Frequently Asked Questions about Mortgages

An ABANCA mortgage is mainly used to finance the purchase of a property, allowing you to pay for your home in installments instead of having to pay the entire amount upfront. Although its most common use is for acquiring your main residence, you can also use it to buy a second home, a commercial property, or even to carry out a major renovation with a large budget. Since it is a loan with real collateral (the property itself), it allows you to access larger amounts of money and longer repayment terms (up to 30 years) than any other type of loan.

Although both are forms of financing, their legal and financial structures address very different needs. The main difference is not only the purpose of the money, but also the collateral that backs the operation. 1. The Nature of the Collateral - In a Personal Loan: The collateral is personal and unlimited. You are liable for repayment with all your present and future assets (salary, savings, vehicles, etc.). There is no specific asset tied to the loan. - In a Mortgage: There is real collateral. In addition to your personal liability, the property is registered in the Land Registry as direct collateral. This means that, in the event of prolonged non-payment, the bank has a preferential right over the property to recover the capital.

1. Amount and Term - Personal Loan: Designed for specific needs (a car, a small renovation). The amounts are smaller and the term rarely exceeds 8 or 10 years. - Mortgage: Intended for home purchase. It allows access to much larger amounts with repayment terms of up to 30 years, making the monthly payment more affordable.

2. The Interest Rate - Lower Interest on Mortgages: Since there is a property as physical collateral (an asset with value), the risk for the lender is lower. Therefore, mortgage interest rates are significantly lower than those of personal loans.

Understanding these terms is key to comparing how much your loan really costs you:

NIR or Nominal Interest Rate: This is the percentage applied to the outstanding principal to calculate the interest you pay each month.

APR or Annual Percentage Rate: This is the legal and useful reference indicator. The APR represents the effective annual cost of your mortgage because its formula includes: - The NIR. - Bank fees (such as the opening fee). - Expenses that the client is legally required to pay (such as the appraisal). - The cost of bundled products (life or home insurance) required to obtain discounts.

Being the holder of an ABANCA mortgage makes you the person who is legally responsible for the debt and for repaying the borrowed money. This entails a series of important legal obligations and commitments: - Universal liability: In addition to the property itself, which serves as collateral, you are liable for the repayment of the loan with all your assets, both those you currently own and any you may acquire in the future. - Property maintenance: As the holder, you have the legal obligation to keep the property in good condition and not to take actions that would significantly reduce its market value. - Payment obligation: You commit to complying with the payment schedule (principal plus interest) agreed upon in the public deed before a notary. - Registry charges: The property will be listed in the Land Registry with a financial charge in favor of the institution until the loan is fully repaid.

At ABANCA we offer a range designed for every profile and type of home. These are our main options: - Mari Carmen Fixed-Rate Mortgage: The payment never changes (unless the loan has discounts for contracting products and/or services). It's ideal if you're looking for total security against Euribor increases. - Mari Carmen Variable-Rate Mortgage: You can benefit from decreases in the index, which means a reduction in the total amount you'll pay in the long term, but you'll need to be prepared for possible increases as well. - Mixed Mortgage: Combines a fixed rate for the first 5 years and a variable rate for the rest. A balance between initial stability and flexibility. - Young Mortgage: Designed for those under 45. Makes it easier to buy even with little savings, allowing you to finance up to 100% through public guarantees. Conditions vary depending on the autonomous community. - Efficient Home Mortgage: Offers preferential conditions (0.10% discount during the first year) if you buy a home with an A or B energy certificate.

The main difference lies in how market risk is assumed. - Mari Carmen Fixed-Rate Mortgage: Your payment is fixed. This is a good option if you want to know exactly how much you will pay from start to finish. - Mari Carmen Variable-Rate Mortgage: Your payment is reviewed every year according to the 12-month Euribor. You can benefit from possible decreases in the index, which would mean a reduction in your payment, but you need to have enough financial solvency to handle an increase in your payment if interest rates go up. This is the right choice if you value payment flexibility and have the financial capacity to manage possible Euribor fluctuations during your mortgage term. - ABANCA Mixed Mortgage: You have a fixed rate for the first 5 years and then it switches to a variable rate. This is a good option if you want stability while you settle into your home and flexibility for the future.

