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									comprehensive
mortgage loan guide
Through this guide, Bancaja aims to enhance your understanding of the most common steps
in the purchase and financing of a home, as well as to help you choose the offer that best
meets your needs.
Should you have any doubts or questions, do not hesitate to enquire at your bank.


The content of this guide is subject to changes due to amendments in current law.
               contents
                                                                                                                                                                          page

               1. What should I know before purchasing a home? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
               2. What should I know before selling a home? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
               3. What is a mortgage loan? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
               4. What if a mortgage loan has already been arranged for the home I am going to buy? . . . . . . . . . . . . . . . . . . 13
               5. How can I tell which type of loan best suits my needs? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
                       A. Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
                       B. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
                       C. Interest period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
                       D. Payment amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
                       E. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
                       F. Payment system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
               6. What information is a mortgage loan applicant entitled to receive? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
               7. What costs are involved in a mortgage loan? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
                       A. Costs prior to closing the loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
                       B. Closing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
                       C. Other possible costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
               8. What types of insurance should I take out? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
               9. What tax benefits will I be eligible for if I purchase a primary residence? . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
contents




           2
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10. Documents to be furnished . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11. How can I renegotiate the interest rate on my loan? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12. Financing options at Bancaja . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13. The Bancaja Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14. Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
         I. Table of monthly loan payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
         II. Approximate mortgage loan closing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
         III. Approximate home purchase costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
         IV. Premiums for insurance linked to the mortgage loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
         V. Taxes applicable to home purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48




                                                                                                                                                                      contents
                                                                                                                                                                  3
1. What should I know before
         purchasing a home?
                                                      Generally speaking, purchasing a home is one of the most     Precautionary steps to take prior
                                                      important financial decisions a family makes. It is thus
                                                      crucial to be well informed and to seek out sound advice
                                                                                                                   to the purchase
                                                      (where to go to find your new home, what precautionary       It is strongly recommended that you take a series of
                                                      steps to take to avoid unpleasant surprises, what taxes      precautionary steps in order to stave off problems down the road:
                                                      must be paid on home purchases, what type of financing
                                                      best suits your needs, etc.).                                s Registry verification or certification: This is the query
                                                                                                                   made at the Property Registry to make sure that the home
                                                                                                                   you wish to purchase is not subject to any conditions that
                                                                                                                   might hinder your free enjoyment thereof (to make sure
                                                      How can I purchase my future home?                           that the seller is truly the owner, to determine whether
                                                                                                                   the home is subject to any liens, back taxes, outstanding
                                                      s Through a real estate agent (API) or real estate agency.   owner association expenses, leases, etc.).
                                                      s Through a contractor or developer.                         Should any such circumstances exist, it is advisable to
                                                      s Directly from the owner in a private transaction.          make sure that the purchase is made free of all manner of
                                                                                                                   liens and encumbrances or, where this is not possible, that
                                                                                                                   you are fully aware of the true extent thereof.


                                                                                                                   s Certificate of zoning compliance: It is advisable to verify,
1. What should I know before purchasing a home?




                                                                                                                   at the town hall with jurisdiction over the home, whether it
                                                                                                                   will be unfavourably affected by any upcoming urban planning
                                                                                                                   projects and whether it complies with current zoning laws.


                                                                                                                   s Analysis of the property's main aspects:
                                                                                                                      • Location: Determine whether the property is located
                                                                                                                      in an area with a lot of noise, traffic, pollution, etc.,
                                                                                                                      whether it is well-connected in terms of transportation,
                                                                                                                      how easy it is to find a parking space, how close it is to
                                                                                                                      basic services such as schools, supermarkets, leisure
                                                                                                                      areas, recreation centres, etc.

                                                  6
  • Home's features: It is critical to check the quality of        s The seller: He or she is responsible for supplying all
  the building materials, which direction the home faces,          information you need to make the purchase and,
  whether it includes any shared services (garage, storage         specifically:
  shed, garden, etc.), that all installations are in proper
  working order, etc.                                                • The title to the property.

  • Price: Verify the price-quality ratio, the costs associated      • A blueprint of the home.
  with the transaction (taxes, notary fees, registry fees, etc.)     • The certificate of occupancy.
  and all other costs involved in using the home (shared
  expenses, owner association fees, etc.).                           • Proof of the last property tax payment.
                                                                     • Proof of the last payment of ownership association
                                                                     expenses.
s Notary public: This is the ideal person to orient you with
                                                                     • Proof of payment of the real estate capital gains tax
regard to current law. He or she will explain the different
                                                                     (subsequent to the conveyance).
circumstances that might affect your purchase agreement and
how to solve them, as well as ensure the appropriateness
and precision of the content of your agreements.
                                                                   s The down payment: By means of a down payment or
                                                                   deposit you can reserve the right to purchase a property.
s Property developers: They must provide the buyer with            To this end, you will need to hand over a given amount in




                                                                                                                                      1. What should I know before purchasing a home?
                                                                   advance against the rest of the payment.
the building specifications and answer all questions
concerning the home's construction, the payment schedule           Should you subsequently choose not to purchase the property
and available financing options.                                   under the agreed conditions, you will lose this payment.
                                                                   Should the seller breach the agreed terms, he or she will
                                                                   be bound to reimburse you for twice the amount received.


                                                                   s Purchase agreement: Sometimes, prior to signing the
                                                                   deed, a private document is signed by the seller and the
                                                                   buyer stating the agreement reached (identification of the
                                                                   parties, description of the property, price, payment method,
                                                                   who will be liable for the relevant costs and taxes, the
                                                                   amount of the down payment, etc.).
                                                                                                                                  7
                                                      s The title: The seller must furnish the title to the home    s Property Transfer Tax: This tax is levied on the second
                                                      that he or she is going to sell. When the purchase is         conveyance of a home. It is equal to 7% of the price stated
                                                      made, the notary will issue a new deed of sale between        on the deed of sale (although this rate may vary from one
                                                      the buyer and the seller stating all the agreed terms and     autonomous community to another: see Appendix V). With
                                                      conditions (price, payment method, etc.).                     government-subsidised housing, the rate ranges from 3%
                                                                                                                    to 7%, depending on the autonomous community
                                                                                                                    (see Appendix V).

                                                          A home's national ID card
                                                                                                                    s Stamp Duty: The rate depends on the autonomous
                                                          A title deed operates like a home's “ID card”, as it is
                                                                                                                    community and the type of home (applicable to first home
                                                          what ensures ownership. It must always be issued by a
                                                          notary and recorded at the Property Registry.             conveyances and mortgage liability with mortgage loans:
                                                                                                                    see Appendix V).


                                                                                                                    s Real Estate Capital Gains Tax: This tax depends on the
                                                                                                                    land's rateable value, how many years have elapsed since
                                                      What taxes must be paid                                       the property was purchased and the municipality where
                                                      for the purchase of a home?                                   the home is located. The seller is the party legally bound
1. What should I know before purchasing a home?




                                                                                                                    to make this payment, unless otherwise specifically
                                                      s VAT: VAT applies only to the first conveyance of a new      agreed.
                                                      home (direct purchase from the developer). The tax burden
                                                      is calculated by applying the relevant rate to the price      Once you have checked all the documents, you will be
                                                      stated on the deed of sale (7% with homes purchased on        ready to go forward with the purchase. To this end, you
                                                      the free market and 3% with government-subsidised and         will need to make your payment in cash or by taking out a
                                                      public housing).                                              mortgage loan.

                                                                                                                                                         Home purchase
                                                                                                                            Taxes                                                                  Impuestos
                                                                                                                                                   New                       Used
                                                                                                                                                               (1)
                                                                                                                                      VAT Between 3% and 7%
                                                                                                                     Property Transfer Tax                           Between 6% and 7%(1)
                                                                                                                              Stamp Duty Between 0.5% and 1%   (1)                          Between 0.5% and 1%(1)

                                                                                                                    (1) Rates may vary depending on the autonomous community where the purchase is made.
                                                  8
       2. What should I know
       before selling a home?




FORE
SAL
                                                    Several questions tend to arise in the process of selling a    What costs are involved?
                                                    home, including the following:
                                                                                                                   Unless otherwise agreed in the deposit agreement or the
                                                                                                                   down payment made against payment of the full price, the
                                                    How much is my home worth?                                     costs payable by the seller are as follows:

                                                    Is my asking price too high or too low?
                                                                                                                   s Notary fees (see Appendix III).
                                                    To determine how much your home is worth, you can use
                                                    any of the following information channels:                     s Real Estate Capital Gains Tax. This information is
                                                                                                                   available at the town hall with jurisdiction over the home.
                                                    s Property appraisers. This type of firm will provide you      s The real estate agent's commission.
                                                    with professional information on the technical value of
                                                    your home and will charge you a valuation fee.
                                                    s Real estate agents (APIs). Real estate agents will suggest
                                                    a price that will allow for the easy sale of your home. This   How long will it take to sell my home?
                                                    may entail a commitment to process the sale through the        Can I buy a new home in the meantime
                                                    agent in question, who will receive a negotiated
                                                    commission in the event that he or she successfully brings     or do I need to wait?
                                                    the sale off.                                                  You will find more information on this question under
2. What should I know before selling a home?




