ESTATE AGENT
(EA) A qualified professional who acts as intermediary in a property transaction and who obtains as a return for the service rendered a percentage of the price (fee).

ACCEPTANCE
This is the fact of agreeing a contract and the terms therein regarding a mortgage loan, offered by a banking entity.

UPDATE
A financial calculation method used to observe a movements of amounts at different times through current monetary units.

SALES agreement
On many occasions, this document, which contains the agreement reached between the seller and the purchaser, is signed prior to the signing of the deed.

AMORTISATION
Total or partial payment for paying back the loan capital.

Local capital gainS tax
A former name referring to the tax on the increase in land value.

deposit
The amount of money which represents a part of the total price of the property and which is given to the seller as a guarantee of the fact that the purchaser will conclude the transaction within an established period. If after this term the purchaser does not conclude the transaction, he loses the said sum. However, if the seller does not abide by the terms of the agreement and sells the property to a different person, he must repay twice the amount to the person who provided the deposit. If the transaction is carried out, the deposit is taken as payment on account.

GUARANTOR
The person who guarantees a loan and assumes the responsibilities of payment in the event that the borrower does not repay the debt or the interest thereof.

calculation base
The number of days used in the formula for calculating interests. According to a calendar year, this would be 36,500, and according to a business year, 36,000, as interests are higher.

EARLY REPAYMENT
This is when the amounts agreed as a loan amortisation are paid early. This can be both total or partial. A percentage of the amount advanced is normally charged to compensate for the financial detriment that implies a change in the schedule of amortisation agreed. Regarding varied interest rate loans, the maximum legal percentage is 1%.

registry cancellation
Elimination from the Land Registry of an entry of encumbrances over the property.

GUARANTEED AMOUNTS
Total amount of the debt covering the mortgage not only includes the amount lent, but also the interests and any possible court costs due to cases of non-payment. This is the basis used for calculating the notary's fees for the mortgage deed.

Capital
Basic amount of the mortgage loan. Total amount of the outstanding debt, without interests.

DEFICIENCY
The period in a loan during which only interests are paid and there is no capital amortisation.

ENCUMBRANCES
Restrictions on the ownership of a property. They are recorded on a public record in the Land Registry. Some examples are: mortgages, usufructs, actions for cancellation, etc.

CertificaTE OF REGISTRY
Legal document issued by the Land Registry, whereby the existence is stated of encumbrances pending over the property.

CIRBE
Risk Information Office of the Bank of Spain (Central de Información de Riesgos del Banco de España), the office to which the financial entities apply, authorised by their clients, for consulting the risk level and the condition of defaulter of the parties concerned in taking out a mortgage loan.

Commission
Percentages on the total amount of the loan that the financial entity can charge the borrower, for various items, as long as they are contained in the loan deed.

co-owner
Joint owner.

contingencies
The conditions that must be borne in mind as they can greatly condition the validity of the mortgage agreement.

urban tax
This is a yearly local tax paid by the owner of a property or residence, whether urban or rural. It is also known as property tax.

mortgage credit
This is an agreement whereby a financial entity opens a credit line from which the holder can take an amount according to their need (this is the main difference with a loan, where the initial amount is fixed and there is only a handover of money by the entity). The holder undertakes to repay the amount received in the terms and conditions agreed between the parties. In the event of breach of contract, the entity has the mortgage guarantee and it will thus become the owner of the asset. The credit is legalised through a deed to be entered in the Land Registry.

REPAYMENT
Each one of the periodic payments for repaying a loan, consisting of part capital and part interests.

FIXED REPAYMENT
The amount to pay is always the same, as long as the interest rate does not change.

INCREASING REPAYMENT
A percentage to pay is established, by which the repayment increases periodically. At the first stage of the amortisation of the loan, the amount to pay is lower, but at the end of the amortisation period interests are higher compared to the other systems of amortisation.

FIXED Capital PAYMENT
See decreasing repayment.

participation quota
Percentage applied to each property or premises in a building that implies the participation in expenses generated arising in equal parts.

decreasing REPAYMENT
The capital amortised is always the same, the interests are constantly reduced, and thus, the repayment to be made.

Differential
The percentage added to the value of the reference rate, when the interest rate is reviewed, for loans taken out at a variable or mixed rate.

DEED OF SALE
Official document, issued by a Notary, containing the clauses and conditions agreed between seller and purchaser. In order to have effects vis-à-vis third parties, it must be recorded in the Land Registry.

mortgage deed
Official document, issued by a Notary, containing the clauses and conditions agreed between the creditor and the debtor of a loan or mortgage credit. In order to have effects vis-à-vis third parties it must be recorded in the Land Registry.

collectibility
Time remaining until a payment obligation falls due.

discharge
Release from an obligation.

