Taking out a mortgage and the best of times can be a daunting and confusing process especially with the amount of small print and paperwork that is involved. The Catalan Government have responded by preparing a modification to the law of the Consumer Code of Catalonia, which will force financial institutions to facilitate a comprehensive and comprehensible report with conditions and characteristics of the loan, before signing.

Even though the bill has not been passed by the Consell Executiu yet, it is a step in the right direction in creating a transparent line between the lender and client and hopefully this new measure will stem the increase in home foreclosures that Spain has experienced since the crisis began.

With the decrease in mortgages being granted because of financial institutions tightening up on their requirements, now they will have to produce, a non binding offer, which details the mortgage and if the client wants to go to the next step, “A Sensitivity Study” will be conducted before a loan may be granted.

The study will also include “notifications” of the lower or higher amount of the monthly fee for the intended loan period, which will be calculated based on the past fluctuations that have occurred over the last 20 years.

Financial institutions must also include in the study a “risk warning” which would result in the foreclosure of the clients home if the contract is breached under the terms of agreement. At the same time, the client’s solvency is to be “evaluated” and if this is not done, then the mortgage must not be granted.

The bill says that "lenders" must act "honestly, professionally and in the best interest of consumers when granting loans or mortgages," or when they pay "brokerage services or advice and, where appropriate, ancillary services ".

As for the foreclosure of the residence, the Catalan Government urges all parties concerned to come to an agreement whereby the client can keep the property while restructuring the debt with the financial institutions.

The bill states that the consumer has a 10 day “thinking period” before signing a detailed mortgage agreement. In the agreement, the total price to be paid by the consumer, a breakdown of all fees, an “example” on expenditure data from taxes, fees and other mortgage derivatives, as well as detailing costs processing, valuation of the estate or mortgage cancellation fee or expenses in case of default must be clearly shown. Institutions should also warn of "contract clauses that create more risk," or those that can alter the price of the loan, as the terms of "floor and ceiling."

The bill provides the consumer the right to choose the notary, as well as making it mandatory for the financial institutions to communicate any information or details of the mortgage that may be deemed as "misleading" or generating "false hope".

The bill also requires notaries to inform the consumer of the rights and an obligation associated with a mortgage, plus recommends the client takes economic advice and at least "three days" before the signing.

It is essential that consumers seek professional help when it comes to buying property in Barcelona in order to avoid possible pitfalls. Choosing a reputable real estate agency that has local knowledge of the Barcelona property market will ensure the consumer will buy with confidence.