                                                    s Own estimate. For an approximate price, determine            “Mortgage Loan for Changing Home” in Section 12, which
                                                    whether any homes similar to your own have been sold           discusses Bancaja's full range of financing options with a
                                                    recently in your building or neighbourhood and find out        view to helping you choose the one that best suits your
                                                    what the asking price was.                                     needs.




                                               10
3. What is a mortgage loan?
                                   A mortgage loan is a loan that is secured through a
                                   mortgage on property, usually a home.


                                   It is closed in a public deed in the presence of a notary
                                   and is recorded at the Property Registry.


                                   Mortgage-secured loans enable longer repayment terms
                                   and lower interest rates than personal-secured loans.


                                   To apply for a mortgage loan at a bank, you will need to
                                   furnish several guarantees, both of a personal nature and
                                   with regard to the property to be mortgaged. Generally
                                   speaking, each bank establishes its own conditions.
3. What is a mortgage loan?




                              12
4. What if a mortgage loan has already been
   arranged for the home I am going to buy?
                                                                                            You may find that the developer has already taken out a
                                                                                            mortgage loan on the home you wish to buy. In this case,      Example of cost savings
                                                                                            you will have several advantages and will be able to
                                                                                                                                                          Let's say you were to purchase a home valued at
                                                                                            arrange a loan that meets your needs easily and at
                                                                                                                                                          €200,000 for which the developer had already arranged
                                                                                            considerable savings.                                         a mortgage loan for €160,000 at Bancaja. If you were to
                                                                                            This is because you will not need to perform the steps        arrange a new mortgage loan, you would need to pay
                                                                                            required to actually mortgage the home, but rather simply     the appraisal company about €260 for the valuation fee
4. What if a mortgage loan has already been arranged for the home I am going to buy?




                                                                                                                                                          and pay an additional €2,400 to €2,800 just for stamp
                                                                                            change the borrower on the loan arranged by the
                                                                                                                                                          duty, depending on the mortgage liability stipulated by
                                                                                            developer for the home you wish to buy. This change in        the bank where the new loan is arranged. In addition to
                                                                                            the borrower of a loan is called loan assumption, and it      these two charges, you would also need to pay the
                                                                                            will be executed at the same time as the deed of sale.        notary and registry fees involved in closing and
                                                                                                                                                          recording the new mortgage. Consequently, by assuming
                                                                                            When you assume a developer's loan, you avoid all the         the developer's loan, you would save over €3,000.
                                                                                            costs involved in having the home appraised, requesting
                                                                                            reports on liens and encumbrances from the Property
                                                                                            Registry, executing the new mortgage deed in the presence
                                                                                            of a notary and subsequently recording the deed at the
                                                                                            Registry. More importantly, you avoid having to pay stamp
                                                                                            duty on the new mortgage deed. This tax varies from one
                                                                                            autonomous community to another, but is most commonly
                                                                                            equal to 1% of the mortgage liability.
                                                                                            In addition to financial savings, by assuming a developer's
                                                                                            loan, you will also save time and headaches, as the
                                                                                            process is simple, quick and convenient.
                                                                                            Should the developer's loan not meet your needs, you can
                                                                                            change the amount to be financed, the term, the payment
                                                                                            dates, etc., without sacrificing the significant financial
                                                                                            savings involved in the assumption.




                                                                                       14
5. How can I tell which type of loan
               best suits my needs?
                                                                 After meeting all of the aforementioned preliminary          B. Interest
                                                                 requirements, you will face the challenge of choosing the
                                                                 mortgage loan that best suits your needs.                    Interest is the price the customer undertakes to pay the
                                                                                                                              lender in exchange for receiving a given amount of money
                                                                 When making this choice, the following factors should be     under a loan.
                                                                 taken into account:
                                                                                                                              The Annual Percentage Rate (APR) is a formula for
                                                                                                                              comparing the interest rates offered by different lenders.
                                                                                                                              To calculate APR, the payment schedule, nominal interest
                                                                                                                              rate, term and closing costs are taken into account.
                                                                 A. Principal
                                                                 This is the amount of money that the lender will provide     Depending on the type of interest rate used, mortgage
                                                                 to the customer upon granting him or her the loan.           loans are classified as:
                                                                 The amount of principal provided is subject to two limits:
                                                                                                                              s Fixed-rate mortgages; or
                                                                 1. The home's value: The maximum amount to be                s Adjustable-rate mortgages.
                                                                 financed, that is, the total amount you may receive under
5. How can I tell which type of loan best suits my needs?




                                                                 a mortgage loan, may be equal to, at most, 100% of the
                                                                 home's appraisal value. In such cases, an additional
                                                                 guarantee must be furnished.


                                                                 2. The applicant's income: Loan payments may not exceed
                                                                 35% or 40% of the applicant's documented cash income.            How to compare different loans
                                                                 This is to ensure that he or she will not have problems          The Annual Percentage Rate (APR) is a formula for comparing
                                                                 making the payments.                                             the interest rates offered by different lenders. To calculate
                                                                                                                                  APR, the payment schedule, nominal interest rate, term and
                                                                                                                                  closing costs payable to the lender are taken into account,
                                                                                                                                  except for supplementary and third-party fees, which must
                                                                                                                                  be itemised separately one by one. This effective cost is the
                                                                                                                                  best way to determine and compare the real rates offered by
                                                                                                                                  different lenders.




                                                            16
1. Fixed-rate mortgages                                         2. Adjustable-rate mortgages
With fixed-rate mortgages, the interest rate established in     Adjustable-rate mortgages are loans where the interest
the loan agreement remains unchanged for the full life of       rate is periodically adjusted in accordance with pre-
the loan.                                                       established rules.
With these loans, both the lender and the customer are
exposed to interest rate risk, that is:                         The applicable interest rate at any given time is
  · Should interest rates fall, the customer will not benefit   determined as follows:
  from the reduction and may therefore end up paying a            · An initial interest rate is agreed and remains
  higher price than that which he or she would have to pay        unchanged for a given period of time. With most
  were he or she to arrange the loan at the current rate.         lenders, this period will range from 3 to 12 months.
  · Should interest rates rise, the opposite is true, namely,     · Upon conclusion of this period, the interest rate will
  the lender will bear the consequences, as it will not be        vary in accordance with the evolution of the reference
  able to pass on the cost to the customer.                       rate agreed in the loan agreement.


For both of these reasons, fixed-rate mortgages tend to         With adjustable-rate mortgages, both the lender and the




                                                                                                                                   5. How can I tell which type of loan best suits my needs?
have shorter terms than adjustable-rate mortgages,              customer are affected by market fluctuations:
thereby reducing the risk of interest rate fluctuations to
both parties.                                                     · When interest rates are low, the customer will make
                                                                  smaller payments.

What are the advantages of a fixed-rate mortgage?                 · When rates are high, the customer will have to make
                                                                  larger payments.
The main advantage of a fixed-rate mortgage is that the
exact amount of all the payments to be made over the full
life of the loan is established from the very start of the      As a result, because interest rates depend on the market,
transaction.                                                    lenders tend to offer longer terms (usually between 20 and
                                                                40 years) for adjustable-rate mortgages than for fixed-rate
                                                                ones (usually between 15 and 30 years).




                                                                                                                              17
                                                                 What are the advantages of an adjustable-rate                    s Commercial Bank IRPH (Mortgage Loan Reference Rate)
                                                                 mortgage?
                                                                                                                                  This is the average rate for mortgage loans with terms of
                                                                 The main advantages are:                                         over 3 years granted by commercial banks for the purchase
                                                                   · Smaller payments thanks to the longer term.                  of free-market homes.

                                                                   · The ability to take capitalise on falls in interest rates.
                                                                                                                                  s Joint Credit Institution IRPH (Mortgage Loan Reference Rate)
                                                                                                                                  This is the average rate for mortgage loans with terms of
                                                                                                                                  more than 3 years granted by all credit institutions for the
                                                                 Reference rates                                                  purchase of free-market homes.
                                                                 The reference rate is the variable on which the
                                                                 adjustments to a loan's interest rate are based.                 s Spanish Federation of Savings Banks (CECA) Reference Rate
                                                                 In 1994, 6 official reference rates were established. In June
                                                                                                                                  This is the average rate for personal loans with terms of at
                                                                 1999, the 1-year Euribor was added to the list. The current
                                                                                                                                  least 1 year but less than 3 and for mortgage loans with
                                                                 official rates are as follows:
                                                                                                                                  terms of 3 years or more granted for the purchase of free-
                                                                                                                                  market homes.
5. How can I tell which type of loan best suits my needs?




