Beware of what you are signing!
As banks in Spain continue to struggle to make Spanish Mortgages profitable, so the requirement for linked products has increased.
For many lenders this requirement can only be enforced for the first year and cancelled by the client for subsequent years as the product is not written into the Mortgage Deed. The reason it is not written into deed is because it is not legal to link compulsory products unless an enhanced rate has been given to the standard variable.
If an enhanced rate is given; in the deed to will stipulate the rate and what it is linked to; but will also clearly define what happens to rate if linked products are cancelled.
To overcome the fact that the banks cannot in general write life cover into the deeds and to avoid having clients drop the requirement for year two many banks are now only offering a up front lump sum life cover premium which means the policy is paid for at inception of loan not regular premiums that can be stopped at a future date.
Clients should be very careful to ensure they know what each bank is applying as compulsory to the loan as it is often not made clear to the client at application and if the Lawyer is signing as power of attorney the small print in the mortgage deed may not be fully explained.
For expert advice and to ensure a Spanish Mortgage is only signed in full knowledge of exactly what is incorporated in the deed and the long-term implications buyers in Spain should always use an independent and experienced Spanish mortgage broker.
