Products linked to loans
It is usual for credit institutions to improve the conditions of their loan offers, for example with an interest rate bonus, if certain products are also taken out.
Your bank can offer you a more favourable interest rate if you:
- Have your salary paid directly in your account
- Pay your receipts by direct debit
- Take out cards
- Take out a pension plan
- Take out some type of insurance
The sale of a loan tied to other products or financial services is banned, unless the bank proves that such products involve a clear benefit for the customer.
If you are going to acquire property insurance, the bank must accept policies other than those it offers, without this adversely affecting your loan conditions or involving any extra cost for you.
The bank may link the loan to your having an account so as to service related payments (reimbursements, interest, etc.).
Hedging interest rate risk
When taking out a variable interest rate product, the bank is obliged to offer the customer a suitable instrument in order to cover the risk of an increase in instalments resulting from a possible rise in the interest rates (Abre en ventana nuevasee Law 36/2003 on economic reform measures (in SpanishAbre en ventana nueva).
By paying a premium over a specific period, if interest rates rise above an agreed ceiling you would not be affected. Once the hedging period is over, interest will be calculated at the rate resulting from the adjustment (the sum of the benchmark rate plus a margin).
From the moment the hedge is arranged and during the hedging period, you would not be charged the variable rate stipulated in the agreement but the fixed rate arranged. Usually, the fixed rate will be higher than the variable rate arranged. Therefore, should you wish to cancel the hedging operation early, you will have to pay an amount that may become significant, depending on the amount by which the benchmark index has fallen.
As in the previous case, once the hedge has matured, you will pay interest again at the rate resulting from the adjustment (the sum of the benchmark plus a margin).
Bear in mind that this type of hedge is offered for short periods and does not cover the ordinary term of a mortgage loan. However, once the hedging period has ended, the bank will probably offer you the possibility of taking out another hedge tailored to the interest rate levels prevailing at that time.
Find out more about interest rate hedge, visit our interest rate hedging instruments in our 2017 Complaints Report (in Spanish) (92 KB)