                                                                 s 1-year Euro Interbank Offered Rate (1-year Euribor)
                                                                 This is the rate at which one-year interbank term deposits       s Rate of return on public debt instruments with
                                                                 in the euro zone are offered by one prime bank to                maturities of between 2 and 6 years
                                                                 another. It represents the monthly average of the daily
                                                                                                                                  This is the internal rate of return on the secondary market
                                                                 values of this rate.
                                                                                                                                  for public debt instruments with maturities of between 2
                                                                                                                                  and 6 years.
                                                                 s Savings Bank IRPH (Mortgage Loan Reference Rate)
                                                                 This is the average rate for mortgage loans with terms of
                                                                 over 3 years granted by savings banks for the purchase of
                                                                 free-market homes.




                                                            18
All of the official rates meet the following basic
requirements for mortgage loan reference rates:
                                                                    With adjustable rates, don't forget to ask
  • They are public and easily verified by the customer.
                                                                    • Which reference rate will be used (Euribor, Savings Bank
  The Bank of Spain publishes these rates each month in             IRPH, etc.).
  the Official State Gazette (each one is assigned a single
  value per month), and they can be easily checked in the           • How the new rate will be established at each adjustment.
  financial pages of daily newspapers.                              • How the new rate and the period for which it will remain
                                                                    in force will be communicated to the customer at each
  • They are objective. The data used to calculate the
                                                                    adjustment.
  rates' values at any given time are aggregated pursuant
  to mathematical procedures approved by the Bank of                • What is involved in cancellation of the agreement,
  Spain.                                                            should the customer decide not to accept the new rate to
                                                                    be applied over the following interest period.
  • They are neutral. No financial institution can
  influence their calculation.
Regardless of whether or not an official reference rate is
used, both the agreed rate and how it will be applied




                                                                                                                                       5. How can I tell which type of loan best suits my needs?
must be clearly stated in the mortgage deed.
                                                                C. Interest period
                                                                This is the period of time during which the interest rate for
s The differential                                              an adjustable-rate loan will remain unchanged.
                                                                With adjustable-rate loans, it is important to distinguish
This is the amount added by the lender to the reference rate.
                                                                between:
How is the amount of the differential calculated?
                                                                s The initial interest period: The term over which the interest
                                                                rate agreed in the loan agreement will remain in force.
Usually, a percentage is established to be applied in
addition to the reference rate.
                                                                s Adjustable-rate interest period: This period begins upon
                                                                conclusion of the initial interest period and lasts until the
                                                                loan has been fully paid off. Over this period, the interest
                                                                rate will be periodically adjusted (usually on a 6-monthly
                                                                or yearly basis), as per the terms of the loan agreement.

                                                                                                                                  19
                                                                 D. Payment amount                                              F. Payment system
                                                                 This is the amount the customer agrees to pay on a regular     This refers to the way in which the loan's principal
                                                                 basis (usually monthly) to the lender that granted him or      payments are calculated. There are several types of
                                                                 her the loan as payment on principal plus interest.            payment systems, including: fixed payments, decreasing
                                                                 If the mortgage is an adjustable-rate mortgage, the payment    payments and increasing payments.
                                                                 amount will change each time the rate is adjusted.             The most common system is the fixed payment system,
                                                                 The amount will basically depend on four factors: the          whereby the borrower always pays the same amount (the
                                                                 principal provided, the term, the applicable interest rate     sum of principal plus interest) as long as the interest rate
                                                                 and the payment schedule (usually monthly).                    remains unchanged.


                                                                 E. Term
                                                                 This is the period of time agreed in the mortgage deed for
                                                                 the customer to repay the full amount of the loan to the
                                                                 lender. Generally speaking, it can be set at up to 40 years,
                                                                 depending on:
5. How can I tell which type of loan best suits my needs?




                                                                   · The type of loan (fixed-rate, fixed payment, mixed,
                                                                   adjustable-rate, etc.).
                                                                   · The applicant's age.
                                                                                                                                    Each type of mortgage loan has its advantages
                                                                                                                                    The advantages offered by each type of mortgage loan,
                                                                   · The regulations governing the loan as stated in the            depending on the applicable interest rate, are as follows:
                                                                   agreement (with public housing).
                                                                                                                                    • Fixed-rate mortgages: Knowing, from the time the loan
                                                                                                                                    is originated, the exact amount of the payments to be
                                                                                                                                    made over its full life.
                                                                 With some loans, a grace period, or interest-only period,
                                                                 will apply. The grace period is the period at the start of a       • Adjustable-rate mortgages: Financing is provided with
                                                                 loan when the borrower pays only interest, making no               longer terms, thereby reducing payment amounts.
                                                                 payments on principal.                                             Moreover, should interest rates fall, payments will be even
                                                                                                                                    further reduced.




                                                            20
6. What information is a mortgage loan
          applicant entitled to receive?
                                                                             The Ministerial Order (M.O.) of 5th May 1994, on                 Once a loan application has been approved, the lender
                                                                             “Transparency of the financial conditions of mortgage            must provide the applicant with a binding loan offer,
                                                                             loans”, aims to guarantee that individuals arranging             which shall be valid for at least 10 days as of the date it is
                                                                             mortgage loans receive sufficient information and                provided.
                                                                             protection by stimulating effective competition between
                                                                                                                                              This offer is legally binding on the financial institution,
                                                                             lender.
                                                                                                                                              but not on the borrower, who is free to decline it.
                                                                             The said M.O. affects mortgage loans meeting the
                                                                             following conditions:
                                                                                                                                              s Signing of the deed
                                                                             s The mortgage must be taken out on a home.
                                                                                                                                              Should the applicant accept the binding offer, the
                                                                             s The borrower must be a natural person.
                                                                                                                                              mortgage loan will be executed in a public deed and the
                                                                             s The principal may not exceed €150,253.02.                      notary will make sure that there are no discrepancies
6. What information is a mortgage loan applicant entitled to receive?




                                                                                                                                              between the financial conditions stated in the binding
                                                                                                                                              offer and the financial terms of the loan agreement,
                                                                             The most important features of this regulation are as follows:   informing the borrower of any differences that may exist
                                                                                                                                              and of his or her right to opt out of the process. In either
                                                                             s Information leaflet                                            case, during the signing, the notary must resolve any
                                                                                                                                              doubts either of the parties may have.
                                                                             This is the document stating, in rough but clear and
                                                                             standardised terms, the financial conditions applicable to       The borrower (or loan holder) is entitled to review the
                                                                             mortgage loans.                                                  mortgage deed at the notary's office at any time over a
                                                                                                                                              period of at least three business days prior to the signing.
                                                                             Lenders must furnish it free of charge to anyone who
                                                                             applies for a mortgage loan.                                     The applicant is the party entitled to choose the notary.
                                                                                                                                              This notwithstanding, he or she may not choose a notary
                                                                                                                                              who, for jurisdictional reasons, is not reasonably familiar
                                                                             s Binding offer                                                  with any of the personal or real aspects of the business.
                                                                             This is a document signed by a representative of the bank
                                                                             or savings bank stating the financial conditions of the
                                                                             loan in the same order in which they are listed in the
                                                                             mortgage deed (principal, payment system, ordinary
                                                                             interest, applicable fees and costs payable by the
                                                                             borrower).
                                                                        22
7. What costs are involved
     in a mortgage loan?
                                                      A. Costs prior to closing the loan                             s Assumption fee: Loan assumption is the process
                                                                                                                     whereby one person assumes the debt of and legally
                                                      Once all the necessary requirements have been met for a        substitutes the holder of a loan with regard to the rights
                                                      mortgage loan to be granted, the lender will take the          and obligations arising therefrom, that is, he or she
                                                      following steps prior to closing it:                           becomes the borrower. It occurs when a person purchases
                                                                                                                     a home from a private individual for which a mortgage
                                                      s The valuation: The home must be appraised, that is, an       has already been arranged or purchases a home directly
                                                      independent expert authorised by the Ministry of the           from a property developer/contractor.
                                                      Treasury must perform a valuation.                             The lender must agree to the assumption, and the party
                                                                                                                     assuming the loan must pay the corresponding fee,
                                                      s Registry verification: This consists of verifying with the   although in this case no origination fee will be charged.
                                                      Property Registry whether the home to be mortgaged is
                                                      subject to any liens or encumbrances.                          s Notary fees: These are for the preparation of the public
                                                                                                                     deed executed by the notary. The amount to be paid will
                                                                                                                     depend on the official fee schedule.
                                                      Both processes entail a series of costs payable by the
                                                      applicant, whether or not the loan is approved.
                                                                                                                     s Taxes: When a loan is arranged, it is subject to stamp
                                                      Once these data have been confirmed, the mortgage loan         duty. The amount to be paid for this tax is calculated by
                                                      can be closed.                                                 applying the rate in force in each autonomous community
                                                                                                                     (see Appendix V) to the mortgage liability (approximately
7. What costs are involved in a mortgage loan?




