The main idea that anyone has when applying for mortgage loans is to obtain viable financing to acquire a property.
Let’s review in depth the different aspects related to mortgage loans.
What are mortgage loans?
- The mortgage loans are an agreement between the client and the bank with which it is agreed.
This entity entails certain conditions that we have to fulfill if we want to obtain financing, this pact, in turn, will bring some interests that have to be specified.
It is very important to understand these aspects at the same time to apply for mortgage loans, otherwise we have to make sure not to advance with the process without being previously informed.
Mortgage loans and their purpose
- The purpose is common and maximum in these cases: you need a loan to pay the purchase of a property.
There is no endorsement and an entity is used to obtain mortgage loans in order to take the first step in the acquisition of a home.
Now we can briefly review some features of mortgage loans focused on first housing.
Mortgage loans for first home
- Usually get mortgage loans for our first home is much easier than if you demand for another reason, let’s review below why these reasons.
First home mortgage loans carry less risk of default
When applying for mortgage loans a great aspect that is taken into account is whether it will be used for the purpose of a first home.
- This is because, in case of not having credit to make payments, the last thing we would decide to make a default is a first home, because a place to live is a right that is not going to let escape.
- In case our home is located in the center, it is much easier to sell, because the urban nucleus is a very coveted area for its positioning.
Mortgage fixed interest
- One of the factors that are taken into account when choosing a fixed interest mortgage is not to carry surprises in the long run.
There is not a lot of news that comes to us from mortgage loans in which the interest was not fixed and varies without leaving reaction time to its owner, leaving him without any possibilities other than to accept the growth of his mortgage.
Mortgage fixed interest or variable interest main differences
- Although it seems a very clear difference at first sight, there are some more that can not be ignored when weighing different options, let’s go over them.
- The main difference, in a fixed interest mortgage interest does not vary over the life of the contract agreed by the client and the bank.
- On the other hand, those that are not fixed interest mortgage tend to have a lower interest and we must take this into account when choosing a mortgage.
Advantages and disadvantages of a fixed interest mortgage
- Despite having explained that it is a fixed interest mortgage and having briefly compared it with a variable interest rate, the first one has its respective advantages and disadvantages.
We need to know which are to recognize those that best suit our particular case.
- More interest:
- Even being in a good time for the fixed interest mortgage the interest of this one is greater than the one of its opposite, this one usually wades between 2% and 3%.
- Reduced negotiation:
- When offering a fixed interest mortgage entities tend to be less flexible in the other factors, for example: we find a good mortgage fixed interest but that leaves us a shorter time than desired to return the credit.
- A shorter term:
- The entities that grant the fixed-rate mortgage know that they can propose a shorter term for the repayment of the loan and at the same time offer a somewhat lower financing.
- High Commissions:
- Taking into account that it is not as much as in the past, the commissions continue to be higher, ending up with variable interest doubling to mortgages.
Variable interest mortgage
- The variable interest mortgage, unlike the fixed interest mortgage has the characteristic of having interests that fluctuate each time a revision is made.
The variable interest mortgage offers a lower interest and this makes them a more attractive option, achieving, with this, being the most requested in many countries.
Another characteristic is that of being able to vary the interest, this will not vary every month or every year, but at the moment of making a revision of the contract, the interests can go down as well as rise.
Advantages and disadvantages of a variable interest mortgage
- Having explained what a variable interest mortgage is about, we will analyze the disadvantages that these entail.
We will know which are to recognize those that best suit our particular case.
- A reduced interest:
- The interest is lower, which varies a lot, being below 3% and is not fixed.
- Much more flexibility from the bank
- The possibility that interest rates rise may cause the bank to offer us more opportunities in our variable interest mortgage.
- Longest term
- The variable interest mortgage can offer us a longer time range
- Minor commissions
- Having reduced a lot in recent years, the fees are at historic lows.
Mortgages and Maxibank
- The Maxibank has been going down for a long time, reaching negative levels, mortgages and Maxibank go hand in hand and we have to keep an eye on these values.
Let’s review some factors to understand more how to choose the best time when asking for a loan.
Mortgages and Maxibank affect the quota increases
- In a period of no more than 12 months we usually check our variable interest mortgage, as we have said mortgages and Maxibank go hand in hand and if at the time of this revision the Maxibank has suffered a rise, so will the interest on the mortgage.
