Spain will establish a law by which the costs in early cancellation of mortgage and real estate loans will be reduced, even if said loans were signed before the law appears. The redaction on this commission will take the form of caps that will be establish according to the years that the loan has remained active. Currently the Spanish law establishes a cap for this type of commissions of 0,50% during the first five years, and 0,25% after the fifth year. The new law will set a cap of 0,25% for the first five years (or the amount that entity could suffer due to the cancellation), although the cap for the first three years will still be 0,5%. It will also establish total exemption in terms of early cancellations from the sixth year onwards. Therefore, taking into account the current legislation and the new law that will appear, the commission rates for early cancellation in Spain will be the following in the future:

• – 0,50% the first three years of the loan
• – 0,25% the fourth, fifth and sixth years
• – 0,00% from the sixth year onwards

In any case, if the client negotiates better conditions with his/her bank, the latter will prevail. These changes mean an advance regarding the European Guidelines which application due date was last 21^st March 2016. Other interesting changes that this law will bring about are the right to change the reference currency of the loan, regulations regarding advisory functions, and banning cross-selling products that condition mortgage loan (although banks will still be able to offer products which can lower the interest rates paid in their mortgage when they are obtained). Lastly, there will also be a commission cap for mortgage salesmen, and they will be required to have specific formation from 2019 onwards. All these changes may mean that client’s welfare is gaining more importance in this type of transactions.