Asking for a mortgage is a very important step since it is possibly the largest amount of credit you will be asking for in your entire life. If you're one among those that are brooding about posing for a mortgage, follow the following pointers which will assist you within the process and must-visit Think Plutus further details.
Sign a mortgage, a key financial decision
However, we must not forget that a couple stuck in the conflict can separate, a bad marriage can be undone through a divorce, but, the mortgage is for a lifetime. If there is no sale of the property or the satisfaction of the debt with the financial entity of the day, whether in the agreed terms, the mortgage is "until death do us part." Hence the previous analogy referring to making a great leap.
Therefore, it is convenient, very advisable, that you think about it before marrying the bank: choosing a mortgage is one of life's most important financial decisions. As such, it will have to be weighed previously, without abuse or haste, with prudence and common sense. Otherwise, you can be involved in an awkward situation, in which the arrival of the beginning of the month ends up becoming a dreaded and fearsome moment.
What you should know before hiring a mortgage
So that you do not take a leap into the void and find yourself trapped in an undesirable loan that forces you to devote too much income to the payment of the mortgage, these are some keys that can be useful before hiring a loan of these characteristics.
1. What legal situation is the house in? The first step we advise you to take is to request a registration note and the corresponding cadastral document.
2. Compare the offers of financial institutions taking into account all the data.
3. What percentage of the home's value will the bank give me?
The lowest between the 80% appraisal and the same percentage of the purchase value, although, as already indicated above, some banks grant 100% again. BBVA is the first entity to recover this practice, as widespread as it was harmful in another era.
4. The products associated with the mortgage, already listed in the previous section. It is convenient to take stock, analyze if a loan is worth considering also those extras. In the case of insurance, you can use tools as comparators to find out how much a home or similar life insurance that is not from the bank would cost.
5. Commissions. This sixth point is in turn related to the differential, since, for example, this can be very competitive, but involve some coupled rates that obscure the product. We remind you that the most common commissions on a mortgage loan are the following:
1. Opening, which includes processing costs?
2. Cancellation, whether total or partial.
3. For early amortization.
6. The interest rate can be fixed or variable.
In the first case, the interest charged by the bank will not change and depending on the amortization system the fee will be unchanged. This is the advantage of these types of loans which, on the contrary, usually include higher interest rates and generally shorter repayment terms). On the other hand, in mortgages at a variable rate, the interest periodically (every three, six or twelve months) and varies according to a certain index. In the variable interest rate, the fees fluctuate and the terms tend to lengthen over time.
7. Do not forget the expenses in deeds and taxes.
Agency, notary, and taxes can be between 10 and 15% of the value of the home.
8. The notary, you better designate it, the bank cannot impose yours. Most of the municipalities with more than 5,000 inhabitants have one of these professionals, so there is where to choose. Not all notaries are equal or take the same interest in explaining each clause, although the new mortgage law has strengthened its obligations at this point.
9. The fee that you will have to face each month is, without a doubt, a key issue, but, be careful: that at the time of signing you can pay it does not mean that you will be able to face it in the future. As a consequence, we advise you to make a prudent calculation of the monthly fee that you can afford, considering that, over the years, unforeseen events may arise.
10. The repayment term can be between ten and forty years today, and its incidence is evident: the more years of the loan, the lower the fee will be, but the higher the final payment to the bank.
11. The dangers of imputing payments. Financial institutions, on occasion, ask the client for authorization to compensate for the red numbers of the account through which he pays the mortgage loan with the positive balance of another account he has in the same bank. If you give that permission, it will be the one who decides what debt to meet with the capital that you have at all times and may not have the same scale of priorities as you. For example, dedicate money that you had planned to use to buy food to pay the monthly loan installment.
12. If you can, avoid the guarantors, since you could put them in a dispute in case you did not pay the fees or if something happened to you: death, serious illness, becoming disabled, etc.