Following the 2008 financial crisis, the role of mortgage brokers in Spain became particularly important. They are professionals who act as mediators between the bank and the individual who wants to take out a mortgage. Their activity is set out in the law and they must inform the user of the costs that their services entail, as well as draw up a contract. There are several types on the market and they must all meet the same conditions and requirements. This article reviews the key aspects:
What is a mortgage broker?
Mortgage brokers, also known as real estate credit brokers, are agents who act as mediators between the bank and the individual who wants to take out a mortgage.
Who can be a real estate credit broker or mortgage broker?
Not everyone can be a credit broker or mortgage broker. In fact, anyone who works as a mortgage broker is obliged to do so under the parameters set out in Spanish Law 5/2019, of 15 March.
This law currently regulates the contracting of mortgage loans and credits in Spain, including everything related to mortgage brokers. More specifically, the activity of mortgage advice is set out in Article 19, "Advisory activity in real estate loans". This article defines who may act as a mortgage broker and under what conditions they must do so.
Types of mortgage broker in Spain
According to Spanish Law 5/2019, of 15 March, there are up to three types of agents that can act as mortgage brokers:
- Lenders: these are the banks or banking institutions themselves.
- Real estate credit brokers: they are independent agents who are in charge of finding the best mortgage option for their clients.
- Appointed representatives: These representatives may only be appointed by one of the two previous figures (lenders or real estate credit brokers).
Mortgage broker obligations
As a result of the new Spanish Law 5/2019, of 15 March, mortgage brokers' activity has been regulated in a more demanding way to guarantee the maximum security for borrowers when it comes to taking advice on mortgage matters.
Some of the obligations established by this law are the following:
- The mortgage broker must inform the borrower in advance, expressly and in writing, whether they are able to provide advice on a specific transaction.
- Before providing the mortgage advisory service (or the conclusion of a contract), the mortgage broker must provide the borrower with information on the range of products to be considered. In other words, the borrower should know whether the advice is given on all available products or only on specific ones (e.g. those offered by a particular bank).
- They must also inform the borrower of the costs that will be charged for the advisory services.
- When the advisory transaction is carried out, the mortgage broker in question must collect information on their client's profile to get to know them better so they can offer products that really suit their particular profile.
- Mortgage brokers are obliged to provide their clients with a hard copy (or another durable medium) of the information regarding the advice they have given.
- When the advisory service is provided, the content, scope and conditions of the advisory service must be determined in advance and contractually.
Alternatives to mortgage brokers in Spain
In addition to mortgage brokers, there are other alternatives that will allow us to get to know the mortgage market quite well and which product is best suited to our personal and financial situation.
In this sense, the idealista/hipotecas comparison tool allows you to find the loan that best suits your characteristics and needs. It is a very easy-to-use option, as you only have to enter a few details to define your customer profile and the search engine takes care of selecting the mortgage that best suits you. What's more, it is a free tool, so it is the best option when you start looking for ways to finance your new home.
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