The mortgage is a loan that is guaranteed by the value of a property, it means that any financial institution offers us, processes and provides a loan to some Interest rates and a guarantee that is based on the value of a property, in this case it is a house, construction or a complex.
It is also known as a product that the bank offers to its clients so that they are creditors to receive an amount of money, which in this case is a "Loan capital", this in exchange for the commitment that the client makes the return of this loan capital together with the corresponding interests that are generated according to the periodic payments or installments. Other types of accounts include different types of guarantees, but this one in particular, the mortgage loan, has the additional guarantee of that property acquired.
In the mortgage loans There are two elements that are essential for it to be carried out. The first being the mortgage loan contract in question, where the debtor's obligations and all the loan conditions appear in detail, as well as the installments, the amortization system and the debtor's obligations. The second element includes the mortgage guarantee, which means that in the event of non-payment or the debtor refusing to pay, the lender can take possession or take over the property or property of the mortgaged person in question.
The characteristics of the mortgage loan, Interest rates
- This type of loan, mortgage loan, will suppose us as debtors a very important financial commitment in the future, it is special for long terms and carries the risk of losing an equity, as well as guarantees the necessary capital to acquire one.
- The type of mortgage credit tends to have a high amount in addition to a long duration, as it involves high amounts of money and with a guarantee as important and of great value as an equity, good or real estate. Before contracting a debt of this magnitude, the risks and feasibility of liquidating this debt must be assessed as a debtor, since the income we have must be recurring and adequate with respect to the debt and commitment to be assumed. It is advisable to have a combined initial savings and net income before assuming the responsibility of owning a mortgage loan.
Interest rates they are indicators to measure the profitability of a purchase or a sale according to time. In the case of mortgage interest rate, interest rate, or interest percentage It is a reference to the total of the credit or investment. Depending on the amount of money and the term or term for the deposit or return, the term is given and when it is not paid there will be nothing.
On the other hand, the interest rates will be an indicator of the percentage of that capital which will be converted into a benefit, and in the case of being a loan, such as a mortgage loan, it will be a percentage of the capital that will have to be paid. The usual thing is the application of interest in periods of one year, although it is also possible that they are applied as days, months, fortnights, or weekly. The interest rate can be measured as the nominal interest rate or as an equivalent annual rate. Although the previous two are related, they are not the same, this measurement will also depend on the negotiation between the debtor and the collector, since the credit may have a different interest according to this negotiation.
The amounts of the mortgage loans.
There are a series of factors that determine the limits of the amount of the mortgage loan, as well as the resulting installment and the repayment term.
One of the factors is the home's appraised value, which can be confused with the sale value of said property. exist authorized appraisal companies They are companies whose task is to assess the appraisal, these companies are registered and authorized in the registry of the Bank of Spain. Naturally, the maximum of a mortgage loan cannot exceed 100% of the appraised value, despite this there are some financial entities that reduce this amount to 70% or even 60% of its appraised value.
The second determining factor of the amount of the mortgage loan It is the borrowing capacity of the applicant. Financial entities carry out a study of income and expenses in order to be more aware of the payments that the applicant can make monthly, or of any modality that has been agreed, the payment of the mortgage loan. Usually the monthly fee is not more than 35% of the applicant's total income after expenses. A minimum of 20% of the total value of the property is strongly recommended, in addition to 10% for the associated expenses that the mortgage loan entails.
The costs involved in a mortgage loan are:
- Interest rates
- Associated expenses.
- Commissions
Interest rates.
There are three types of interest rates:
- Mortgage loans at fixed interest. In this modality, the interest rate does not vary during the agreed duration of the mortgage loan, in addition to the monthly payment. The notable advantage and for which we recommend this modality is that the monthly payment will be the same and will remain the same for the duration of the term, regardless of whether market interest rates rise or fall. The disadvantages are that the amortization is lower than in the variable rate.
- Mortgage loans to variable interest. This modality is composed according to the value of the reference index, it may be the case of Euribor, plus a fixed spread. The fee has an amount that can be updated to the value of the index that is referenced. The advantages and disadvantages of this modality are easy to understand, as interest rates rise, the fee will be higher, as interest rates fall, the fee will be lower or lower. This is verified with an example: if the Euribor that is referenced to a semester is at 0,55% and the differential is 2%, in total 2,55% interest would be paid semi-annually, that until the next review, in addition to being an annual review.
- The loans mixed mortgages. They are usually the most popular. Applying a fixed rate for part of the payment term and applying a variable interest rate for the remainder of the term. We highly recommend this modality, due to its versatility and the advantage that our quotas are referenced with Euribor in a period of decline. For that it is important to be aware of the rises and falls of Euribor.
Euribor is the benchmark for monthly installment calculations, used in most variable rate mortgages. This same index had an indicator of 2016% in February 0,01. This makes us see that, had we opted for a variable mortgage loan modality, we would have paid a fee with 2.01% interest at that time, a good time for the variable interest modality! Not? Perhaps, as of May 2018 the Euribor is set at -0,188, judge for yourself.
The associated expenses.
The mortgages entail a series of associated expenses, among them are:
- Property valuation or appraisal expense.
- Agency processing fees. It usually represents 3% of the financed amount.
- Tax for the formalization of the loan with a mortgage guarantee.
- Expenses for Property Registry and notary.
Commissions It is important to know how to advance!
There are them for opening, the commissions for opening are normally a percentage of the amount loaned by the financial institution. There are also compensations in case of total or partial withdrawal (amortize), which in this case would be to pay the debt before the end of the term. The compensations to be amortized are usually tempting since having an extra capital or unforeseen income, this can be used to settle the debt, although this does not usually happen since the financial institution does a study of the applicant or client, before giving a loan, looking so that this can not pay off the debt before, after all it is the lucrative part of the mortgage loan.
IRPH or Euribor?
Both are quota benchmarks, although the difference between the two is that the Euribor is applied monthly and is used for other types of loans in addition to mortgage creditFor the type of mortgage loan, the IRPH index is usually used, which is used especially for the acquisition of homes and loans of that nature.
Which is better?
We recommend always keeping abreast of the forecasts of rise and fall with respect to the EuriborThis benchmark often has many ups and downs that make anyone feel unsure about choosing it as a better option.
Despite the fact that the IRPH benchmark index has a degree of stability considered "good", Euribor offers us quite favorable drops, this is an issue that can be debated regarding what kind of benefits we want to obtain in our annual installments. Do we want to pay less from time to time and risk paying extra too? Or do we prefer a stability that takes us to different degrees of height but without jumping?