New Mortgage Law, points of interest

As many people will know, on 2019 June the 16th, became effective the new Mortgage Law (law 5/2019)1, which mainly regulates the mortgage contracts and provide much more security to the individuals before the banks and lending institutions.

Going thorugh the law we find some very interesting articles which I believe can be of the interest of many people, like art. 20.

Art. 20 from the new mortage law

In real estate loan contracts that are denominated in foreign currency the borrower will have the right to convert the loan to an alternative currency in accordance with the provisions of this article. This alternative currency will be:

a) the currency in which the borrower receives most of the income or has the majority of his assets with which he has to repay the loan, as indicated at the time was done the most recent solvency assessment related to the loan contract, or

b) the currency of the State in which the borrower was a resident on the date of conclusion of the loan contract or is a resident at the time the conversion is requested.

The exchange rate used in the conversion will be the exchange rate  on the date on which the conversion is requested, unless otherwise contractually established. For these purposes, and unless the loan agreement provides otherwise, the exchange rate used for the conversion will be the one published by the European Central Bank on the date on which the conversion is requested.

This means even you initially contract your mortgage in Spain and you do it in Euros, if you are resident or you receive the majority of your income in a different currency, you can decide on a determinate moment to convert the mortgage to your currency. This is really useful, as it helps you to avoid having to exchange funds every month and as well and even more important, not being subject to the possible exchange rate fluctuations of the Euro against your currency.

1) Mortgage Law (law 5/2019)

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