The mortgages It is one of the products that most bank users hire since they are made for the acquisition of a home. Where, the number of mortgages constituted on homes is 30.600, 3,9% more than in June 2017, according to the data provided by the National Institute of Statistics (INE). It is shown that the average amount is 123.896 euros, an increase of 5,1%. On the other hand, the average amount of mortgages registered in the property registers in June (from public deeds carried out previously) is 151.006 euros, 13,9% higher than the same month in 2017.
Such is the importance of mortgages that many users consider if it is necessary to contract some class be sure by formalizing this real estate process. Well, in this sense, the only policy that requires hiring is the one that takes into account fires. Current regulations in Spain require that owners have insurance of these characteristics to anticipate this incident at any time. On the contrary, home insurance, despite what many users may believe, is not mandatory, but optional.
This kind of insurance, on the other hand, is highly recommended to subscribe as it helps to preserve the content and container of the property. Contributes among others covers some as important as water damage and electrical damage to appliances, home and DIY maintenance service, replacement of keys and locks due to theft or theft and even civil liability and legal protection for you and your home, among some of the most relevant . Although there are many options that you can choose from through the offers made by insurance companies.
Why do banks require insurance?
You will surely find that some of the mortgages marketed by banks require you to purchase home insurance and perhaps other different formats. Not because the current regulations require it, but as a commercial strategy to improve the conditions of contracting the mortgage loan that you are going to contract. One of the objectives to include an insurance of these characteristics is based on lower the differential of mortgages. That is, so that this product for financing is much more competitive and in the end you save a few euros in the operation.
The inclusion of one or more insurance of these characteristics allows you to lower the interest rate by a few tenths of a percentage with respect to its original rate. Generally bonuses they do not usually exceed 1%, but at least it will help you contain the financial effort that you will have to make to buy a new home. If you do not accept these special conditions, of course you will not have access to these special mortgage offers. Not in vain, it is the condition imposed by financial institutions.
Effects on mortgage credit
It is a condition that is present in the so-called subsidized mortgages and as a commercial strategy so that your monthly payments are more affordable from that moment on. However, they usually include some kind of insurance that has little or nothing to do with the home. You will have no choice but to analyze if this expense compensates you at the time of performing the operation. Because the money that you can save through the mortgage bonus can go through the cost of insurance.
For this precise reason, you will have to analyze whether or not it is really convenient for you to hire this insurance product. It may not be like that and the most profitable thing is that you turn to other financing models, even without bonuses. In the long run they may be more profitable for the defense of your personal interests. Beyond other approaches you have in the insurance sector. Because what is at the end of the day is that the policy subscribed is useful to you. Something that does not always happen in all situations or in all users. It is a factor that you should always keep in mind when you go to to sign the contract of any mortgage credit.
Advantages in the bonus
Of course, mortgages include a series of advantages that you must analyze in great detail. Because they are not only derived from the actual use that you provide to home insurance or other formats. But through some benefits such as those that we expose you below:
- Get that kind of interest be reduced minimally. Its direct effect is that you will have cheaper monthly payments for the duration of the mortgage contract.
- They are developed with a total exemption in commissions (opening, study, early cancellation, etc.) and in the expenses in their management or maintenance. In this way, there is no doubt that you will have another source of savings when buying your new home.
- It is a commercial strategy that is present in a good part of the offers and promotions that financial entities have been doing in recent years. To get a more competitive interest rate in the operation.
- It is very common that this class of mortgages are not linked to a product linked to the fixed rate. If not, on the contrary, they are included in the variable rate, where there are more differences between the lines of credit.
Disadvantages of the bonus
The bonus on mortgages, on the other hand, also carries a series of damages that you must assess prudently when analyzing this special product. For example, through the following situations that we are going to explain to you below and that you need to keep in mind from this precise moment.
- The insurance that you have to contract may not be of great use to your interests as a user. You may even already have it hired with another insurance company. In this case, it will be an unnecessary expense that will make the operation significantly more expensive.
- This class of mortgages are not only linked to a series of insurance products. But also to the hiring of other financial products (pension plan, savings program, investment funds, etc.). It is the strategy used by banks to lower the interest rate on these financial products.
- In many cases, the bonuses on mortgages They are very small and you can even ask yourself if this sacrifice is really worth making. That is, formalize one or more insurance that you may not need at that time.
- It will only be a profitable operation if the decrease in the mortgage interest rate is really appreciable. You should not settle for a few tenths of a percentage, but you should at least reduce the spread to 1%.
- If what you are looking for is a subsidized mortgage, you should know that it is a rising product and that you will find more and more models with these characteristics. This means that you have to compare them all until you get the one that best fits your profile as a bank user. Even with the help of a real estate advisor who can provide you with new data so that you can make the right decision.
Other bank requirements
In this class of mortgage loans, the requirements may be higher. As for example, that you have to link the payroll or regular income in the line of credit. Also, although it is more infrequent with the domiciliation of the main household receipts (gas, electricity, water, etc.). Where it starts from a very well-defined commercial strategy and that is based on the fact that as you have more contracted products or greater links in your income, the conditions of the mortgage will progressively improve. In any case, not above 1, 5% or 2%, which is the maximum limit for these accounting movements in mortgages.
On the other hand, it will be very convenient that you do not take out a mortgage for the mere fact that it is subsidized by these conditions that we are talking about in this article. This should be a secondary aspect in making decisions about what is best for you. Because it may be that in the long run the mortgage it is more expensive for you. Not surprisingly, you should bear in mind that the bank is looking out for its own interests, not yours. In this sense, consumer associations warn about the danger that this class of mortgage loans harbor. More than you can have in the first place.
From this scenario, you must bear in mind that subsidized mortgages are a modality within what these financial products are. With its advantages and disadvantages and that only you will have to assess whether or not it is worth hiring them. At first it may surprise you but at the moment of analyzing them you will surely detect some other inconvenience in your subscription. In this sense, you should not let yourself be carried away by the first impact of these promotions, but on the contrary, be more thoughtful to assess all their conditions, which are many. More than you can have in the first place.