BANKRUPT
The person who can not repay a debt. This can also refer to the debt itself.

ADJUSTMENT DATE
Time at which the interest rate of a mortgage with a fixed rate turns from fixed to variable.

value date
The date established by a financial entity for charge and payment purposes.

security
The amount given on account to reserve the right of purchase over a property, which will be lost if the purchase is not performed on the terms and conditions agreed, and the amount will be repaid at twice its value in the event that the seller dishonours the conditions agreed.

signing of deed
The holder of the loan has three business days to study the loan deed in the Notary's office, before signing it.

"Gestoría"
A private agency which deals with all administrative work (tax payments, registration of deeds, and so on).

mortgage
An in rem right formed as a guarantee of the fulfilment of a series of obligations with a third party (loans, bills). Together with the payment of the principal, it guarantees the receipt of payment of the ordinary and default interests, costs and expenses deriving from the contingent action for debt in the event of default of a payment. Although not exclusively so, the most frequent mortgages are over property. They are legalised by means of a public document and their rights are constituted with their registration in the Land Registry.

Property tax
(see Urban tax).

TRANSFER TAX
Tax applied to the sale and purchase of property under second or subsequent transfers. The amount is 6% of the deed price. In this case, Stamp Duty is not applicable.

stamp duty
Tax applied to the formal documents of certain legal acts.

tax on increased value of property sold
This is paid for the increase in the value of the property sold and depends on factors such as the rateable land value, the number of years elapsed since the property was purchased and the district to which it belongs. The payment of this tax corresponds to the seller.

Value added tax
VAT. Indirect tax only applicable in the case of new properties (first transfer).

private banking index
This is the average rate of credit operations of banks.

REFERENCE RATE
Percentage that is established as a fundamental part of the interest rate, when this is variable, and in comparison to which the interest of the loan is to be revised. The reference cannot be modified by the borrower or the bank entity. It can be said that it must be provided by a neutral party, thus, it is the Bank of Spain which officially publishes the price of money on the market. The references used which are considered as being official are: MIBOR, IRPH, CECA and the Public Debt performance rate with a term of 2 to 6 years. There is a new reference, EURIBOR, which replaces MIBOR, and operates within the scope of the European Union.

ceca reference rate
This is the average rate of the operations of personal loans from one to three years and of the loans with mortgage guarantee for the acquisition of free property in a term of more than 3 years.

registration in the Land Registry
It is necessary for a mortgage loan to be recorded in the Land Registry for it to have legal effects.

INSOLVENCY
Incapacity to meet obligations due to a lack of resources.

Interest
Return on capital over the years. It is the fee paid to the financial entity due to the money borrowed.

Fixed interest
The interest rate over the loan stays the same. At the moment it is slightly higher than the variable and the terms are shorter. For this reason the monthly repayment is higher than the variable.

mixed interest
The initial interest rate stays the same over a period of six months or a year (even three or five years), from this moment, it is calculated again and with an annual periodicity. The initial interest is higher than the one of the mortgages of variable interest and the term is usually shorter.

variable interest
This kind of interest changes with the passing of time, and terms of revision are established for its updating when the contract is signed. It consists of a reference rate, agreed by the parties, as well as a differential and a rounding, fixed by the bank.

Stamp Duty
Tax applied to the formal documents of certain legal acts.

PROPERTY TAX
Local fee encumbering ownership of a property. It is charged yearly, depending on the rateable value.

Reference index of mortgage loans
There are three different types of reference index of mortgage loans, that is, banks, savings bank and all Entities.

maximum and minimum limit
In the mortgage contracts of variable rates, there is a clause containing the maximum and minimum limit that the interest can reach.

delay
Delay in the payment of a debt that leads to the charge of default interests (see default interest).

default
This is the period request or imposed in order not to face immediately the payment of a due debt.

Novation
Any change agreed by the parties, which affects substantial elements of the contract (terms, types, repayments, etc.) which in order to have effect must be recorded in the Land Registry.

NEW WORKs
Public document whereby the existence of a new building or construction is recorded. Its registration in the Land Registry implies the creation of a registered property due to the extinction of the registered property of origin.

binding offer
There are 2 different meanings:

1. In the case of the subrogation of a mortgage loan between financial entities, the binding offer is the document that the entity which intends to subrogate in the loan sends to the first credit entity, containing the new conditions of the interest rate that it is going to apply to the client in the event that they finally move to another entity.