Yes, you can modify the terms of your loan after it has been signed. In the banking world, this process is called novation (changing the conditions with the same institution), or creditor subrogation (if you decide to transfer your mortgage from another bank).

The most common ways to change the interest rate are:

• Switching from variable to fixed: Very useful if the Euribor rises and you prefer the security of a fixed payment.
• Improving the spread: By taking out bundled products (such as direct deposit of your salary or insurance), the interest rate on your mortgage is reduced, allowing you to pay less each month.
• Modifying the term: Sometimes, the change in interest rate is accompanied by a modification in the loan term (extension or reduction) to find the ideal balance in your monthly payment.

At ABANCA, we are committed to a clear and simplified cost structure. We want you to know exactly which items could generate a charge and under what legal circumstances:

1. Opening fee: €0 For ABANCA Mortgages, this fee does not exist. You will not have to pay any amount for the study, granting, or processing of your loan.

2. Early repayment fee (Reimbursement) This applies if you decide to repay part or all of the outstanding principal before the agreed date. - Legal Limits: The law sets maximums that vary depending on whether your mortgage is fixed or variable. - Financial Loss: This fee can only be applied if the repayment results in a financial loss for the bank (for example, if the money is repaid at a time when market rates are lower than your mortgage rate). - Your right: You will always see the maximum applicable percentage in your ESIS before signing.

3. Fee for novation (Modification of terms) If in the future we agree to change the term or interest rate of your contract, an administrative fee may be applied for processing the change. - Transparency: We will inform you of the exact cost before proceeding with the modification so you can assess its profitability.

4. Fee for claiming overdue positions This charge is generated only if there is a delay in the payment of an installment. - Purpose: It covers the actual costs the bank incurs when carrying out the necessary actions to claim the unpaid debt (calls, communications, etc.). - Important note: To avoid this cost, we recommend always having sufficient funds in the account from which payments are debited on the due date of your bill.

To make your financial planning simple, at ABANCA we use the French amortization system. This method allows your monthly payment to always remain the same, as long as the interest rate does not change.

The mathematical formula to calculate this fixed payment (m) is: m = (C*i)/1-(1+i)^(-n)

Where: - C: The amount of the mortgage loan (the principal). - i: The monthly interest rate (your annual nominal interest rate divided by 12). - n: The total number of months your mortgage lasts.

If you choose a Mari Carmen Variable Mortgage or the variable tranche of our Mixed Mortgage, you should be aware that the cost of your loan is linked to the evolution of the interbank market. These are the real implications of its fluctuations: 1. The risk of rising payments Euribor is volatile. If the index rises, your monthly payment will automatically increase on the date of your annual or semi-annual review. - Direct impact: This increase reduces your available monthly income, which may affect your ability to save or meet other financial commitments.

1. Increase in the total cost of the loan Euribor doesn't just affect your next month's bill. A prolonged upward trend over several years means that, by the end of the mortgage term, you will have paid a total amount of interest significantly higher than initially expected.

2. Financial uncertainty Unlike a fixed rate, a variable rate does not allow for exact long-term planning. You should have a safety cushion to absorb possible periods of high rates without compromising your financial stability.

Before making a decision, we recommend you do a forecasting exercise: What would happen if your payment increased by €150 or €200 per month? If this increase would put your well-being or the payment of your basic bills at risk, your profile is better suited to the security and predictability of the Mari Carmen Fixed Mortgage. At ABANCA, we prefer you to choose the option that lets you sleep soundly today and twenty years from now.

