mortgage penalties

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This topic contains 3 replies, has 4 voices, and was last updated by Profile photo of Anonymous Anonymous 5 years, 9 months ago.

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  • #56110
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi – Can anyone advise….
    My current spanish mortgage is due for review next month, We were offerend personal insurance and property insurance when we took the mortgage back in 2008.. To be honest there quotes were a lot more expensive than we could get ourselves here in the uk.
    Because we did not take out these policies with the lender they added another 1% unto our mortgage rate, 0.5% for not taking there personal insurance and another 0.5% for not taking out there property insurance. Is this common practice.

    Rgds

    David

  • #102839
    Profile photo of Anonymous
    Anonymous
    Participant

    it’s illegal – tell them you’ll denounce them to the “oficina de consumidores”:……………….

  • #102830
    Profile photo of Anonymous
    Anonymous
    Participant

    & put a claim in for all the amounts overpaid !

  • #102856
    Profile photo of Anonymous
    Anonymous
    Participant

    The interest rate charged by most banks in Spain is based on two factors.

    Firstly the index used for most mortgage is Annual Euribor, this figure is widely published and will be the same for everyone that has sign during the same month. For example Annual Euribor for the month of January 2011 was 1.66%.

    The second factor is the difference that the banks charge above the Euribor base rate. In most cases the bank will offer a mortgage at a given rate and then offer discounts to that rate if the client takes extra products with the bank, for example house and life insurance.

    This practice is known as cross selling and is illegal in the UK. In Spain it is legal.

    Some banks will sign mortgages at low rates but then add penalty increments if products are not taken, others will sign higher rates and then discount the rate according to the products taken.

    In your case I am sure you will find this clause included in the mortgage deed (escritura de hipoteca)

    This is an example of why it is important to understand what you are signing and acknowledging that what appears to be the best rate is not always the best mortgage

    I would suggest you calculate the difference between taking the products or paying the increased rate and act accordingly.

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