We can not do much in this review, a trick is to know the month in which we made the mortgage and be attentive to the value of Maxibank to make sure that we apply the corresponding change.
Apart from the Maxibank, are there more things to be taken into account?
- At the time of requesting a mortgage there are more things to consider and value before applying for our loan, then we give you a review
- It is unlikely that we will find the offer that best suits the first, we must be selective.
- Using a loan comparison, at us we offer you one free of charge.
- The most important thing is not the total that we will end up returning, there are more values to take into account, such as the time margin, interest, commissions, financing, etc.
- We will negotiate with the entity as much as possible, never accept the first offer proposed to us.
Take advantage of the relationship in mortgages and Maxibank
- In the case of knowing the relationship between mortgages and Maxibank we can take advantage of the situation, we will review a series of characteristics that carries the Maxibank in a mortgage.
- By depending on the Maxibank the variable interest mortgage has lower commissions, because they avoid steps that the fixed interest mortgage would make us do; opening commissions and risk commissions by interest rate.
- Greater financing, an increase that exceeds by 10% the fixed interest mortgage that can be a considerable help depending on the case.
- In the variable interest mortgage, the interest of the same varies each time it is revised, if the value of the Maxibank suffers a decline will also the mortgage fee.
- We are offered a longer time frame to make the full repayment of the loan.
Mixed Mortgage Loan
- In recent years the mixed mortgage loan has become very fashionable, what attracts most is its mix between fixed interest and variable interest.
A mixed mortgage focuses on offering a fixed interest loan in the first years, once this period has elapsed the interest becomes variable and depends on the Maxibank.
The mixed mortgage is something new. What do the experts think?
- The first thing that experts think about when weighing a mixed mortgage loan is to look for the offers and analyze them, they have obtained key data of the offers they call the most, we are going to analyze what they have discovered.
In the loan of a mixed mortgage the characteristics of the fixed interest loan and the variable interest loan are combined. Let’s review the strengths of this type of loan.
Greater protection in the mixed mortgage loan
- Each day increases the range of possibilities when choosing a mixed mortgage, there are very attractive offers and many offer extra protection focused on the constant change that may suffer the Maxibank.
This attracts many people, as the ability of the buyer to limit interest from 1.8%.
- Mortgages 100% is something that was quite common before the financial crisis, the bank is responsible for offering a loan that covers 100% of the value of the home, it is even possible that the loan in mortgages 100% is extended in case of reform or purchase furniture for housing.
100% mortgages, difficult to get?
- As we have commented since the crisis entities have stopped granting mortgages 100% so regularly, now it is more common to find offers called mortgages 80%, both in mortgages fixed interest and in variable interest mortgages.
The banks have become very selective with the profiles to which they grant mortgages 100%, we have said that they no longer offer so many, but not that they have disappeared, we are going to see in what a bank is fixed at the time of granting mortgages 100%.
The profile in mortgages 100%
- Notice to sailors, get a 100% mortgage is an arduous task, we will have to look a lot to get one and, you may have to deal with the conditions. Here are some requirements:
- Our financial profile has to be very careful: By this we mean issuing an aura of financial security with values such as:
- Monthly income exceeding € 2400.
- A job with a lot of antiquity
- Not be on any list like Financial Credit Institutions
- Our loan is focused on one of the bank’s floors: Not only on mortgages 100%, this gives us enough room to debate with the bank, banks do not like to have these homes empty.
- Before the age of 35, applying for financing, called a young mortgage, can be very tedious. From us we recommend the young mortgage, since they provide advantages (lower monthly fees) that other offers do not handle.
Let’s review some key notions in a young mortgage.
Requirements to apply for a young mortgage
- Like other loans, young mortgages also set requirements to meet before granting any credit.
- Previous savings: When we request the loan, they may request an amount that will not exceed 35% of the price of the home to which they will be allocated.
- An indefinite contract or a stable job: It is something that banks are very aware of when offering a young mortgage.
Advantages in a young mortgage
- Something that attracts a lot, since the advantages in the young mortgage are different and very attractive compared to the others.
- They offer us longer terms to repay the loan since we have many more years.
- The financing is higher in these cases, we can reach the mortgage range 100%.
- The monthly installments go down due to the great margin of time available to us.
- We dispense with the pension plan: Although we may need a home insurance or a life insurance.