                                                                                                                     twice the amount of the loan).
                                                      B. Closing costs
                                                                                                                     s Property Registry recording fees: Once the mortgage
                                                      s Loan origination fee: This is a one-time fee charged by      deed has been executed, it must be recorded at the
                                                      the lender at the start of the loan. It tends to be a          relevant Property Registry.
                                                      percentage of the amount of the loan.
                                                                                                                     The lender is responsible for recording the deed.
                                                                                                                     The amount to be paid will depend on the official fee
                                                                                                                     schedule.



                                                 24
    Mortgage loans involve the following costs:

    · Valuation                    · Notary fees
    · Origination fee              · Registry fees
    · Taxes                        · Processing fees




C. Other possible costs                                      of the customer and with the approval of the lender. The
                                                             amount is calculated as a percentage of the outstanding
                                                             principal at the time the amendment is made.
  Late-payment interest: This is the interest rate applied
to those amounts that, upon coming due, remain
outstanding. In short, it is a penalty applied to the           Charge for notice of default: In the event of default on
borrower for breaching his or her payment commitments.       payments, the lender will usually charge the customer a
                                                             fixed amount at such time as the payments are made. This




                                                                                                                                7. What costs are involved in a mortgage loan?
                                                             amount is pre-established in the loan agreement.
  Compensation for early repayment: this will be charged
on the amount of the loan that is repaid before the agreed   The schedule of fees chargeable to borrowers must be
upon dates. There will be a charge of 0.50% if the           previously reported to the Bank of Spain and available to
repayment is made within the first 5 years of your           anyone wishing to consult it.
mortgage. Starting in the 6th year, 0.25% will be charged.

  Loan amendment fee: This fee is charged should any of      The borrower may only be charged those fees expressly
the conditions established at the start of the loan          stated in the mortgage deed.
agreement be amended over the life of the loan by request




                                                                                                                           25
8. What types of insurance
        should I take out?
                                                     By law, mortgage holders must purchase fire insurance for
                                                     the property under mortgage.


                                                     Additionally, it is recommended that multiple-risk
                                                     homeowners insurance to insure against different types of
                                                     household accidents (flooding, burglary, damage to third
                                                     parties, etc.).


                                                     Additionally, it is recommended that life insurance be
                                                     purchased to insure that, in the event of the loan holder's
                                                     death, the insurance company will pay off the outstanding
                                                     balance on the loan.


                                                     With self-build mortgage loans, ten-year builder's
                                                     warranty insurance covers damage caused to the building
                                                     by flaws or defects affecting the structural components
                                                     and directly compromising the building's mechanical
                                                     resistance and stability. Although this type of insurance is
                                                     not required for individual self-builders building homes
                                                     for their own use, proof of its purchase is required should
8. What types of insurance should I take out?




                                                     the new buyer so request as part of a conveyance inter
                                                     vivos, to be effective as of the time of the conveyance
                                                     until completion of the ten-year term required for this
                                                     type of warranty.




                                                28
9. What tax benefits will I be eligible for
      if I purchase a primary residence?
                                                                                      This section refers only to national laws. It does not          C. Loan financing
                                                                                      discuss the specifications made under the laws passed by
                                                                                      each autonomous community based on the powers                   When a bank loan is used to finance at least 50% of the
                                                                                      transferred to them under Act 14/96, dated 20th December,       cost of the purchase or restoration of a primary residence,
                                                                                      on the Transfer of National Taxes to the Autonomous             and a total of no more than 40% of the loan is repaid in
                                                                                      Communities and Complementary Measures.                         the first 3 years of its life, the following deductions apply:
                                                                                      The purchase, as well as the construction or restoration, of      1. The first 2 years (as of the purchase or restoration),
                                                                                      a home (provided it is or will be the primary residence)          25% of the first €4,507.59 paid each year for principal,
                                                                                      entails a series of tax benefits with regard to personal          interest and financing costs may be deducted. This rate
                                                                                      income tax:                                                       falls to 15%(1) for the remainder of the amount paid up
                                                                                                                                                        to a maximum of €9,015.18.
9. What tax benefits will I be eligible for if I purchase a primary residence?




                                                                                      A. Savings through a Home-Savings Account                         2. In subsequent years, the foregoing percentages are
                                                                                      Holders of this type of account are entitled to deduct(1) 15%     20% and 15% respectively..
                                                                                      of the increase in the balance of their Home-Savings
                                                                                      Account from their taxable income, provided the amounts           3. With homes purchased prior to 4th May 1998, the
                                                                                      invested are used exclusively for the purchase or                 loan holder will be entitled to a larger personal income
                                                                                      restoration of their first primary residence and the account      tax deduction, as per the conditions set out in the
                                                                                      is not more than 4 years old.                                     Spanish Budget Act.


                                                                                      B. Payments made by the homebuyer
                                                                                                                                                      The costs and taxes arising from the purchase of a
                                                                                      Homebuyers may deduct(1) 15% of the amounts paid for the        primary residence are also tax-deductible.
                                                                                      purchase or restoration of a home that is or will be their
                                                                                      primary residence.




                                                                                      (1) Up to the limits established under current law.

                                                                                 30
10. Documents to be furnished
                                     The documents you will need to furnish to the institution    C. Details of the property to be mortgaged
                                     where you apply for your loan provide three types of
                                     information:                                                 Several situations are possible:

                                     A. Personal details                                          s Private purchase between individuals: Photocopy of the
                                                                                                  title to the home (to be furnished by the seller).
                                     Spanish ID Card (DNI) or Vat No. and, if married, the
                                     applicable community property system (this is because,
                                     should the mortgage be arranged for a home that will be      s Purchase from a developer: If the works are being
                                     used as the family address, the consent of both spouses is   financed by the same bank where the buyer is applying for
                                     required).                                                   his or her loan, a photocopy of the purchase agreement
                                                                                                  must be furnished, to be provided by the developer. If the
                                                                                                  works are being financed by a different bank, the deed of
                                                                                                  horizontal division must be requested from the developer.
                                     B. Financial details
                                                                                                  s If you wish to build your own home: You must provide
                                     s Employees: Usually, the last 2 payslips are requested,     the title to the parcel and the building permit and plans.
                                     along with the most recent personal income tax and
                                     personal property tax statements.

                                     s Self-employed: Usually, the most recent personal
                                     income tax and personal property tax statements are
                                     requested, along with the receipts for the most recent
                                     interim income tax and VAT payments.
10. Documents to be furnished




                                32
11. How can I renegotiate the
     interest rate on my loan?
                                                               Perhaps you already have a mortgage loan but are paying       The benefits granted to mortgage holders under current
                                                               higher interest on it than you would had you taken it out     law lie in the substantial decrease in the costs involved in
                                                               today. In this situation, you have two refinancing options:   changing lenders. Savings include:
                                                               novation and subrogation.
                                                                                                                             s Exemption from stamp duty.
                                                               Novation allows the borrower to renegotiate the interest
                                                               rate conditions and, where applicable, the term of the
                                                               loan with his or her lender.                                  s Reduction in notary and registry fees.

                                                               Subrogation allows the borrower to change lenders,            s Limit on early redemption penalties with both
                                                               substituting his or her current lender with one that can
                                                                                                                             adjustable-rate mortgages and fixed-rate mortgages that
                                                               offer him or her better financial conditions.
                                                                                                                             are converted to adjustable-rate ones. (This limit is 2.5%,
                                                               Any natural or legal person who holds a mortgage loan         although some lenders breach this requirement).
                                                               (whether fixed-rate or adjustable-rate) can make either of
                                                               these changes, regardless of the date on which the loan       s The agreed early redemption penalty may be charged
                                                               was closed and whether or not the possibility of early        subject to a limit of 1% for adjustable-rate mortgages
                                                               redemption is explicitly stated in the deed.                  closed prior to 27th April 2003 or 0.5% for adjustable-rate
                                                                                                                             mortgages closed from 27th April 2003 on.
                                                               A subrogation, or assignment, agreement may only be
11. How can I renegotiate the interest rate on my loan?




                                                               used to negotiate changes in the conditions governing the
                                                               initially agreed or current ordinary and late-payment         s When early redemption was agreed but no penalty was
                                                               interest rates.                                               established, the lender shall not be entitled to collect any
                                                                                                                             amount whatsoever for this reason.
                                                               With loans closed as of 27th April 2003, changes may be
                                                               negotiated in the conditions governing the initially agreed
                                                               or current ordinary and late-payment interest rates, the      With novations undertaken to extend the term of a loan
                                                               loan's term may be extended or both.                          closed on or after 27th April 2003, the lender may not
                                                                                                                             collect more than 0.1% of the outstanding balance on the
                                                                                                                             loan as a loan amendment fee.




                                                          34
Neither novation nor subrogation can be used to change        s If you decide you would like to switch lenders, the new
the outstanding balance on the loan. Should you wish to       lender must provide you with a binding offer. (It is
apply for additional financing, you will need to do so        usually as of this moment that you will need to pay any
through a separate legal document to increase the             valuation and registry verification costs.) Remember, these
amount.                                                       offers are only binding on the lender that makes them
                                                              and never on you.

