The mortgage loan is the most common type of loan when buying a home. It is a loan granted by a financial entity that is guaranteed by the house itself to be acquired. Usually, the loan does not cover the entire property price but about 80% of its appraisal value.
When we need more money than the percentage that the bank is willing to offer us, we can call on guarantors of the operation, a person who intervenes as a guarantee in a loan and who assumes the payment responsibilities in case the borrower does not face the debt or your interests.
Maximum amount
It is the maximum amount that a financial entity provides based on different parameters. The value of the home would determine the first of these. An independent appraisal company must carry out the valuation.
Financial institutions consider that monthly installment should not exceed 35% of monthly net income unless other guarantees are used.
Loan Term
The period agreed to return the capital and interest can usually reach up to 30 years. Still, the usual is between fifteen and twenty, to prevent the payment of interest is excessive. Therefore, it is convenient to adjust the loan term as much as possible, avoiding unnecessary extension.
A short term implies higher fees, and a more extended period makes the loan charges more affordable.
Amortization
It is the payment of outstanding capital. The repayment of money is usually more significant as the life of the loan progresses.
We can make an outstanding repayment when we want to reduce the debt because we have specific capital. The money contributed outside the regular installments is a partial amortization of capital. If we paid all the debt at once, we would be talking about a total early repayment.
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It is the amount that promises to pay periodically who signs a mortgage loan to the financial institution that has granted it. It includes the initial capital plus interest and does not necessarily have to be monthly; there are also quarterly, semiannual, or annual.
Lack
The period in which the capital amortization part is not paid and only interest is paid.
Interests
The price for the capital that we have been lent and pay in our installment is calculated based on the outstanding money and the interest rate.
Commissions
Financial institutions usually charge some commissions on their mortgages. For granting the loan, the Law regulates that all expenses related to the study of the loan must be included in a single initial commission called the ‘opening commission.’
APR
The Annual Equivalent Rate is the actual annual cost of the loan. The interest rate, possible revisions, and the fees that apply are taken into account to calculate it.
Types of mortgage loans
When you decide to sell your house, the price is an essential element to consider. These are some references so you can assess your property.
The cadastral value. For the city council to charge you annually the tax on real estate, it has had to calculate your home’s cadastral value. For this, it has been based on the meters, the location, and the plant. Although this is lower than the market price, it can serve as a reference.
The bank’s appraisal if you applied for a mortgage. Although it is higher than the cadastral value, it is also lower than the market since banks tend to price downwards.
You can turn to real estate agencies. After giving you a price, you can work with them exclusively or not. You have to know that if you decide to work with them, the price will increase from 3% to 5%.
You can also orient yourself through a home in your area and with similar characteristics, which has been sold recently. The price will give you a fundamental orientation of how the market is.
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