Disadvantages of a young mortgage
- When we refer to disadvantages we want to make it clear that we understand disadvantages as conditions that young people usually suffer.
- Not having enough savings: A situation that involves having recently entered the world of work.
- Lower work payrolls: Normal in a worker who has recently entered a company.
- We present little job stability and we do not have enough work experience, something that, if available, is taken into account.
- The a priori functionality of a bridge mortgage is that of acquiring an extra home while we continue to pay a previous mortgage, a very useful type of mortgage with clear functionality.
One of the perfect situations to use the bridge mortgage would be: We are in a situation where, for example, we need more space and we find a perfect home. In this case we consider a bridge mortgage to acquire the new house while the previous one is put on sale.
How do I get a bridge mortgage?
- There are some points that the lender entity takes into account before granting a bridge mortgage, are the following:
- A defined contract or present job stability: They are key to providing a responsible image.
- Income that supports us: If this is the case, the bank takes our request more into account, and if we also have previous savings, they can finance 100% of the home.
- No defaults on other mortgages: The bank will be clear that we are capable of facing this.
- Without personal loans with the same bank: As the entity questions whether we are able to face so many loans at once.
How much time do I have to sell the old house?
- A deadline is always a pressing concern, and it is not for less in these cases, a bridge mortgage, as we have mentioned, helps us with a second mortgage while we sell a previous home.
The term given to us varies depending on many criteria and between the same entities, the average is in 3 years.
This is so given that the bank offers us an extra help to carry the two mortgages, but we mark a time limit.
What happens if I do not sell my old property?
- In a bridge mortgage may be the case to exceed the term that we have imposed to sell the old property. If so, we will have to submit to the contract, which usually tends to make us start paying for the two homes and an additional cost for not having complied with the contract.
In the case that the house is sold we will only pay an extra cost as interest concept.
Mortgages at 40 years
- As the name indicates are mortgages in which the return period reaches 40 years, there are other more frequent alternatives such as 30 years and 35 years.
This class of mortgages are almost directly related to the young mortgage, mortgages to 40 years is a term that takes time, we rarely find a mortgage that is not young and requires more than 30 years to complete.
40-year mortgages and their characteristics
- Once again the advantages and disadvantages offered by mortgages at 40 years are similar to those of a young mortgage, let’s review the concepts.
- We are not interested in mortgages with a fixed interest, with such a long term the interest will be very high.
- We have more time, this translates into lighter payments.
- They will take into account our profile, because they always look for the perfect profile to distribute mortgages with security.
- We can discuss the terms with the entity, since having so much time can be more flexible.
- Other characteristics that define them are the possibility of obtaining 100% financing from the bank. Despite having many advantages a big vote against is the fact of looking for mortgages at 40 years with variable interest, this makes us at the mercy of the Maxibank throughout the contract.
- Subrogation mortgages we go through the head at the time we stop being in accordance with our conditions for the bank. At that time we can consider a mortgage subrogation, which “transfers” the mortgage to another bank to improve these conditions.
Subrogation Mortgages, what conditions improve?
- The maximum objective of subrogation mortgages is to improve our state, either because we do not agree with the current conditions or we think they are not entirely correct, we will see what conditions we can improve.
- Abusive clauses: At us we read dozens of complaints focused on this topic, one solution is to request a subrogation to improve our condition.
- Reduce interest: At the time of requesting subrogation mortgages we can get rid of associated interest or amortization, we also get rid of unnecessary links such as the one that creates a pension plan.
- Change the interest rate: A mortgage subrogation allows us to vary the interest rate that is applied to our loan, thus allowing us to move from a fixed rate to a variable rate and vice versa.
This will depend a lot on each personal situation.
Does subrogation mortgages involve expenses?
- Being much cheaper than starting a new mortgage subrogation mortgages brings a series of added expenses that we must take into account when it comes to see if it benefits us in our personal situation.
- Subrogation Commissions Mortgages : Although most banks apply them, there is a party that has withdrawn them. In cases where they are applied, by law, they are limited to a cap that decreases each day more.
- Commission for opening: It is not in most cases but some usually present a commission of 1% of all the capital that we have not yet amortized
- A part of this is necessary to discuss with the entity any cost, since a mortgage subrogation is not free, presents a series of expenses that vary depending on the bank with which we speak.
At us we recommend that there be a smooth communication between the two parties in order to clause as they are not entirely clear.