Domiciliating a payroll, contracting life or home insurance with the bank, opening a pension plan or contracting an alarm are some of the conditions that banks can demand in exchange for improving the conditions of the mortgage with a lower interest. Getting a mortgage with an initial fixed interest of less than 2.50% for the first five years, in a mixed-rate mortgage, when the Euribor currently exceeds 4%, may seem very greedy. But all that glitters is not gold. Sometimes, these ‘extra’ conditions can eat up all the savings we get from the bonus… and even be more expensive. The financial comparator HelpMyCash They have done the math to find out if it pays off or not, and they confirm that, sometimes, supposedly cheap mortgages have a trick.
What is a subsidized mortgage?
A subsidized mortgage is one that is associated with the contracting of other products at the same time as the credit itself. This type of mortgage is characterized by the fact that, when contracting several products with the same bank, this offers better conditions when contracting the mortgage, the so-called bonuses.
In general, the main advantage is that the interest on the mortgage is lower, which means savings on the interest on their loan for the client. In exchange, you must contract other products jointly, such as insurance, accounts, cards, direct debits, funds, deposits, alarms, etc.
How to differentiate a subsidized mortgage from one that is not?
It is easy to detect whether the interest on a mortgage is reduced or not by contracting other products. From the Mortgage Law of 2019, Consumers can freely decide if they want to opt for a subsidized mortgage with the aim of obtaining a reduction in the interest rate. As HelpMyCash assures (@InfoHelpMyCash) Banks are legally obliged to indicate whether the price of their mortgage loans is subsidized (reduced) in exchange for meeting certain conditions. And if it is, they have to show the rate they apply whether those requirements are met or not.
The comparator explains it with a concrete and real case. “In case of Cajamar It is a good example,” he explains. On their website you can find the conditions of your Mixed Type Mortgage, whose interest is 3.40% for the first five years and Euribor plus 1.60% for the following years if you do not contract any additional product from the bank. On the other hand, its bonus rate is 2.40% during the first five years and Euribor plus 0.60% for the rest of the term If the client directs his payroll in the entity, take out your insurance of home and life, use one of your cards e invest in any of your funds.
Associated products do not always compensate
As a general rule, the total price of the mortgage is lower if these additional products are contracted, since the reduction in interest usually offsets the cost of the links. Now, if the number of bonuses is high (more than three), It is very likely that this offer will be more expensive than other mortgage loans that have a higher rate but can be obtained with fewer extras.
For example, let’s say that a person needs 150,000 euros to be returned in 30 years and asks for Cajamar mixed mortgage. With the maximum bonus, a 2.40% interest for the first five years, so your first 60 installments would be almost 585 euros per month. However, taking as a reference the prices published on the Cajamar website, the cost of the insurance, the card and the fund would amount to about 545 euros per year, so The total to be paid for this loan would be about 37,825 euros during the first five years.
And now let’s imagine that that same client asks for the EVO Banco Flexible Mortgagewhose interest is a little higher, of 2.45% the first five years and Euribor plus 0.60% for the following, but it is subsidized only for direct debiting the payroll and taking out the entity’s home and life insurance. In this case, the first 60 monthly payments would be almost 589 euros, but since the annual cost of the associated products would be lower (just over 380 euros per year for an average profile, according to the entity’s website), The total to be paid for this loan during the first five years would be around 37,240 euros; less than with Cajamar.
But money is not everything. It must also be kept in mind that The bonuses “oblige” the client to have contracted certain products while the mortgage is still alive. And those additional services do not have to be convenient for him. For example, in the case of Cajamar, the maximum bonus is achieved by maintaining a minimum balance of 3,000 euros per year in an investment fund, which is a high amount that the mortgage holder could use for other purposes (with less risk of loss and commissions). ). And you must also take out life insurance, which is only advisable if the applicant wishes to protect his or her heirs (and whose price will increase as the owner gets older).
Essential: do the math and compare
To know whether or not it is worth opting for the mortgage with the reduced interest or staying with the one with a higher interest rate, you have to be patient and crunch the numbers. According to HelpMyCash, the solution is simple: you have to calculate the total price of the loan, that is, what will have to be paid in total for it taking into account its fees, its commissions and the cost of its associated products. Thus, the client will be able to compare several offers and find out which one would really be cheaper.
The comparator remembers, however, that the bonuses are not carved in stone in the mortgage offers: you can negotiate with the bank during the application process to lower your interest without having to contract certain products. The chances of reaching an agreement with the entity will be higher if the client enjoys a very good economic situation or if you entrust the processing to a mortgage brokerwho is a professional specialized in achieving the best possible conditions.
2023-09-15 03:01:46
#Beware #lowinterest #mortgages #bonus #trick #expensive
