers all study, processing and granting costs (art. 14.4).
• Variable rates. The rate may not be changed against you during the contract unless both parties agree in writing, and a variable rate must follow an objective reference index (art. 21.1). No minimum rate (floor) may be set on variable-rate operations (art. 21.3). See the guide on Euribor and reference rates.
• Form. A loan secured on a residential property in Spain must be formalised in an escritura pública (public deed) (art. 22.1).

If something goes wrong

The Banco de España runs a customer portal (Portal del Cliente Bancario) with online enquiry and complaint services. Transitional provision 5 of Ley 5/2019 says that until the consumer financial dispute body envisaged by Ley 7/2017 exists, the Banco de España’s complaints service handles complaints from borrowers and guarantors about breaches of transparency rules. I did not find whether that body has since started working; check the portal for the current route.

Which professional to consult

A regulated lender or a registered credit intermediary supplies the documents. For the advice that is yours by law, use a notary you choose. For a reading of the contract on your side, consult a lawyer registered with a Spanish bar association (colegio de abogados); see mortgage lenders and property lawyers.