Purchasing a home involves a high outlay of money and, generally, the need to apply for a mortgage loan. The offer of financial products is broad, but there are also differences between them. Therefore, before taking out a mortgage, it is advisable to analyse each of its clauses.
What to pay attention to when taking out a mortgage
Interest rates or Euribor are terms that are already familiar. But it is not the only thing to compare before taking out a mortgage. What elements are fundamental?
Types of mortgages
Until not long ago, variable-rate mortgages were the most common. But with the rise in the price of money, fixed-rate ones have gained ground. The ideal option is to choose the cheapest without losing sight of the fact that, with variable-rate mortgages, you assume risks. Meanwhile, fixed-rate mortgages, although maybe more expensive, offer greater security. There are also mixed mortgages, a rising formula in recent years, with fixed interest in the first years and variable interest later.
TIN, TAE and Euribor
Although they may be confused, they are not the same. Some differences are worth knowing and help choose the best mortgage:
• NIR (Nominal Interest Rate): the agreed price for borrowing money. We'll get it by multiplying the Euribor by the differential applied by the bank.
• APR (Annual Equivalent Rate): includes aspects associated with the loan such as commissions, cost of discounted products, TIN, repayment period, etc. It allows you to compare loans under very different conditions and check the profitability of each one.
• Euribor is an official reference interest rate. It is the most used to calculate variable interest rates on mortgages.
Expenses and commissions
It is an essential aspect we sometimes forget. However, choosing well in this regard can lead to significant savings. We recommend comparing opening and cancellation fees, subrogation or novation fees. All of them can vary significantly from one bank to another. Another fee we must consider is that of the account linked to the mortgage.
Bonuses and linked products
It is common for banks to offer some advantages if we get products such as life or home insurance or pension plans. Although it may seem attractive in principle, it is worth doing the math to check whether or not these compensations are worth it. Sometimes, it is possible to benefit from other actions, such as direct debiting salary and bills.
Tips for taking out a mortgage
In addition to taking all of the above, it is advisable not to lose sight of some tips that will help avoid making mistakes when taking out a mortgage:
• Calculate your economic odds thoughtfully to choose an acceptable instalment and repayment period.
• Have some savings. Although 100% mortgages exist, the usual thing is that the bank does not finance more than 80% of the property value.
• Negotiating with several banking entities allows you to learn about market conditions. Also, you can improve loan conditions by negotiating with several entities.
• Avoid commissions as far as possible.
• Don't rush. A mortgage is a long-term financial product of a high amount. Therefore, take your time to do the math, resolve doubts and compare.
If you dream of buying a home in Spain, go to Spainhouses.net andstart your search now. Take a step forward to achieve your purpose.