It is advisable to take the following steps before            s The lender making the offer will handle of the
undertaking a subrogation:
                                                              paperwork involved in making the change, provided you
                                                              accept the offer.
s First, try to negotiate an interest rate adjustment with
your current lender. It may offer you a novation (whereby
any amendment would affect the rest of the life of the
loan) or a temporary interest rate lock-in agreement
(whereby the new interest rate will remain in force for a
given period of time, usually one year).

s Should you not obtain a satisfactory response, go to




                                                                                                                                 11. How can I renegotiate the interest rate on my loan?
another lender and enquire about the conditions it can
offer you to refinance your mortgage.

s Compare the amount you would save on interest if you
were to refinance through the new institution with the
cost of making the change (i.e. notary fees, registry fees,
early redemption charges, origination fee, valuation fee
and processing fees).

s Before taking the decision, seek advice on the amount
of the costs to be paid, either at your current lender (in
case of novation) or at the lender with which you would
like to refinance (in case of subrogation).

                                                                                                                            35
12. Bancaja's financing offer
                                                                                                                                                            “Pay when you want” or Custom                                                                                    Single Credit
                                        Mortgage Catalogue         Adjustable-Rate Mortgage                       Fixed-Rate Mortgage                                                                                   Custom 20 Mortgage
                                                                                                                                                                     40 Mortgage                                                                                        (1st draw for home)
                                        Description           Payment amounts are adjusted                The interest rate remains unchanged          A loan with a flexible payment system, allowing      A loan with a flexible payment system,              A single mortgage loan to meet all your
                                                              annually. If interest rates rise from       over the full life of the loan and is thus   you to make principal payments whenever you          allowing you to make principal payments             financing needs. It is a standing credit
                                                              one year to the next, so will the           higher than an adjustable rate. In           want with no added fees. Payment amounts             whenever you want for the first 5, 10 or 20 years   line that allows you to finance
                                                              payment amount. Likewise, if interest       exchange, the borrower has the security      will only include interest. If you are between the   with no added fees. If you are between the          anything you need at mortgage loan
                                                              rates fall, the payment amount will         of knowing that, regardless of interest      ages of 26 and 35, to qualify for this mortgage      ages of 26 and 35, to qualify for this mortgage     rates, since you can draw anew on any
                                                              fall, too.                                  rate fluctuations, his or her monthly        loan, you must be a Custom customer. (Sign-up        loan, you must be a Custom customer (Sign-          principal you repay.
                                                                                                          payment will always be the same.             for the Custom programme is free.                    up for the Custom programme is free).

                                        Interest rate         Adjusted yearly, generally linked to        Remains the same throughout the              Adjusted yearly, linked to the Euribor.              Adjusted yearly, linked to the Euribor.             Adjusted yearly, linked to the Euribor.
                                                              the Euribor.                                full life of the loan.

                                        Payment               Fixed payments comprising principal                                                      Principal payments are made at your                  Fixed payments comprising principal                 Fixed payments comprising principal
                                        system                plus interest. With each new                                                             convenience. This notwithstanding, it is             plus interest. With each new payment,               plus interest. With each new
                                                              payment, less of what you pay is                                                         advisable to pay principal regularly                 less of what you pay is interest and                payment, less of what you pay is
                                                              interest and more is principal.                                                          rather than wait till the final maturity.            more is principal.                                  interest and more is principal.


                                        Term                  Maximum of 40 years, provided you           Maximum of 30 years, provided you            40 years, provided you are not over the              Maximum of 40 years, provided you                   Maximum of 40 years, provided you
                                                              are not over the age of 35.                 are not over the age of 45.                  age of 35.                                           are not over the age of 35.                         are not over the age of 35.

                                        Principal             As a general rule, up to 80% of the         As a general rule, up to 80% of the          As a general rule, up to 80% of the                  As a general rule, up to 80% of the                 As a general rule, up to 80% of the
                                                              valuation amount can be provided for        valuation amount can be provided for         valuation amount can be provided for                 valuation amount can be provided for                valuation amount can be provided for
                                                              the purchase of primary residences and      the purchase of primary residences and       the purchase of primary residences and               the purchase of primary residences and              the purchase of primary residences and
                                                              70% for other types of residences. In       70% for other types of residences. In        70% for other types of residences. In                70% for other types of residences. In               70% for other types of residences. In
                                                              certain cases, up to 100% of the            certain cases, up to 100% of the             certain cases, up to 100% of the                     certain cases, up to 100% of the                    certain cases, up to 100% of the
                                                              valuation amount may be provided.           valuation amount may be provided.            valuation amount may be provided.                    valuation amount may be provided.                   valuation amount may be provided.

                                        Grace period          You can defer principal payments and        You can defer principal payments and         Interest-only over the 40-year life of               It's up to you. If you so choose, the               NO
                                                              pay only interest for up to 5 years,        pay only interest for up to 5 years,         the loan.                                            interest-only period can be from 1 to 5
                                                              thereby reducing payment amounts.           thereby reducing payment amounts.                                                                 years, 10 years or 20 years long.


                                        Final principal       You can defer payment of up to              years, thereby reducing payment              NO                                                   NO                                                  NO
                                        payment (balloon      30% of the principal until the end          amounts.
                                        payment option)       of the loan and pay it off early or
                                                              include it in your payments
                                                              whenever you wish.
12. Financing options at Bancaja




                                        Reduction of          If you agree to arrange for the direct      NO                                           If you agree to arrange for the direct               If you agree to arrange for the direct              If you agree to arrange for the direct
                                        differential linked   deposit of your paycheck, purchase                                                       deposit of your paycheck, purchase                   deposit of your paycheck, purchase                  deposit of your paycheck, purchase
                                        to other products     mortgage protection insurance and open                                                   mortgage protection insurance and open a             mortgage protection insurance and open              mortgage protection insurance and open
                                                              a pension plan, each year the interest on                                                pension plan, each year the interest on your         a pension plan, each year the interest on           a pension plan, each year the interest on
                                                              your mortgage will be 0.30% lower.                                                       mortgage will be 0.30% lower.                        your mortgage will be 0.30% lower.                  your mortgage will be 0.30% lower.

                                        Change when you       Bancaja will not charge any fees for        Bancaja will not charge any fees for         Bancaja will not charge any fees for                 Bancaja will not charge any fees for                NO
                                        want free of charge   amendments made to the conditions           amendments made to the term or               amendments made to the conditions of                 amendments made to the conditions of
                                                              of your loan.                               final principal payment.                     your loan.                                           your loan.




                                   38
Mortgage Catalogue                                      Mortgage Loan for Changing Home
                                                                                                                                    Custom Pre-mortgage Loan                         Self-build Mortgage Loan
                           Home you are selling                                     Home you are buying
Description                                                                                                                 This loan is designed to offer young people   Mortgage loan intended to finance the
                         Aimed at homeowners seeking to trade in their current home for another, generally better and
                         more expensive one. To do so, they do not need to sell their current home first, but rather have   under the age of 36 financing for the         construction of a home by an individual
                         one year to sell it without the rush and without having to make a single payment. Two separate     payments they need to make while their new    developer. The principal is not provided as a
                         transactions are required: one for the home being sold and one for the home you wish to buy.       home is being built.                          lump sum, but rather is provided in
                                                                                                                                                                          instalments as the works are completed.

                         Neither interest nor principal is paid for          Any of the available financing options may     Adjustable-rate with regular interest         Adjusted yearly, linked to the Euribor.
Interest rate            12 months, giving you ample time to sell            be chosen as the new loan for the home         payments.
                         your home at the best price.                        being purchased.


                         Nothing is paid for the first 12 months. If         Fixed payments comprising principal plus       At maturity of the loan.                      Fixed payments comprising principal plus
                         the home has not been sold by the end               interest. With each new payment, less of                                                     interest. With each new payment, less of what
Payment system           of this period, payments will be fixed              what you pay is interest and more is                                                         you pay is interest and more is principal.
                         and comprise principal plus interest.               principal.


Term                     Maximum of 40 years.                                Maximum of 40 years, provided you are          Maximum of 3 years.                           Maximum of 30 years.
                                                                             not over the age of 35.

                         As a general rule, up to 80% of the                 As a general rule, up to 80% of the            Up to 20% of the home's purchase price,       The maximum amount of the loan will be 70%
Principal                valuation amount can be provided with               valuation amount can be provided with          including tax.                                of the value of the parcel and 90% of the cost of
                         primary residences and 70% with other               primary residences and 70% with other                                                        construction. Principal will be provided as follows:
                         types of residences.                                types of residences.                                                                         an initial instalment for a maximum of 70% of the
                                                                                                                                                                          value of the parcel and the remainder depending on
                                                                                                                                                                          the percentage of the works completed (as per
                                                                                                                                                                          certificates of completion of works issued by the
                                                                                                                                                                          valuator). In both cases, sums are limited to 85% of
                                                                                                                                                                          the loan's principal until full completion of all works.

