Mortgage brokers and how to compare offers

Key rules

• Broker register: Only use a broker you can find in the Bank of Spain's public register of intermediaries, or your region's register.
• Broker fee: Get the fee in writing before the broker starts work.
• FEIN: Compare the FEINs from each bank, not advertised rates.
• Time to review: You should receive the FEIN at least 10 days before signing.

Should you use a broker?

A broker is optional. It can save you time if you do not speak Spanish or want several banks approached for you. It costs money, so only use one if the fee is clear and worth it. You can also ask banks directly and compare their offers yourself.

Check the broker is registered

Mortgage brokers must be authorised and registered. Search for the broker in the Bank of Spain's public register of intermediaries on its website. A broker working only in one region may be on that region's register instead.

Then ask for:

• Proof of professional indemnity insurance.
• The names of the staff who will handle your file.

Be careful with people who say they are "independent" or are tied to one bank. Their status is different, so ask which one they are.

Get the fee in writing first

The broker must tell you its fee in writing before it starts work. Only one side should charge you: you may pay a fee, but it must be disclosed in advance and not duplicated by a charge from both sides.

Fees vary widely. A common model is a success fee of around 1% to 2% of the loan, often with a minimum of a few thousand euros. Others charge a flat fee, or are paid by the bank and charge you little or nothing. Ask whether it is a percentage, a flat fee or paid by the bank, and when it falls due. Check that no fee is owed before the mortgage is signed.

Compare offers with the FEIN

The FEIN is the standard sheet each bank must give you. It is a binding offer for the period stated, so it lets you compare like for like instead of comparing headline rates. Ask every bank you are considering for one. You should have it at least 10 days before signing, and the notary will go through it with you.

Put the FEINs side by side and compare:

• Loan amount and term.
• Rate type (fixed, variable or mixed) and the nominal rate (TIN).
• For variable loans, the index, the spread and how often the rate is revised.
• Monthly payment and total amount repayable.
• Early repayment fees and arrears interest.
• Fees for opening and valuation, and any others.
• Cost of mandatory insurance.
• How long the offer stays valid.

Read the TAEG carefully

The TAEG is the yearly total cost of the loan, including fees and linked products. It is the best single figure for comparing, but the lowest one is not always the best deal. It assumes you take the linked products, such as insurance or a payroll account. Check which ones it assumes, and what happens to the rate if you cancel them later.

The checklist and timeline below set out the steps in order.

Timeline and deadlines

• Check the broker is registered: before you agree to work with them

• Receive the FEIN from each bank: at least 10 calendar days before signing

• Compare the FEINs side by side: while each offer is still valid, within the period stated on it

• Confirm whether any broker fee is due: before the mortgage is signed

Documents you need

• The FEIN (Ficha Europea de Información Normalizada), the standard binding offer sheet. Each bank you are considering gives you its own, so ask every bank for one.

• The broker's written statement of its fee, given to you before it starts work. You only need it if you use a broker.

Checklist

• Ask the broker for proof of professional indemnity insurance and for the names of the staff who will handle your case.

• Ask for the broker's fee in writing before work begins, and check whether it is a percentage, a flat fee or paid by the bank.

• Ask each bank for a FEIN so you can compare binding offers rather than headline rates.

• Compare the loan amount, term, rate type, nominal rate (TIN) and, for variable loans, the index, spread and revision period.

• Compare the TAEG, then check which linked products it assumes and what happens if you cancel them.

• Compare the monthly payment, total amount repayable and the cost of any mandatory insurance.

• Compare early repayment fees, arrears interest, and the fees for opening and valuation.

• Note how long each offer stays valid and decide before the earliest one runs out.

• Confirm with the broker whether any fee is due before you sign the mortgage.

Frequently asked questions

How much does a mortgage broker in Spain usually charge?

Many brokers charge you around 1% to 2% of the loan, often with a minimum of a few thousand euros, and only when the mortgage goes through.

Where can I check that a mortgage broker is registered?

You can look up a broker in the Bank of Spain's public register of intermediaries on its website. A broker that works in only one region is listed with that region's authorities instead. Registered brokers must also carry professional indemnity insurance, so ask to see it.

Is the offer with the lowest TAEG always the best one?

Not always: the TAEG (the yearly cost of the loan including fees and linked products) is the best single figure for comparing offers like for like, but it depends on the linked products it assumes. Check what those products cost and what happens if you cancel them, because the offer may be worth less without them.

Does the bank have to keep to the offer in the FEIN?

Yes, the FEIN is a binding offer for the period stated on it, so the bank must honour those terms during that time. Note the validity date on each FEIN, because an offer you compare late may no longer be open.