What is compensation for interest rate risk?

Law 41/2007 of December 7, on Regulation of the Mortgage Market, contemplates the collection of compensation for interest rate risk in the cases of subrogation cancellation and non-subrogation, total or partial, of mortgage loans or credits, which occur within a period of interest rate revision whose agreed duration is greater than 12 months.

This compensation, which affects loans and mortgages formalized after December 9, 2007, provided that the mortgage (guarantee) falls on a dwelling and the borrower (debtor) is a natural person or a small company for tax purposes. of companies, tries to compensate the bank when the loan or credit is canceled in advance and the cancellation generates a loss of capital to the entity. In any case, the compensation may not exceed the amount of the loss generated.

In the writing of mortgage loan or credit, it must be contemplated which of the modalities that are indicated next is the one applied for the calculation of the compensation by the risk of interest rate:

1. A fixed percentage that must be applied to the outstanding capital at the time of cancellation.

2. The total or partial loss that the cancellation generates for the entity, calculated according to the difference between the outstanding capital at the time of the early cancellation and the market value of the canceled loan or credit.

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As indicated in Law 41/2007 of December 7, for loans or mortgage loans referred to a fixed or variable interest rate whose review period exceeds twelve months, there is no commission for full or partial early repayment- Touch the green $. However, it is possible to agree compensation for withdrawal and/or compensation for interest rate risk.

In relation to the compensation for withdrawal, which establishes a compensation for the loss suffered by a banking entity due to the unilateral withdrawal of the contract , it can be agreed both on loans or mortgage loans at a variable interest rate whose review period is equal to or less than 12 months, as well as for loans or mortgage loans at a fixed or variable interest rate whose review period exceeds twelve months, provided that they have been formalized after December 9, 2007, and the conditions established in the Law 41/2007.

In addition to this compensation, Law 41/2007 of December 7 establishes compensation for the loss suffered by a banking entity due to the unilateral withdrawal of the contract (compensation for withdrawal). In it, the maximum amounts that the bank can receive for this concept are indicated:

– The maximum compensation for amortization within the first 5 years of a life of the mortgage will be 0.50% of the amortized capital.

– The maximum compensation for amortization after the five years of the life of the mortgage will be 0.25% of the amortized capital.

Both compensations for withdrawal and interest rate risk type should be determined in the contract and in the mortgage offer provided by the bank, so it is advisable to be informed in detail of all the conditions of the loan or consult the bank in case of having any doubt.