Documentation
The so-called red tape can give us a real headache, especially if moving into the mortgage world. It therefore helps to know exactly what we’re getting into.
When we decide to purchase a house, we have to be prepared for the mountain of documents that will pass through our hands; some will be from the seller or the bank, while others we will have to search for ourselves. If requesting a loan, transfers can become a big issue, especially if we don’t know what we’re talking about and exactly what we’re being asked for. Let’s have a look at what types of documents we have to deal with during this process.
Informative booklet
This is a document which banks are obligated to provide to anyone who requests it. It contains information related to loans and transaction costs, as well as:
- The maximum loan amount.
- The total loan repayment period.
- Frequency of instalments (monthly, quarterly, etc.).
- Types of interest: fixed- or variable-rate.
- Type of annual interest (if fixed-rate) or margin above the reference index (if variable-rate).
- Interest type review period.
- Initial commission.
- Early settlement fee: partial and total:
- Taxes and duties.
- Periodic instalments.
- Rates and fees for professionals involved in the procedures.
- Other expenses.
Binding Offer
This is a document drawn up by the bank specifying the exact mortgage conditions. It has a 10-day validity period and contains the financial clauses which will later appear in the loan agreement.
The binding offer must include at least the following information:
- The loan proceeds.
- The amortization.
- Simple interest.
- The bank commissions and charges accrued by the loan.
Loan Agreement
Once the bank offer has been accepted, this contract must be formalised as a public deed. The notary must check that there are no discrepancies in the financial conditions of the binding offer or in the financial clauses of the agreement. The client will then have three days to look over the contract before signing it.
The mortgage is completed through the following procedures:
- Entry into the land register: the registrar must make sure there are no unfair contract terms.
- Check there are no outstanding Stamp Duty payments.