Spanish lenders and bad practices
Spanish mortgage lenders using “bad practices” to rip off borrowers
According to María Martínez, a professor of civil law at the University of Zaragoza, several mortgage lenders here in Spain oblige their clients to take on additional products, such as life insurance which increase conveyancing costs by as much as 100% when purchasing a property.
The report states that the law only requires only requires mortgage borrowers to take our fire insurance, whereas in several cases mortgage lenders are demanding the borrower take on life insurance, temporary incapacity insurance, unemployment insurance, pension plans, credit cards, and direct debits, as conditions for approving a loan.
Not only are these additional products not obligatory, according to the report it is against the law to oblige clients to take out such products,
The extra costs associated with these practices can double conveyancing costs for mortgage borrowers from around 10% of the property purchase price to 20%, claims the report.
It is worth pointing that this refers to mortgage lenders and not specifically banks. As a personal example, when I went to apply for my mortgage with Banco de Andalucia in Fuengirola, the bank manager clearly explained that by law I only required a minimum of fire insurance and that most of the additional services on offer were not required to the mortgage approval.
Regards
Andrew Bellés
That is good to know.