Mortgage loans

There comes a time in life when we want to go from tenants to owners in order to dispose of our assets as best we see fit and avoid “losing” the money from a rent.

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Home Loans: How to Find the Best Mortgage

However, the purchase of a house or premises for a business requires a significant investment. Since most of us do not have thousands of euros in our bank accounts, there is a specific financial product for this purpose: mortgage loans.

Home Loans: How to Find the Best Mortgage

Mortgage loans

If you still don't know what a mortgage is , keep in mind that we are talking about a product offered by banks to finance large amounts of money. Banks lend a certain amount of money to buy a home, for example, with the agreement that the borrower will pay a monthly installment within a certain period of time and according to the interest set in the contract.

It is true that most people only look at the interest to pay when choosing a mortgage loan, but you also have to take into account the commissions that are indicated and other financial products that can be included when signing the mortgage. Also, remember that you can never get 100% financing, normally banks offer 80% of the value of the home , so it is required to have certain savings before applying for a mortgage loan.

A home loan is not the same as a home loan

If you are not a financial expert, it is normal that when you listen to mortgage loan and mortgage credit they seem the same to you. However, they are different financial products (although both can have a variable, fixed or mixed interest).

In the case of mortgage loans, we are talking about open mortgages or lines of credit that offer a certain amount to finance other projects without having to reapply for a loan again. It is as if it were a credit card with a higher limit with the advantage that its interest is lower than that of a consumer credit.

However, in mortgage loans you cannot access more money than was signed in the contract. In addition, it is necessary to comply with the amortization method, the repayment term and the agreed interest rate.

Determining factors when requesting a mortgage loan

The granting of a mortgage is not a process that occurs from one day to the next since when talking about such large amounts of money, banks must be sure that the person will be able to repay the money loaned with the interests agreed upon over time. settled down. That is why they only offer this financial product to people with a low risk profile . Success in applying for your mortgage will depend on factors such as the following:

  • Age is very important since the more years of working life the applicant has, the more time they will have to pay their mortgage loan. That is, the conditions will not be the same for a 25-year-old person as for a 50-year-old person.
  • If you are not on a delinquent base such as Asnef or other similar delinquent files, you will have a better chance of getting your mortgage.
  • As we previously indicated, a mortgage usually only finances 80% of the value of the property, so you must have the remaining money (or offer other guarantees) to get your mortgage loan approved.
  • As there are significant differences between banks, if you want to save time finding a mortgage that meets your needs and expectations, you can use a mortgage comparator or simulator .
  • To avoid defaults, most banks determine that the monthly fee to be paid is not greater than a third of the applicant's net income.
  • When applying for your mortgage loan, only trust entities supervised by the Bank of Spain such as banks, savings banks or credit cooperatives.

Frequent questions

  • What is the double guarantee of payment of a mortgage loan?

Unlike other financial products, in a mortgage loan there is a mortgage payment guarantee and a personal one, which is why we speak of a double payment guarantee. The mortgage guarantee implies that the property can be seized if the agreed monthly installments are not met. The personal guarantee means that if when a seizure occurs (the bank keeps the house or other property mortgaged due to non-payment) the property lost its value and the debt is not covered, the bank can seize other property (present or future) to cover the amount owed.

  • Can you ask for a mortgage as a personal loan?

Since the end of a mortgage is very different from that of a personal loan, this rarely happens. Remember that mortgages are requested to finance large amounts of money (such as the purchase of a house or a premises), while in personal loans much smaller amounts are requested money to face expenses such as a reform, buy a car or pay the University enrolment. In addition, there are significant differences between your guarantees, repayment terms, interest rates and other additional expenses.

  • What documents must be presented when requesting a mortgage loan?

Each case is thoroughly studied to avoid any default situation. For this reason, among the documents that you will have to present are: ID, proof of income, receipts for other loans (if applicable) and annual and / or periodic VAT payments, among others.

  • How to find the best mortgage?

So that you have a better vision of this sector and find the mortgage loan that best suits your financial situation, you can use a mortgage comparator or simulator . Its operation is very simple: enter the money that you can pay monthly and for how many years you want to pay off your mortgage. You will instantly know which banking entities suit your needs, including the money they can lend you.

  • Can they force me to contract linked products?

Fortunately, current legislation has regulated this common practice of banks and today mortgage applicants are not required to take out other financial products alongside their mortgage loan such as home insurance, a pension plan or life insurance. Now, something very different is that they offer you these products including certain advantages such as a reduction of the differential.

  • Is a fixed mortgage or a variable mortgage better?

It all depends on the personal situation of each individual and the current financial environment. In this sense, it is necessary to assess the economic forecasts of each person and the Euribor scenario to take into account the assumable risk.

Roger molins Jerome P Allison ( LinkedIn )
I am a freelance writer and consultant for companies and individuals, with a particular emphasis on fintech, technology, startups and online marketing. More information ...