Sunday, December 10

5 key questions before signing a mortgage

The mortgage firm will continue to grow this year, although of more moderate way than in the previous two years. If in 2020 the mortgage firm grew 11 percent and in 2021, 18 percent, this year it could be around a 5 percent increase.

Several factors explain this slowdown. On the one hand, the exhaustion of the dammed up demand, on the other, the increase in prices together with the economic uncertainty. However, hehe attractive offers from banks in mortgages and the low levels of the Euribor will continue to act as an incentive.

Young people will have a lot to say in the new mortgage scenario. If to date most of the operations were for replacement, with a special pull of new housing, it is expected that this year young people will opt for acquiring their first home ownership, since during the pandemic the interest in buying increased.

Questions to ask yourself before getting a mortgage

Applying for a mortgage is a very important decision, if not transcendental, since we are going to have a debt for a long period of time. That is why the mortgaged future must consider a series of questions.

“The first thing to ask yourself is if you qualify for a mortgage”, explains Miquel Riera, mortgage expert at the comparator

So that Sergio Carbajal, our mortgage manager at Rastreator, believes that two questions should be asked related to this: “How much money do I need to apply for a mortgage? How much do I have to have saved?”

In general, banks ask that 30 percent of the value of the home be saved (20 percent would go as an advance on the purchase since the bank only finances 80 percent, and the remaining 10 to pay the corresponding taxes ).

To this must be added, continues Riera, “there is a stable employment situation and that a sufficient salary is received to pay the installments” (the amount of the installments must not exceed 35 percent of the net monthly income, as recommended by the Bank of Spain).

Fixed, variable or mixed rate mortgage: is the second thing that the mortgaged should ask themselves.

The fixed rate is more suitable for customers who always want to pay the same, says Riera, while the variable rate is suitable for those who want to pay a very low fee during the first years, but must be aware that this fee can rise to as the European Central Bank (ECB) raises rates.

Also that these increases in the Euribor will be less noticeable the more years you have paid the mortgage.

Finally, the mixed rate, which, as Riera recalls, “is an uninteresting option for the vast majority of potential mortgage holders”.

All mortgage carries a series of expenses: The third question that the client must take into account is about the expenses that a mortgage entails. The client must understand that he will pay some interest, that these interests may also fluctuate due to the rise in the Euribor, which will affect higher installments.

Also that the entity may charge you a series of commissions or charges, for example, for early cancellation or for the interest rate compensation clause.

Finally, the future mortgaged must ask himself if he can meet the bond required by the entity to access the offer. Many banks, beyond requesting the payroll direct debit, require the payment of life and home insurance, which carry commissions, but also the use of cards with a minimum expense, contribution to investment funds or pension plans.

The importance of comparing

From HelpMyCash they advise going to as many banks as possible, regardless of the order.

“When you have several offers on the table, the applicant can compare them to assess which one would be more profitable.” Riera also advises taking the best proposal to other banks to try to obtain a better counteroffer.

In this sense, it is more likely that the trusted bank improves its conditions (it does not want to lose its client), but other entities can also do so due to the great competition in the sector.