Grace period             Full (no principal or interest) for 1 year.         Depends on the loan you choose and may         Full                                          You can defer principal payments and pay only
                                                                             range from 1 to 40 years Optional.                                                           interest for up to 5 years, thereby reducing
                                                                                                                                                                          payment amounts.


                         NO                                                  Optional, depending on the conditions          100% at maturity.                             You can defer payment of up to 30% of the




                                                                                                                                                                                                                                          12. Financing options at Bancaja
Final principal                                                                                                                                                           principal until the end of the loan and pay it
                                                                             of your chosen loan.
payment (balloon
                                                                                                                                                                          off early or include it in your payments
payment option)
                                                                                                                                                                          whenever you wish.

Reduction of             NO                                                  YES                                            NO                                            If you agree to arrange for the direct deposit of
differential linked to                                                                                                                                                    your paycheck, purchase mortgage protection
other products                                                                                                                                                            insurance and open a pension plan, each year the
                                                                                                                                                                          interest on your mortgage will be 0.30% lower.

Change when you          YES                                                 Bancaja will not charge any fees for           NO                                            Bancaja will not charge any fees for amendments
want free of charge                                                          amendments made to the conditions of                                                         made to the conditions of your loan.
                                                                             your loan.

                                                                                                                                                                                                                                     39
13. The Bancaja Commitment
                                  Bancaja has made a revolutionary commitment to its             Which points of the Bancaja Commitment
                                  customers entailing a whole new way of being and doing.
                                  This commitment rests on three main pillars:
                                                                                                 affect mortgage loans?
                                    · Dedication                                                 Point 1. Out contracts: Clearer and with no small print.
                                    · Equality in relationships                                  Contracts for savings accounts, cards and loans will not
                                                                                                 contain any print smaller than 1.7 mm and, in order to
                                    · Trust in our customers                                     ensure maximum transparency, customers will be informed
                                  It is summed up in the motto:                                  of the most common questions

                                  “If it isn't good for you, it isn't good for us.”              Point 3. We will notify our customers of insufficient
                                                                                                 funds and non-payments by means of an SMS message.
                                                                                                 We will send an SMS message to any customer who provides
                                                                                                 us with his or her private mobile phone number whenever
                                                                                                 any of his or her accounts has insufficient funds or has been
                                  Who is affected by the Bancaja Commitment?                     overdrawn due to loan, card or account payments.
                                  All individual customers in all their domestic transactions.   If we fail to send the SMS message, we will pay €10.
                                  Although professionals and companies benefit from several
                                  of the measures implemented under the commitment,
                                                                                                 Point 6. We will reply to loan applications within 24 hours.
                                  initially they will be eligible to receive penalty payments.
                                                                                                 At our branches, we will reply to loan applications within
                                                                                                 a maximum period of one business day.
                                                                                                 In case of breach, we will waive the arrangement fee.
                                  What do we expect from the Bancaja
                                  Commitment?                                                    Point 14. Should you lose your job, we will defer payments
                                                                                                 on your home mortgage at Bancaja for 6 months a not cost.
                                  Bancaja seeks to improve its relationship with customers,      If you lose your job, we will defer payments on your home
13. The Bancaja Commitment




                                  positioning itself in the market as a transparent              mortgage for 6 months. The deferred payments will be
                                  institution, endeavouring to break the image of a              paid without additional interest at the end of the loan.
                                  “dominant position” or “position of strength” so often         Mortgage payments may be deferred once every 3 years,
                                  associated with financial institutions.                        providing the titleholder is not in default on payments.
                                                                                                 In case of breach, we will defer all your payments for one
                                                                                                 year free of charge.

                             42
14. Appendix
                  Table of monthly loan payments
                             euros
                  Amounts in euros

                          Interest rate                                                                                                           Monthly payment per €1,000
                  Years       3.00%           3.50%           4.00%           4.50%            5.00%           5.50%           6.00%            6.50%          7.00%
                     1          84.69           84.92            85.15           85.38            85.61          85.84            86.07           86.30           86.53
                     2          42.98           43.20           43.42            43.65            43.87           44.10           44.32           44.55           44.77
                     3          29.08           29.30           29.52            29.75            29.97           30.20           30.42           30.65           30.88
                     4           22.13          22.36           22.58            22.80            23.03           23.26           23.49            23.71          23.95
                     5           17.97           18.19           18.42           18.64            18.87           19.10           19.33            19.57          19.80
                     6           15.19           15.42           15.65           15.87            16.10           16.34           16.57            16.81           17.05
                     7           13.21          13.44            13.67           13.90            14.13           14.37           14.61           14.85           15.09
                     8           11.73           11.96           12.19           12.42            12.66           12.90            13.14           13.39          13.63
                     9          10.58            10.81           11.04           11.28            11.52            11.76           12.01           12.25           12.51
                    10           9.66            9.89            10.12           10.36            10.61           10.85            11.10           11.35           11.61
                    12           8.28            8.51            8.76            9.00              9.25            9.50            9.76           10.02           10.28
                    15           6.91             7.15            7.40            7.65             7.91            8.17            8.44             8.71           8.99
                    18           6.00            6.25            6.50             6.76             7.03            7.30            7.58             7.87           8.16
                    20           5.55            5.80            6.06             6.33            6.60            6.88              7.16           7.46             7.75
                    25           4.74             5.01           5.28             5.56            5.85             6.14            6.44            6.75             7.07
                    30           4.22            4.49             4.77            5.07             5.37            5.68            6.00            6.32            6.65
                    35           3.85             4.13           4.43             4.73             5.05            5.37            5.70            6.04            6.39
                    40           3.58            3.87            4.18             4.50            4.82             5.16            5.50            5.85            6.21

                  Example: In the case of a loan for €120,000 with a 15-year term and an interest rate of 4.50%, the monthly payment amount would be:
Appendix I




                  120 x €7.65/month = €918/month.

             44
Approximate mortgage loan closing costs
The amounts shown below are approximate. They refer to mortgages taken out on owned property.



Amount           Valuation with VAT Registry certificate     Total prior costs                Notary       Registry            Processing                 Tax                        Prior costs + Mortgage costs
   30,000               197.20                16.26               213.46                     435.00         153.26                  207                  498.75                                  1,507.47
   40,000               197.20                16.26               213.46                     440.00          177.30                 207                 645.00                                   1,682.76
   50,000               197.20                16.26               213.46                     445.00         195.33                  207                 806.25                                   1,867.04
   60,000               197.20                16.26               213.46                     450.00        199.00                   207                  967.50                                  2,036.96
   70,000               197.20                16.26               213.46                     470.00        204.34                   207               1,058.75                                   2,153.55
   80,000               197.20                16.26               213.46                     481.00          213.36                 207               1,210.00                                   2,324.82
   90,000               197.20                16.26               213.46                     487.00          219.37                 207                1,361.25                                  2,488.08
 100,000               261.00                 16.26                277.26                    499.00        228.38                   207                1,512.50                                  2,724.14
  110,000              261.00                 16.26                277.26                     511.00        234.39                  207               1,663.75                                   2,893.40
  120,000              261.00                 16.26                277.26                     517.00        241.00                  207               1,815.00                                   3,057.26
  130,000              261.00                 16.26                277.26                    535.00        249.42                   207              1,966.25                                    3,234.93
 140,000               261.00                 16.26                277.26                    535.00        256.00                   207                 2,117.50                                 3,392.76
 150,000               261.00                 16.26                277.26                    535.00        264.45                   207              2,268.75                                    3,552.46
 160,000               261.00                 16.26                277.26                    559.00         276.47                  207              2,420.00                                    3,739.73
  170,000              261.00                 16.26                277.26                    559.00         279.47                  207                2,571.25                                  3,893.98
 180,000               261.00                 16.26                277.26                    559.00        288.49                   207               2,722.50                                   4,054.25
 190,000               261.00                 16.26                277.26                     577.00       294.50                   207               2,873.75                                   4,229.51
 200,000               352.64                 16.26              368.90                       577.00        300.51                  207              3,025.00                                    4,478.41
  210,000             364.24                  16.26              380.50                       577.00       303.49                   207                3,176.25                                  4,644.24
 220,000               375.84                 16.26               392.10                     607.00        306.96                   207                3,327.50                                  4,840.56
 230,000               387.44                 16.26               403.70                     607.00        309.00                   207              3,488.75                                    5,015.45
 240,000              399.04                  16.26               415.30                     607.00         312.00                  207              3,630.00                                    5,171.30
 250,000              410.64                  16.26              426.90                      643.00         315.00                  207               3,781.25                                   5,373.15
 260,000               422.24                 16.26              438.50                      643.00        318.00                   207              3,932.50                                    5,539.00
 270,000              433.84                  16.26               450.10                     643.00         321.00                  207              4,083.75                                    5,704.85
 280,000              445.44                  16.26               461.70                     661.00        324.00                   207              4,235.00                                    5,888.70
 290,000               457.04                 16.26               473.30                     661.00         327.00                  207              4,386.25                                    6,054.55
 300,000              468.64                  16.26              484.90                      661.00        330.00                   207               4,537.50                                   6,220.40

These figures are approximate and were calculated for a mortgage taken out on a single property.       Example: If you have a home valuated at €200,000 and would like to mortgage it, in the event that
The amounts shown in the table include VAT wherever it applies.                                        you were to obtain a loan for 80% of the home's value, then: €200,000 x 80% = €160,000.
Mortgage liability is estimated as twice the amount (200%) of the loan's principal.                    • Costs arising prior to closing come to: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .€277.47
                                                                                                       • Taxes and costs involved in the closing come to: . . . . . . . . . . . . . . . . . . . . . . .€3,432.47
                                                                                                       • Total costs and taxes: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .€3,739.73




                                                                                                                                                                                                                                    Appendix II
                                                                                                                                                                                                                               45
                    Approximate home purchase costs
                    When calculating the costs involved in executing a deed of sale, it is important to distinguish between new and used homes, as they are subject to different tax
                    treatments. Moreover, it is not necessary to take the real estate capital gains tax into account, as it is payable by the seller. Notwithstanding the foregoing, it is
                    possible to reach formal agreements to the contrary.

