Glossary

Creditor. A physical or legal person who can demand payment or fulfillment of a mortgage obligation. In other words, the entity to whom you pay your mortgage.

Amortization. The process by which you repay the money borrowed in the mortgage through partial and periodic payments called installments.

Deposit. Money given to the seller of a property once an agreement is reached. This deposit allows you to reserve the purchase.

Guarantee. The guarantee is an additional assurance for the payment of obligations incurred in the mortgage. It implies fulfilling the credit agreement or, otherwise, a third party will or the established property will be delivered.

Discount. It is the reduction of the interest rate applied for contracting some services with the bank.

Grace period. It is a period of time pre-established by the parties during which the mortgage is not amortized.

Encumbrances. Obligations that the previous owner of the property has with someone, usually a banking entity.

Principal. It is the total amount the bank lends you for your purchase.

Zero debt certificate. A document issued by a bank to certify that you have no outstanding debt with them. Request it as soon as you finish paying off your mortgage.

CIRBE. The Central Information on Risks of the Bank of Spain. It gathers data on all outstanding debts greater than €9000, including your mortgage.

Early termination clause. Allows the bank to end the loan and demand full payment when several installments are missed.

Opening fee. Percentage that banks charge you for granting the mortgage and assuming its risk.

Prepayment fee. A compensation you must pay the bank if you decide to pay off the entire mortgage loan before the agreed date.

Overdue fee. Additional payment the bank demands if you do not pay the defined installments on time.

General contracting conditions. The clauses that govern the mortgage loan contract in a financial institution. They are non-negotiable, unlike the specific conditions.

Debt forgiveness. A legal act by which the creditor releases the debtor from the payment obligation, either in whole or in part.

Credit. Loan of a certain amount of money between two parties. It involves the commitment to repay it within a given period and with compensatory interest.

Mortgage credit. A loan granted to buy, expand, repair, or build a home or other properties.

Monthly installment. The amount of money you have to pay each time to repay your mortgage.

Interest installment. The portion of each monthly mortgage payment that corresponds to interest.

Principal installment. The portion that corresponds to the repayment of the actual amount borrowed, excluding interest.

Deed in lieu of payment. Involves delivering an asset, in this case, the purchased property, in exchange for settling the outstanding debt.

Spread. The fixed percentage added to the Euribor to establish the interest rate you will pay.

Deed. A document signed before a notary to validate the agreed mortgage loan.

Euribor. The interest rate at which European credit institutions lend money to each other.

Deposit. The provision of a property as security for the payment of a mortgage, either your own or someone else’s. It is also the term for the advance payment of money in exchange for a service or commitment.

FEIN. European Standardized Information Sheet that includes all the conditions of the mortgage before signing. It must be provided by financial institutions and is binding.

FIAE. Standardized Warnings Sheet that details the legal consequences of failing to comply with the conditions established for the mortgage.

Administrative expenses. Costs for processing deeds and paying mortgage taxes.

Notary fees. Arise from executing the public deed of the mortgage.

Property tax. Direct tax paid annually by the owner of a property to the municipality.

Documented legal acts tax (AJD). The tax paid for handling official documentation.

Transfer tax. Paid to the Treasury when purchasing a second-hand property.

Late interest. Compensation paid by the debtor to the creditor for not paying the debt on time.

Mortgage law. Legal regulations governing mortgages in Spain.

Free of encumbrances. Property without liens, debts, mortgages, or hidden commitments. Be sure to check this aspect before purchasing.

Novation. Any change included in the mortgage conditions after signing.

Binding offer. A document the bank gives the client with all the loan conditions before notarization.