Financial Dictionary - Binding offer
The binding offer (known as FIPER before the Mortgage Law) is the document that the bank gives you when you are going to sign your mortgage. It consists of approximately five pages, and contains all the features of the loan as well as the clauses and conditions; in this way, you will be clear about the obligations that each party is going to assume, because when they are incorporated in the mortgage deed, they will be legally binding.
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This is a free document that the bank must give you and is prepared once it has carried out the risk study and evaluated your credit profile. They will then meet with you to agree on the conditions of the mortgage. And a few days before signing at the notary, the bank will give you this offer. You must take a very careful look at it, as you will be signing the information it contains: the general conditions and particular clauses, the type of instalments and terms, repayments, etc. More specifically: your data and that of the bank; the maximum amount and duration of the mortgage; the Annual Percentage Rate (APR) and the way it has been calculated; the repayment table; the costs you will have to bear as customers; the specific clauses of the loan or of the instalment; the obligations you must fulfil; the risks of the loan; and any possible relevant warnings.
How valid is the binding offer?
Once the bank gives it to you, you have approximately fourteen calendar days to accept or reject it (in any case, this period cannot be less than ten days). If you do not respond to this offer, the bank will consider it as a rejection, and may maintain the conditions or modify them.
It is important to note that you are not obliged to accept the conditions of the binding offer and that if you are not in agreement, you must negotiate with your bank (it is a good idea to be duly advised). Or you can even partially accept them, in which case you must inform the bank about the clauses you accept and the ones you do not, and the bank will decide whether or not to improve the offer.
It is always a good idea to hold on to this document, even after you have signed the mortgage. It will serve as a guarantee against possible incidents or changes in the conditions, and will have a probative value against possible eventualities.
What if I subrogate the mortgage?
If you are thinking of subrogating your mortgage to another bank, it must analyse the conditions of the contract you had with the initial bank, and decide whether it will match or improve them.