The mortgage is a banking product with which you will practically have to live once in your life. It is the tool you have to acquire the home that you have liked so much. And that it will require a large outlay on your part, and that can reach amounts of up to 300.000 euros, depending on the model of property chosen to carry out the operation with the bank. He will need you to compulsorily meditate on his terms, since there are many euros that will be at stake.
The level of indebtedness that you will have will be really very important, more than through other types of credits: personal, consumption, etc. And for all this you should be more receptive to the conditions that the bank will impose on you before signing the contract. Review and analyze the document because after having signed it, it will be too late to go back, and you will have no choice but to assume all its conditions.
A mortgage loan carries many, perhaps excessive characteristics that will keep you in debt for many, many years. You may reach 60 years without having closed the operation. For this reason, it is much more important than other lines of financing (personal loans, for consumption, or the purchase of the car). You don't want to leave anything to chance, of course, if you don't want to develop a problem over the next few years.
Interest rates will be decisive
The first aspect that you should pay more attention to are the interest rates that the bank will apply to you. You must get as competitive as possible. And that you can even achieve it by contracting other products with your entity (insurance, savings plans, investment funds, etc.). In this way you will achieve that the intermediation margins are lower by a few tenths.
Anyway, the best strategy will be to do numbers on your calculator, and you come to the conclusion that you can assume the debt. In other words, you won't have a problem paying the mortgage. This process may take several days, even longer than necessary. But it will be worth it, since the money is at stake, and you should not leave anything to improvisation. It would be a big mistake that you would have to pay for it in the future. Do not forget.
It will also be very convenient for you to review the offers and promotions that financial institutions have been promoting with great regularity. Not in vain, You can save many euros if you opt for this beneficial strategy. And since the contracted product has a long duration, its effects will be even greater. The differences between the interests of the banks are very significant. And it will depend on this that you pay less when you finalize the operation.
Commissions and other expenses
Another aspect in mortgages that is of great importance are the commissions and other additional expenses that are established in their contract clauses. If possible, sign a contract for a product that is exempt from these payments, as you will save a lot of money over the next few years. The percentages of these expenses can reach up to 3% on the amount purchased. And more if you can save it through this commercial strategy.
A good part of the proposals that you can find at the moment are developed without commissions, or other expenses in their management or maintenance. Try by all means that your choice is based on these parameters, because the benefits that will bring you in the coming years will be enormous. And that combined with a good interest rate will help contain your expenses for a long time.
Have some savings
If you are going to formalize a mortgage loan in the coming months, you should know that the new trend is governed by not contributing the money for the money for the purchase of the new home. They will only grant it to you with 75% or 80% of the operation. For this, you will necessarily have a more or less important bag to support you in the operation. The higher the amount you have, the better for your interests. Not surprisingly, you will pay less money, both in its amortization and in interest.
This measure that banks are promoting affects your level of indebtedness to be lower. This is the wish of the Bank of Spain, which recommended the application of this strategy to the banks themselves. Anyway, there is a minimum amount which you will not be able to get rid of if you want to constitute a mortgage from now on. It is set in tone at approximately 50.000 euros.
Mortgage duration
Its repayment term will also be another of the determining factors that you should set at the time of signing it. Gone are the times when you could formalize it almost for life, with maximum terms of up to 50 years. Nothing is the same since the international economic crisis, and as a consequence of them their deadlines have been lowered to 25 or 30 years as a maximum limit. You must adjust to your real needs to choose the most beneficial duration for your interests.
If you subscribe the most expansive periods, you will have to assume more affordable fees, but in exchange for having to pay its amount for much longer. This in practice will mean that the expenses for the mortgage are significantly higher. And it really may not be worthwhile to formalize this banking product under these conditions.
If you can, the most profitable operation will be to pay it off for less time. It is true that the fees will be more demanding, but by closing the operation earlier, you will have to pay less money. And with the possibility of being open again to the contracting of new lines of credit. To reform your home, pay for your next vacation, or even buy the latest models of audiovisual equipment.
What about the floor clause?
After what happened in recent years, you should be careful that they do not sell you a mortgage with these characteristics. Luckily you will have it easier, since most banks have been removed from their current offer. Not surprisingly, its conditions harm you notably, more than you may initially think. And that they would make you pay more money than necessary right now.
This class of financial products imposed a minimum interest rate that could not be exceeded. And given the historical drop in the evolution of the European benchmark index, the popularly known as Euribor, it prevented you from picking up its significant drop. Remember that you are currently in negative territory. And if you had formalized a mortgage loan with this condition, you would have to pay more money than you should in the monthly installments.
Fixed or variable interest rate
It is another of the dilemmas that you have to solve from now on when signing a mortgage. It will depend on the conditions of the financial markets. Now it is more profitable to subscribe it with a variable interest rate, before the stage presented by the Euribor. But being a long-term loan, this scenario may not be the same in a few years, and therefore, you will not make the operation profitable.
Of course, a fixed interest will allow you to always pay the same, not having to worry about the evolution of the markets. But also wasting the current conjunctural movement in the economy. For your choice, the term to which your mortgage is directed will be very decisive. You will have no choice but to take it into account to optimize the operation in the best possible way.
And on a third level, there are the mixed mortgages, which combine the best and worst of each model. And that lately are being promoted from banks as an alternative to financing housing. You will only be the one who has to opt for the most favorable format in the defense of your interests. And this factor will be one of the most important.
8 tips for taking out a mortgage
If you are thinking of subscribing any of these banking products, it will never come to you that you import a series of tips that will be very useful in this banking operation. And it may determine that you are able to sign the contract with greater success. At least you are in a position to try it, which is not little, after having reviewed the main characteristics of these products so necessary in homes.
- Try to study all the offer that banks present to you, because surely you can find a very favorable model for your interests as a user that you are.
- Eliminate all additional expenses that entail the mortgages, from their commissions and to other completely unnecessary expenses.
- Look up the formula for amortize it faster, since through it you will be eliminating greater expenses, and what is worse, for a long time in your life.
- Read carefully the fine print of the contract, in case conditions are included that are little or not at all favorable to your interests, and that may involve you in the formalization of a lousy banking operation.
- If you contract other banking products you can get a mortgage credit bonus, which will depend on the degree of loyalty you have.
- Let yourself be carried away by conditions that mark the markets, as a passport to get it in the best possible conditions, and containing the expenses.
- The mortgage proposals for the purchase of the first home they are always more satisfactory than on the second. If this is your case, you can take advantage of the many promotions that are enabled by financial institutions.
- Be aware of how the European benchmark is evolving, and try to formalize this product based on the best trends that present at all times.