Locking the mortgage can be hard work. Many people still do not see it clearly when it comes to going to the bank and asking for financing to buy a house or an apartment. And although it may not seem like it, it can be really difficult to decide on a mortgage or another: the interests, the commissions, the associated insurances, the expenses of the constitution of the mortgage, etcetera.
So that contracting with one of these products does not become an odyssey, we recommend the financial comparator HelpMyCash, who has prepared a guide on what to consider when applying for and contracting a good mortgage loan. Here you have it:
1. EVALUATE IF YOU MEET THE REQUIREMENTS
The first thing to do is to check that we meet the requirements that banks usually demand. In general, for us to be given a mortgage we must enjoy a stable economic situation (indefinite contract, certain seniority …), a good income, a healthy credit history (few or no outstanding debts), etc. Likewise, we will have to have enough savings to pay the entry of the house plus the purchase and sale expenses: an amount equivalent to 30% of the value of the property.
2. COMPARE THE OFFERS OF VARIOUS BANKS.
If we meet those requirements and demands when applying for a mortgage, the next step will be to go to the bank and formally request a mortgage. The idea is to go to a minimum of three banks so that we can compare the various offers and we can keep the one that seems most interesting for our situation.
3. VARIABLE OR FIXED MORTGAGE? IT DEPENDS ON YOUR PROFILE!
It is probable that the banks to which we go to request a mortgage give us the option of mortgaging us with a variable interest (linked to the Euribor) or with a fixed one. The variable rate can come out more on account if we return the money in 15 years or less or we want to pay low fees during the first years, while the fixed rate can be convenient if the repayment period is 20 years and we prefer that our monthly payments are always stable.
4. LOOK FOR LOW INTEREST
Whether it is a fixed or variable mortgage, the ideal is that the interest is as low as possible, since this way the installments will be cheaper. In the first case, it is best if the rate is less than 2%, while in the second, the differential (the part that Euribor adds to determine the interest) should be around 1% or less.
5. BEWARE OF EXTRA PRODUCTS
In many cases, the interest offered by banks will be reduced in exchange for contracting other products: insurance, accounts, cards, and pension plans … These additional services can cost us money, so we will have to assess whether it is worth signing or If it is better to take out a mortgage that, despite having a higher rate, does not include these extras.
6. LOOK AT THE COMMISSIONS.
It is also important that we look at commissions, which are charges that the bank will not charge for certain operations. The best known are the opening (for giving us the mortgage), the early repayment (for returning money before the time), the subrogation (for changing entity), and the novation (for agreeing to modifications). The best thing is that our mortgage loan does not include any.
7. MAKE SURE YOU CAN PAY THE FEES.
After reviewing all the mentioned aspects, we will have to make sure we can pay the fees without problems. HelpMyCash.com recommends that the amount of the mortgage monthly payments, plus that of other possible debts that we have, does not exceed 35% of our net income.
8. READ ALL THE “FINE PRINT”.
Fees, commissions, or the price of additional products are not the only expenses that a mortgage can have. You will also have to pay the appraisal, the registry verification, and the copy of the deed … For this reason, you have to read all the “small print” of the mortgage offer made by the bank to know how much your loan will cost us in your whole. In this way, in addition, we will ensure that we do not slip any hidden clause.
9. DON’T BE SHY: ASK ABOUT EVERYTHING YOU DON’T UNDERSTAND.
In case you do not understand any of the clauses of the future mortgage, you can ask the banker to explain its content to you in detail since it is their entire obligation. One day before the mortgage is signed, we will have to visit the notary for advice, so we can take advantage of it to resolve last-minute doubts.
10. NEGOTIATE THE MORTGAGE TERMS.
Finally, it must be borne in mind that all aspects of mortgages are negotiable. Consequently, it is advisable to try to reach an agreement with the bank so that it offers us better conditions. Achieving it will be easier if we have a good profile, and we can present several attractive proposals from other entities.