2. In new mortgages, the "Binding Offer" is a document that the credit entities must deliver to the client and that must contain all the financial conditions of the loan. The validity of this offer cannot be shorter than ten business days from the delivery date.

purchase Option
Right to purchase a property on an established date at a stipulated price. The purchase option is usually acquired by providing a certain amount of the money of the total price of the property. Having a purchase option over the property one wants to acquire gives one more time to take out a loan or find a better property.

PROMISSORY NOTE
Document whereby a person acknowledges their undertaking to repay a certain amount in a fixed period of time.

INSTALMENT PERIOD
Period of time which elapses between one repayment and another. In general, this tends to be one month, although it could also be quarterly or every six months.

INTEREST Period
This is the time during which the interest rate initially agreed for the loan remains a valid and unchanged. The fixed rate coincides with the period of the loan. The variable rate tends to be for one year.

Amortisation term
This is the time decided on in the loan agreement for the client to return to the financial institution the entirety of the amount borrowed. In general, the repayment period may be of up to thirty years, but normally it is between fifteen and twenty years, so as to avoid the payment of interest being excessive. Therefore, it is best to reduce the term of the loan as much as possible, avoiding making it unnecessarily longer. This depends on your repayment capacity.

CAPITAL GAINS TAX
This is a municipal levy paid by the seller according to the revaluation of the property (difference between what it cost the seller and the present transfer price).

MORTGAGE LOAN
Amount of money granted, normally by a financial institution, to an individual or legal person, with the additional guarantee of a property. The purpose of the loan may be one of many, but the most common are aimed at financing the purchase of property. Although all loans are guaranteed with the personal guarantee of the borrowers, in house loans a mortgage guarantee is incorporated so as to return the money in longer periods.

BORROWER
Person in whose name the loan is taken out, who assumes all obligations and acquires all the rights of the agreement they sign with the lending financial institution.

FIRST MORTGAGE
This is the name for the first mortgage over a property.

FIRST PROPERTY
This is the property which is normally and officially the residence of the owner.

Principal
This is the part of the capital remaining or pending repayment to the financial institution.

rounding
This is a practice for the simplification of decimal points in applicable interest rates.

ReFUNDING
This is the cancellation in instalments of a debt returning the principal and interest of the loan or credit.

TERMINATE
Cancel an agreement due to a legal cause.

SECOND PROPERTY
This is the property not of habitual or official use of the owner of the property. As regards requesting a mortgage loan, the implication is that entities usually lend a lower percentage of the total value of the property.

AmortiSATION SYSTEMS
Way in which the return of the loan is agreed. This may be through fixed repayments, fixed capital payments, increasing capital payments. Fixed repayments are the most common.

SolvencY
This is the capacity to meet the debts undertaken.

SubrogATIOn
There exist two different concepts:

1. Action whereby the purchaser of a property assume all the rights and obligations of another person due to a loan granted previously with the guarantee of said property. This is a very common practice when a new property is purchased directly from the constructor thereof, which has obtained a mortgage loan to finance the construction.

2. Subrogation also means the legal fact of the substitution of the mortgage creditor, i.e. the case in which the borrower changes their loan to another financial institution which improves the conditions of the interest rate.

A.P.R.
(Annual Percentage Rate) Mathematical process whereby the financial conditions applied to a loan are transformed to their annual equivalent, whatever their form of repayment. In other words, for two loans with different interest rates and commissions, with the same term, once their corresponding A.P.R.s have been calculated, the result is comparable, as the A.P.R. has standardised both conditions, turning them into one annual equivalent.

VALUATION
Value of a property certified by companies incorporated to such end. Through such certificate, not only is the true value of the property known, but also in addition it serves as a reference so as to obtain the necessary financing.

INTEREST RATE
Percentage applied to the pending capital of a loan so as to calculate the interest which is due repayment.

NOMINAL INTEREST RATE
That which appears in the contract.

SUBSTITUTING referenCE RATE
Rates established in the mortgage loan deed whether variable or fixed, applicable only in the case of the reference rate initially agreed no longer being published officially for any reason.

PROPERTY DEED OF OWNERSHIP
Deed evidencing the property, in which are detailed the date and way in which it was acquired, as well as the main characteristics thereof.

ValUATIOn
Operation whereby experts valuate an asset or right.

VERIFICATION
A check made in the Land Registry to determine whether a property is free of encumbrances or not.

OFFICIAL protected housing
Describing usual, permanent residences with a maximum usable surface area of ninety square metres fulfilling the price and quality conditions established.

O.P.H.
(Official Protected Housing) Housing the type, size and price of which are regulated by the Authorities as a condition in order to qualify for certain advantages, both financial and tax-related, on the part of the purchaser, who in turn must meet certain established conditions.