1. Expenses paid by ABANCA: - Notary: The notary's fees for the loan deed. - Land Registry: The registration of the mortgage. - Administrative Agency: The administrative paperwork to register the transaction.

2.Expenses you pay: - Appraisal: This is necessary for an independent entity to value the property and determine the loan limit. This is the only management fee you will have to pay yourself. - Taxes on the purchase: VAT if it is a new build or ITP if it is a resale and from the Autonomous Community. - Remember that at ABANCA our opening fee is €0, so you won't have that extra expense at the start.

In order for us to analyze your financial health and give you an answer about your Mortgage as soon as possible, we will need you to provide us with these documents (yours and those of any other holders, if applicable):

Personal and tax documentation - Valid DNI or NIE. - Updated employment history (you can request it from Social Security). - Last year's Income Tax Return (IRPF). - Bank statements from the last few months of your accounts (if you are not yet an ABANCA customer). - Receipts for other loans if you have any other active credit or installment payments.

Depending on your employment situation - If you are an employee: Your last 3 payslips and your employment contract. - If you are self-employed: Quarterly VAT and IRPF returns, the latest corporate tax return (if applicable), and the annual VAT summary.

About the property you are going to buy - Simple Note from the Land Registry (must be no more than 3 months old). - Deposit or reservation contract, if you have already signed it. - Energy efficiency certificate of the property.

You can complete almost the entire process without setting foot in an office, saving time and physical paperwork. These are the steps to apply for our ABANCA Mortgage: 1. Personalized simulation: Go to our website, enter the value of the house and your income, and in one minute you'll have a tailored offer. 2. Application and document submission: From your private area or the app, upload photos or PDFs of your payslip, ID, and other documents. No folders needed! 3. Personal manager at a click: Even though the process is online, at ABANCA you won't be alone. You'll have an expert manager assigned to answer your questions by phone or chat. 4. Appraisal and verification: We coordinate the appraiser's visit and make sure everything is legally in order. 5. Signing before a notary: This is the only step that, by law, requires your physical presence to ensure you understand everything you are signing. But we'll schedule the appointment at the location most convenient for you!

From the moment you accept our offer until you walk through the door of your new home, the process usually takes between 3 and 6 weeks. This time is divided into three key phases: - Risk assessment and analysis (3-7 days): Once you upload all your documentation to the ABANCA platform, our team analyzes your repayment capacity and solvency. If everything is in order, we will give you the "risk approval". - Appraisal and registry verification (7-10 days): An independent appraiser visits the property to certify its value. At the same time, we check the registry to ensure the house has no hidden encumbrances. - Notarial management and reflection period (10-14 days): By law (Law 5/2019, of March 15, regulating real estate credit contracts), once we send you the final terms (FEIN), you must have a 10 calendar day reflection period (14 in Catalonia) before you can sign the mortgage at the notary. This is a useful time for you to read everything carefully.

1. Payment capacity (Debt-to-income ratio) This is the most important factor. Ideally, the payment for your future mortgage (added to any other loans you may have, such as a car loan) should not exceed 30% or 35% of your net monthly income.

Example: If you earn €2,000 net per month, your ABANCA mortgage payment should be around €600 - €700.

1. Job stability We need to know that your income is recurring and consistent over time. We value positively:

• Being an employee with a permanent contract and a minimum length of service (generally more than one year).
• Being a civil servant.
• If you are self-employed, presenting a solid track record of at least two years with stable profits.

1. Initial savings Normally, mortgages cover up to 80% of the appraised or purchase value (whichever is lower). This means you should provide the remaining 20% as a down payment, plus an additional 10% to cover taxes (ITP/VAT) and administrative costs.

If you are under 45 years old, ask about our ABANCA Young Mortgage, which can offer up to 100% financing with public guarantees.

There is a fundamental difference between what the law requires and what the bank can offer you to improve your conditions. Clarity here is your greatest guarantee of freedom.

