The Spanish real estate sector is going through a difficult time. Despite the rise in mortgage prices, housing prices continue to rise because there is still more demand than supply. Something similar happens with rents, and their prices have not stopped rising in the last year and a half.
Although the sale and purchase of homes remains at more or less stable figures, the signing of mortgages is on the decline.
The mortgage market has already had several months of declines. Last August, the mortgage firm plummeted 22.7% compared to the same month of the previous year.
The average amount of mortgages established has also decreased, and is now estimated at 139,171 euros.
In the accumulated total of the year, the drop in the number of mortgages granted is 15.4%. For experts, this has a lot to do with the rise in interest rates and with the demand on the part of the banks more requirements to grant this type of loans.
In this scenario, it is worth taking into account some keys to be able to access a mortgage loan with fewer difficulties.
Do not look for a 100% mortgage plus expenses
Until a few years ago, it was relatively easy to find banking entities that offered their clients full financing of the amount of the home purchase and the expenses associated with the operation through a mortgage loan.
Since the 2008 crisis, conditions have been tightening and banks and savings banks are now limited to offering a 80% of the purchase and sale value or the appraisal value of the home.
Therefore, whoever wants to buy a home must have saved 20% of your total budget.
Since banks are now more demanding when evaluating a person’s solvency, what financial experts advise is have saved 30% of the amount (the extra 10% is to be used to cover the costs of the operation).
To help young people under 35 years of age to acquire a home, the Government launched a few months ago a mortgage guarantee system. This can be used to cover that 20% of the amount of the home that the bank is not going to grant as a mortgage.
Improve debt capacity
Debt capacity is the proportional part of one’s income that a person owes. allocate to the payment of installments derived from loans and credits.
Although a recent report from the Bank of Spain indicated that many households allocate more than 40% of their income to mortgage payments, this is not advisable.
Banks monitor the borrowing capacity of those who apply for a mortgage loan. Adding what will have to be paid for the installment of this loan and other outstanding debts that the interested party has, the result It should not exceed 40% of your monthly income.
To improve debt capacity, two options can be implemented: look for new sources of income, or reduce outstanding debts.
In practice, what many people do is try to settle outstanding debts before going to the bank to request a loan to buy a home.
Assess the amortization period
The repayment period refers to the time it will take to pay a debt.
In the case of mortgage loans, The longer the repayment period, the lower the monthly payment. The downside is that the longer it takes to pay off a debt, the more interest must be paid for the same.
Experts advise doing your accounts carefully to choose the most appropriate repayment period in each case. When in doubt, it is better to choose a longer term to have more liquidity each month. In the future, if the economic situation is good, we can start doing early repayments to finish before paying the debt and save on interest payments.
Choose between mixed, variable or fixed interest rate
When the Euribor is on the rise, as at the moment, banks tend to resist offering fixed rate mortgages. If they do, the type of interest is usually higher than that applied to a variable mortgage. The great advantage of the fixed rate is that the monthly payment will be the same throughout the life of the loan.
He variable interest rate, is the most common. Its fluctuations can play for or against the mortgaged. Now the rates are high and that causes the installments to rise, but for a few years the Euribor has been negative, allowing significant savings to those who had a variable rate mortgage.
Currently, many banks are promoting the commercialization of mixed rate mortgages. With them, the client pays a fixed fee during the first years, and then switches to a variable interest rate.
Given that the mortgage loan is a product that is contracted over the long term, choosing the right type is not easy, because in 10, 20 or 30 years the market can change a lot.
Whether or not to hire linked products
Banks can offer their clients improvements in the loan conditions if they agree to contract linked products such as home insurance or a credit card. What they cannot do is condition the granting of the loan to the contracting of these products.
At first glance, obtaining a reduction in the interest rate may seem interesting. But, when it is linked to the contracting of other products with the bank, it may happen that the savings are not so great.
In these cases, you must calculate to see how much you are really going to save on the mortgage payment and how much you are going to pay over X years for having contracted those additional products or services.
Experts recommend hire as few associated services as possiblebecause it is always possible to find insurance at a cheaper price than those offered by the bank.
2023-11-05 14:31:00
#Keys #mind #applying #mortgage #Estrella #Digital