                                                                  Costs                                                                Taxes                                                                 Total
                    Amount                                                                                            1st conveyance                             2nd conveyance                        costs and taxes
                                       Notary         Registry        Processing         Total costs         VAT (7%) Stamp Duty (1%)           TOTAL             Capital Gains (7%)         New home                      Used home
                      60,000          390.66            153.26            207                  751             4200          600                 4800                     4,200                      5,551                     4,951
                      70,000          408.69            158.26            207                 774             4900           700                 5600                     4,900                     6,374                      5,674
                      80,000           420.71           170.28            207                 798              5600          800                 6400                     5,600                      7,198                    6,398
                      90,000           426.72             180.3           207                 814              6300          900                  7200                    6,300                     8,014                        7,114
                    100,000            438.74            187.32           207                 833              7000        1000                  8000                     7,000                     8,833                       7,833
                     110,000          448.76             197.33           207                 853               7700        1100                 8800                      7,700                    9,653                      8,553
                     120,000           456.77          204.34             207                868              8400          1200                 9600                    8,400                   10,468                       9,268
                     130,000           467.79           214.36            207                889               9100         1300               10400                      9,100                   11,289                      9,989
                    140,000            474.81            221.37           207                 903             9800         1400                  11200                   9,800                      12,103                   10,703
                    150,000           486.82             231.39           207                 925            10500         1500                 12000                   10,500                     12,925                     11,425
                    160,000           497.84            232.39            207                 937             11200        1600                 12800                    11,200                     13,737                     12,137
                     170,000          506.85              238.9           207                 953             11900         1700                13600                    11,900                   14,553                     12,853
                    180,000             513.87           240.4            207                 961            12600         1800                14400                    12,600                     15,361                     13,561
                    190,000              517.77         245.41            207                 970             13300        1900                 15200                    13,300                    16,170                     14,270
                    200,000           520.88            247.62            207                 976            14000         2000                16000                    14,000                    16,976                     14,976
                     210,000          528.89            252.43            207                988              14700         2100               16800                     14,700                    17,788                   15,688
                    220,000            532.93           253.65            207                994             15400         2200                 17600                   15,400                   18,594                      16,394
                    230,000            538.91           257.44            207              1,003              16100        2300                18400                     16,100                   19,403                       17,103
                    240,000            543.92           261.44            207               1,012            16800         2400                 19200                   16,800                     20,212                      17,812
                    250,000            547.93          264.45             207               1,019             17500        2500                20000                     17,500                    21,019                    18,519
                    260,000           550.93            270.46            207              1,028             18200         2600                20800                    18,200                    21,828                     19,228
                    270,000           558.94            274.05            207              1,040             18900         2700                 21600                   18,900                   22,640                     19,940
                    280,000           562.95            276.47            207              1,046             19600         2800                22400                    19,600                   23,446                     20,646
                    290,000           568.96            277.89            207              1,054             20300         2900                 23200                   20,300                   24,254                       21,354
                    300,000            573.97          282.48             207              1,063             21000         3000                24000                    21,000                   25,063                      22,063
                     310,000          578.98             287.07           207               1,073             21700         3100               24800                     21,700                   25,873                      22,773
                    320,000           583.99            291.66            207              1,083             22400         3200                25600                    22,400                   26,683                     23,483
                    330,000               589          296.25             207              1,092              23100        3300                26400                     23,100                    27,492                     24,192
                    340,000            594.01          300.84             207               1,102            23800         3400                 27200                   23,800                    28,302                    24,902
                    These figures are approximate and include VAT wherever it applies.                                      Example: If you would like to buy a home valuated at €200,000 and would like to take out a mortgage
                                                                                                                            for the amount of €160,000, the costs and taxes arising from the purchase will be as follows:
                    * This rate may vary from one autonomous community to another. (See Appendix V for the
                                                                                                                            For a new home:                                             For a used home:
                    applicable rate in your community.)
Appendix III




                                                                                                                            • Costs involved in the purchase: . . . .€16,976            • Costs involved in the purchase: . . . €14,976
                                                                                                                            • Costs involved in the mortgage: . . . .€3,740             • Costs involved in the mortgage: . . . . €3,740
                                                                                                                            • Total costs: . . . . . . . . . . . . . . . . . .€20,716   • Total costs: . . . . . . . . . . . . . . . . . . €8,716
               46
Premiums for insurance linked to the mortgage loan
The premium payments calculated below are annual and based on the following suppositions:
• Mortgage Protection Insurance: The policyholder is a 30-year-old male; the sum insured is the nominal amount of the loan.
• Caja Hogar Plus: The insurance covers only the structure for an amount equal to the nominal amount of the loan




                              Valuation value for the                                  Valuation value for the   Mortgage Protection
                                                         Caja Hogar Plus
                               purposes of insurance                                    purposes of insurance        Insurance

                                      30,000                  68.13                           30,000                   48.20

                                      40,000                 69.08                            40,000                   64.26

                                      50,000                  70.03                           50,000                   80.33

                                      60,000                  83.36                           60,000                   96.40

                                      90,000                 125.05                           90,000                  144.60

                                      120,000                166.73                          120,000                   192.79

                                     150,000                 208.41                          150,000                  240.99

                                     200,000                 277.88                          200,000                   321.32

                                     300,000                 416.82                          300,000                  481.98

                                     400,000                 555.76                          400,000                  642.65

                               Figures in euros.




                                                                                                                                            Appendix IV
                                                                                                                                       47
                  Taxes applicable to home purchases


                  Autonomous                 Tax               Tax rate                                                Exemptions or deductions                                                       Applicable rate
                  Community

                   Autonomous    Property Transfer Tax          7%        Purchases of primary residences by disabled individuals or large families and purchases of government-subsidised housing.        4%
                   Community     1st Conveyance (Stamp Duty)    1%        Purchases of government-subsidised housing.                                                                                       0%
                   of Valencia                                            Purchases of primary residences.                                                                                                 0.1 %
                                 Stamp Duty on Mortgage Deed    1%        Government-subsidised housing.                                                                                                    0%
                                                                          Purchases of primary residences by disabled individuals or large families.                                                       0.1 %

                   Andalusia     Property Transfer Tax          7%        Purchases of government-subsidised housing or primary residences,                                                               3.5 %
                                                                          buyers under the age of 35 and homes costing less than €130,000.
                                 1st Conveyance (Stamp Duty)    1%        Purchases of government-subsidised housing.                                                                                      0%
                                                                          Purchases of primary residences, buyers under the age of 35 and homes costing less than €130,000.                               0.3 %
                                 Stamp Duty on Mortgage Deed    1%        Government-subsidised housing.                                                                                                   0%
                                                                          Primary residences, buyers under the age of 35 and homes costing less than €130,000.                                            0.1 %

                   Aragon        Property Transfer Tax          7%        Purchases of primary residences by large families meeting the following requirements: if they already own                         3%
                                                                          a home, the new home's useful surface must be at least 10% larger than the old home's and household
                                                                          income for the purposes of personal income tax must be less than €35,000.
                                 1st Conveyance (Stamp Duty)    1%        Purchases of government-subsidised housing.                                                                                      0%
                                                                          Purchases of primary residences by large families meeting the following requirements: if they already own                        0.3 %
                                                                          a home, the new home's useful surface must be at least 10% larger than the old home's and household
                                                                          income for the purposes of personal income tax must be less than €35,000.
                                 Stamp Duty on Mortgage Deed    1%        Government-subsidised housing.                                                                                                   0%

                   Asturias      Property Transfer Tax          7%        Purchases of homes classified as public housing.                                                                                  3%
                                 1st Conveyance (Stamp Duty)    1%        Purchases of government-subsidised housing.                                                                                       0%
                                                                          Purchases of homes classified as public housing.                                                                                 0.3 %
                                 Stamp Duty on Mortgage Deed    1%        Government-subsidised housing.                                                                                                    0%
                                                                          Homes classified as public housing                                                                                               0.3 %

