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Spanish Mortgage Costs Supreme Court Ruling – Lender Pays.

Good news for people buying Spanish Property with a Spanish Mortgage: Spanish Mortgage Costs Supreme Court Ruling – Lender Pays.

Spanish Mortgage Cheaper

In the past, buying a Spanish property by taking out a mortgage added up to 4% on the Property Purchase Price. This pushed the costs on top of the net property price to as high as 15%. Much of this happened because the mortgage lender forced you to assume the costs of the mortgage. Incidentally, this was a cost you could not claim against or offset as costs against income when you submitted your tax return because you were not the benefactor of the arrangement.

Spanish Legal System Defends Consumer

The Spanish Legal System should be applauded for its support of the ordinary consumer in this way and let’s hope it leads to renewed confidence in the property sector within Spain. Once more, the conclusion is that, with property prices still subdued, it is a Buyer’s Market and there has never been a better time to dip your toe’s in the market. This applies if you seek to take out a mortgage or pay for the property outright.

[Sentencia TS 705/2015]

The Supreme Court has analysed contractual terms between banks and consumer and adjudged them to be Unfair Contract Terms. As a result, all costs attributed by the bank to the consumer in which it is the bank who is the passive subject and could, in theory, deduct such costs from tax returns, must be borne by the bank.

Obiter Dictum

The Obiter Dictum of the decision looked at costs derived as a by-product of contracting the mortgage. This refers to Notarial, Land Registry (notifying the Charge against the Property  on behalf of the Mortgage Lender), Transmission Tax, Stamp Duty for documents drafted in the Notary and other costs stemming from the mortgage – including Mortgage Indemnity Protection.

The judgment is available here, (in Spanish only): http://www.poderjudicial.es/stfls/TRIBUNAL%20SUPREMO/DOCUMENTOS%20DE%20INTER%C3%89S/TSCivil%2023.12.15%20%282658-13%29.pdf

Minutes of the Decision here, (in Spanish only):

http://www.poderjudicial.es/stfls/TRIBUNAL%20SUPREMO/DOCUMENTOS%20DE%20INTER%C3%89S/Nota%20de%20la%20Sala%20de%20lo%20Civil%2021%20de%20enero%202016.pdf

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