The Only Mandatory Insurance: Property Damage Insurance According to Spanish regulations, to formalize a mortgage it is mandatory to have property damage insurance. - It protects the value of the collateral (the home) against risks such as fire or natural elements. - It must cover, at a minimum, the structure of the house. - Legally, the policy must include a clause assigning rights in favor of the financial institution.

Life Insurance: Protection, Not an Obligation It is important to clarify that Life Insurance is not legally required to take out a mortgage. It is a family security tool that guarantees the cancellation of the debt in the event of the holders' death or disability, preventing the financial burden from falling on the heirs. You have the right to take out these insurances with the company of your choice. If you decide to bring a policy from another provider, ABANCA will accept it as long as it meets the legal and coverage requirements, without this resulting in a worsening of your loan analysis conditions. Although you are free to choose, if you take out your home or life insurance with us, we will apply a discount to your mortgage interest rate. This allows your monthly payment to be lower than if you take out the insurance externally.

Payment protection insurance is a voluntary policy designed to ensure the stability of your mortgage in the face of unforeseen situations that directly affect your ability to generate income. Its goal is to prevent family indebtedness during times of economic vulnerability.

What contingencies does it mainly cover? This insurance is activated in two critical situations, adapting to your employment profile at the time of contracting: - Involuntary unemployment: Intended for salaried employees with a permanent contract. If you are dismissed, the policy covers your monthly payments. - Temporary incapacity (Medical leave): Aimed at self-employed workers, civil servants, or temporary employees. If you suffer an illness or accident that temporarily prevents you from working, the insurance covers your mortgage payments.

Taking out this optional insurance with ABANCA can provide you with a discount on your loan interest rate, allowing you to save on your monthly payment while protecting your future.

You can review all the details of your loan in real time and without paperwork through our digital channels: - ABANCA App: Go to the "Loans" section, select your mortgage, and you will see the outstanding principal, your next payment, and the current interest rate. - Online Banking: From our website, access your global position to download the amortization schedule. This document allows you to project the evolution of your debt month by month. - Digital Mailbox: Check your communications to see interest settlements and review notifications if your ABANCA mortgage is variable or mixed.

If you have any technical questions about statements or conditions, your personal ABANCA manager will explain everything simply with just a call or a message from the app.

The process of transferring your mortgage to another bank is called creditor subrogation. At ABANCA, we help you complete this process in four steps:

1. Review and offer: We analyze your current mortgage and present you with an ABANCA offer with better terms (lower interest rate or switching from variable to fixed rate).
2. Notification: We inform your current bank that you want to switch to us. They have 15 calendar days to issue the certificate of outstanding balance and, if they wish, to match or improve our offer.
3. Debt certification: If your bank does not improve the conditions, we request the exact amount needed to pay off the debt and carry out the transfer.
4. Signing at the notary: We formalize the transfer of the loan by signing the subrogation deed before a notary, after completing the mandatory and free Transparency Act. From that moment on, you will pay your installments to ABANCA under the new agreed terms.

When you bring your mortgage to ABANCA, we cover the notary, registry, and administrative fees. You would only need to pay for the new appraisal.

Repaying capital early is a personal decision, but there are certain economic scenarios where this option is especially efficient for improving your household finances: - During the first years of the loan: Due to the French amortization system, the first mortgage payments carry a higher percentage of interest. If you have extra capital and decide to make an early repayment at the beginning of the loan term, the total interest savings will be significantly greater than if you make the same contribution in the later years. - In high interest rate environments: If the interest rate you are paying on your mortgage is higher than the net return you would get from a risk-free savings or investment product (such as a bank deposit), repaying debt is usually the most efficient option to optimize your capital, as you are eliminating a guaranteed financial cost. - If you have a variable-rate mortgage and the Euribor rises: If you have a variable or mixed-rate mortgage and the market is experiencing an upward trend, repaying capital will help you mitigate the impact of index revisions.