Applying for a mortgage loan comes with a whole new set of terminology that you should be familiar with. One of the documents you will need before your mortgage is the FEIN.
This document provides detailed information about a mortgage product to potential borrowers. European Economic Area (EEE). This is a standardised format designed to make it easier for borrowers to compare different mortgage products from different countries and lenders. How long is the period between FEIN and signing the mortgage?
What is the FEIN of a mortgage?
FEIN provides clarity and transparency when it comes to mortgages. It is the ideal way for users to compare the various offers available from financial institutions because it includes all the small print of that mortgage loan.
The document sets out the characteristics and conditions of the mortgage.
What does FEIN mean?
FEIN is the acronym for European Standardised Information Sheet. In it, banks must formally explain the terms and conditions of the mortgage they are offering the customer, and it must be provided prior to the final signing of the loan agreement.
The interest rate, fees, management costs, and mortgage repayment period are some of the characteristics that must be clearly stated in the FEIN.
How long does it take between the FEIN and the signing of the mortgage?
Between the signing of the FEIN and the mortgage before a notary, there must be a minimum of 14 calendar days in Catalonia and 10 calendar days in the rest of Spain. During this period, the prospective mortgagor should carefully analyse the offer in order to make an informed decision before signing the final loan agreement.
In addition, you must also go to a notary to receive advice and sign a preliminary agreement where the notary will examine the terms of the loan.
Once the preliminary deed has been signed before a notary, at least 24 hours must pass before the final deed can be signed.
In other words, the time between the FEIN and the signing of the mortgage cannot be less than 11 or 15 calendar days in any case.
Expiry date of the FEIN
The FEIN expires 10 calendar days after the offer is received (14 days in Catalonia).
This means that its validity, the time between signing the FEIN and the final signing of the mortgage, will be the period during which the bank is obliged to maintain the conditions offered. Signing the sale after that date means renegotiating all the conditions of the mortgage.
Duration and period of validity
There is no set time limit for how long it takes the bank to process the FEIN from the time the user applies for the mortgage until the bank issues it. It depends on each financial institution.
Extension expired
Although it is possible to request an extension of an expired FEIN in order to extend the validity of the agreed terms, the bank is not obliged to accept it and may restart the review process with the updated terms.
Non-binding mortgage offer
When the bank offers a FEIN, it is providing an official and binding offer. In other words, if the customer signs it, the bank is obliged to maintain the agreed conditions.
The Fein is signed before a notary public.
Once the FEIN has been signed by the bank, it will send all the documentation electronically to the notary chosen by the interested party. The notary will verify that the document complies with all the requirements of the law.
When is the FEIN signed?
The FEIN must be signed 10 calendar days before the mortgage is signed (14 days in Catalonia). Once the bank has analysed the applicant's profile, taking into account aspects such as income level, age, savings and employment status to assess creditworthiness, it offers a loan with personalised and binding terms and conditions.
What happens after signing?
After signing the FEIN, the interested party is guaranteed that the conditions will remain unchanged for 10 days (14 in Catalonia) if they sign their mortgage within that period. This means that the price will not be affected by interest rate rises during that period.
As it is not a binding document for the user, they are not obliged to sign the mortgage. They can therefore request different FEINs from different banks.
Example of FEIN mortgage
The FEIN includes the main features of the mortgage, such as the amount, term, instalment and repayment schedule. It also details the duration of the loan and the interest that the customer will have to repay, as well as information on bonuses, opening and cancellation fees.
The FEIN must include, in general, the characteristics and conditions of the mortgage:
- The lender details, as well as the commissions it receives.
- The currency: the currency in which the bank is granting the loan.
- The amount mortgage and the deadline return.
- Interest rate that applies. Whether the rate is variable, fixed or mixed. In the case of a variable-rate mortgage, the reference index (which is usually the Euribor).
- The total amount to be disbursed on the mortgage by the owner, including interest. In the case of variable and mixed mortgages, this is an approximate calculation.
- The property value and loan-to-value ratio, that is, the percentage of the mortgage loan in relation to that value.
- Warranty: Assets that serve as collateral for payment. In the case of mortgages, this is usually the property you are purchasing.
- The frequency of payments and the number of instalments which will have the mortgage along with its respective amount (if they will vary in the future, this is also noted).
- The table or amortisation table and how much capital will be amortised with each instalment.
- The commission, if any, for making an early repayment.
- The consequences for the holder of fail to pay of the fees.
- The borrower's rights, such as the right to withdraw and the right to portability.
FEIN and valuation
The mortgage appraisal An official valuation is a necessary requirement for determining the value of the property and is essential for establishing the amount that the bank will lend. There is no fixed deadline for receiving the FEIN after obtaining the valuation, as this will depend on the bank with which you decide to negotiate the mortgage loan.
In general, an appraisal report will be prepared within approximately 5 working days after the appraiser's visit, and it is valid for 6 months. Once the appraisal report is available, you can proceed to discuss the loan terms with various banks.
Conclusions
The European Standardised Information Sheet (ESIS) for mortgages brings clarity and transparency to the loan application process and is beneficial to all parties involved.
The FEIN document allows applicants to compare different loan options in detail and makes it easier to choose the best option based on their financial circumstances.
For its part, it helps the bank ensure that applicants understand the terms of the loan agreement, an effective way to reduce the risk of defaults and improve loan management.
In summary, FEIN is necessary to ensure a competitive and transparent environment in the mortgage market.