                   Balearic      Property Transfer Tax          7%        Purchases of government-subsidised housing.                                                                                       1%
                   Islands       1st Conveyance (Stamp Duty)     1%       Purchases of government-subsidised housing.                                                                                      0%
                                 Stamp Duty on Mortgage Deed     1%       Government-subsidised housing.                                                                                                    0%
                                                                          Purchases of primary residences by individuals under the age of 36, disabled individuals and large families.                     0.5 %
Appendix V




             48
Autonomous
                         Tax               Tax rate                                                        Exemptions or deductions                                                                     Applicable rate
Community

Canary       Property Transfer Tax         6.5 %      Purchases of primary residences classified as public housing or by individuals                                                                         6%
Islands                                               under the age of 35, disabled individuals or large families.
             1st Conveyance (Stamp Duty)   0.75 %     Purchases of government-subsidised housing.                                                                                                            0%
                                                      Purchases of primary residences.                                                                                                                      0.5 %
             Stamp Duty on Mortgage Deed   0.75 %     Government-subsidised housing.                                                                                                                         0%
                                                      Primary residences.                                                                                                                                   0.5 %
Cantabria    Property Transfer Tax          7%        Purchases of primary residences by individuals under the age of 30, disabled individuals and large families.                                          5%
                                                      Purchases of primary residences by individuals with certified disabilities of at least 65%.                                                           4%
             1st Conveyance (Stamp Duty)    1%        Purchases of government-subsidised housing.                                                                                                           0%
                                                      Purchases of primary residences by individuals under the age of 30, disabled individuals and large families                                          0.3 %
                                                      Purchases of primary residences by individuals with certified disabilities of at least 65%.                                                          0.15 %
             Stamp Duty on Mortgage Deed    1%        Government-subsidised housing.                                                                                                                        0%
Castile-La   Property Transfer Tax          7%        Purchases of first primary residences with values not in excess of €140,000.                                                                          6%
Mancha
             1st Conveyance (Stamp Duty)    1%        Purchases of government-subsidised housing.                                                                                                           0%
                                                      Purchases of first primary residences with values not in excess of €140,000.                                                                         0.5 %

             Stamp Duty on Mortgage Deed    1%        Government-subsidised housing.                                                                                                                        0%
                                                      First primary residences with values not in excess of €140,000.                                                                                      0.5 %
Castile-     Property Transfer Tax          7%        Purchases of subsidised housing.                                                                                                                       4%
Leon                                                  Purchases of primary residences by individuals under the age of 35, individuals with certified                                                         4%
                                                      disabilities of at least 65% and large families.
             1st Conveyance (Stamp Duty)    1%        Purchases of government-subsidised housing.                                                                                                            0%
                                                      Purchases of primary residences by individuals under the age of 35, individuals with certified disabilities of at least 65% and large families.       0.3 %
             Stamp Duty on Mortgage Deed    1%        Government-subsidised housing.                                                                                                                         0%
                                                      Purchases of primary residences by individuals under the age of 35, individuals with certified disabilities of at least 65% and large families.        0.3
Catalonia    Property Transfer Tax          7%        Purchases of primary residences by individuals under the age of 32, individuals with certified                                                         5%
                                                      at least 65% and large families, subject to conditions.
             1st Conveyance (Stamp Duty)    1%        Purchases of government-subsidised housing.                                                                                                            0%
                                                      Purchases of public housing.                                                                                                                          0.1 %
             Stamp Duty on Mortgage Deed    1%        Government-subsidised housing.                                                                                                                         0%




                                                                                                                                                                                                                               Appendix V
                                                      Public housing.                                                                                                                                       0.1 %

                                                                                                                                                                                                                          49
                  Autonomous
                                            Tax               Tax rate                                                  Exemptions or deductions                                                           Applicable rate
                  Community

                  Extremadura   Property Transfer Tax          7%        Government-subsidised housing.                                                                                                         3%
                                                                         Purchases of primary residences, subject to conditions.                                                                                6%
                                1st Conveyance (Stamp Duty)    1%        Purchases of government-subsidised housing.                                                                                            0%
                                                                         Purchases of primary residences, subject to conditions.                                                                               0.4 %
                                Stamp Duty on Mortgage Deed    1%        Government-subsidised housing.                                                                                                         0%
                                                                         Primary residences, subject to conditions.                                                                                            0.4 %
                  Galicia       Property Transfer Tax          7%
                                1st Conveyance (Stamp Duty)    1%        Purchases of government-subsidised housing.                                                                                            0%
                                                                         Purchases of primary residences.                                                                                                      0.75 %
                                Stamp Duty on Mortgage Deed    1%        Government-subsidised housing.                                                                                                         0%
                                                                         Primary residences.                                                                                                                   0.75 %
                  Madrid        Property Transfer Tax          7%        Purchases of homes in the Central Municipal District of Madrid for use as primary residences for at least                              4%
                                                                         4 years where the home is less than 60 years old, has an area of less than 90 square metres
                                                                         and has not received subsidies for reforms.
                                                                         Purchases of primary residences by large families.                                                                                     4%
                                1st Conveyance (Stamp Duty)    1%        Purchases of government-subsidised housing.                                                                                            0%
                                                                         Purchases of public housing homes with areas of up to 90 square metres.                                                               0.4 %
                                                                         Purchases of homes costing less than €120,000.                                                                                        0.4 %
                                Stamp Duty on Mortgage Deed    1%        Government-subsidised housing.                                                                                                         0%
                                                                         Homes costing less than €120,000.                                                                                                     0.4 %
                  Murcia        Property Transfer Tax          7%        Government-subsidised housing.                                                                                                         4%
                                                                         Purchases of primary residences, subject to conditions.                                                                                6%
                                1st Conveyance (Stamp Duty)   0.5 %      Purchases of government-subsidised housing.                                                                                            0%
                                                                         First purchases of homes included in the Region of Murcia's Youth Housing Plan                                                         0%
                                                                         for individuals under the age of 35.
                                Stamp Duty on Mortgage Deed   0.5 %      Government-subsidised housing.                                                                                                         0%
                                                                         Homes included under the Region of Murcia's Youth Housing Plan for individuals under the age of 35.                                   0.1 %
                  La Rioja      Property Transfer Tax          7%        Government-subsidised housing.
                                                                         Purchased of primary residences by individuals under the age of 36 and individuals with certified disabilities of at least 33%.         5%
                                                                         Purchases of primary residences by large families.                                                                                      5%
                                1st Conveyance (Stamp Duty)     1%       Purchases of government-subsidised housing.                                                                                             0%
                                                                         Purchases of primary residences by individuals under the age of 36, individuals with certified disabilities                            0.5 %
                                                                         of at least 33% and large families, as well as by taxpayers whose income for the purposes of personal
                                                                         income tax does not exceed 3.5 times the minimum inter-professional salary.
Appendix V




                                                                         Purchases of land to be used to build primary residences when the real value thereof is less than €150,253.                            0.4 %
                                Stamp Duty on Mortgage Deed     1%       Government-subsidised housing.                                                                                                         0%
             50
Autonomous
                         Tax               Tax rate                                            Exemptions or deductions                                            Applicable rate
Community

Álava        Property Transfer Tax          6%        Purchases of homes in general.                                                                                     4%
                                                      Purchases of homes with areas no greater than 120 square metres, subject to conditions.                           2.5 %
             1st Conveyance (Stamp Duty)   0.5 %      Purchases of government-subsidised housing.                                                                       0%
             Stamp Duty on Mortgage Deed   0.5 %      Government-subsidised housing.                                                                                    0%
Guipúzcoa    Property Transfer Tax          6%        Purchases of primary residences with areas no greater than 120 square metres and whose real value does not         3%
                                                      exceed €200,000, subject to conditions.
             1st Conveyance (Stamp Duty)   0.5 %      Purchases of government-subsidised housing.                                                                       0%
             Stamp Duty on Mortgage Deed   0.5 %      Government-subsidised housing.                                                                                    0%
Vizcaya      Property Transfer Tax          6%
             1st Conveyance (Stamp Duty)   0.5 %      Purchases of government-subsidised housing.                                                                       0%
             Stamp Duty on Mortgage Deed   0.5 %      Government-subsidised housing.                                                                                    0%
Navarre      Property Transfer Tax          6%        Purchases of primary residences by family units with more than 3 members with no other home                       5%
                                                      in the municipality. Cap: €180,304. (Amounts in excess of this figure will be taxed at 6%.)
             1st Conveyance (Stamp Duty)   0.5 %      Purchases of government-subsidised housing.                                                                       0%
             Stamp Duty on Mortgage Deed   0.5 %      Government-subsidised housing.                                                                                    0%




                                                                                                                                                                                          Appendix V
                                                                                                                                                                                     51
                If it’s not good for you, it’s not good for us
CIVF 18/10/05




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