Tips for Choosing The Best Mortgage Loan for Communities
Before making a decision to hire a mortgage, we highly recommend making a thorough comparison between different products offered by the mortgage market as an appropriate selection can lead to significant financial savings for the home buyer. Along with the characteristics of these products should also be considered socio-economic circumstances of the buyer in the present and in a foreseeable future, and well adapted to the characteristics of the mortgage and their own interests. A good choice can save significant amounts of money. In addition, information of all aid to young Communities.
For example, if the buyer provides an increase in their ability to purchase (for an inheritance, because the housing case and gained two salaries because their work or business expectations have improved by a drop in interest rates, etc.) may be interested to repay the loan before it signed the loan, but the committee for the early cancellation may be very high and involves “lose” money in the features that can obtain another mortgage.
For this reason, it is essential that the buyer of a home knows the key variables affecting these loans:
- Amount of the loan. Generally, banks tend to offer mortgages amounting to 80% of appraised value of the house, although in recent years as a result of high house prices, financial institutions have offered products with higher limits on this 80%.
- Value pricing of housing. Is the value of housing as certified by a qualified and accredited for this purpose.
- Depreciation. Consists of the total or partial payment is made to repay a loan. The amount payable includes the amount that is more interest on that loan. There are different ways to return or a loan. The most common method is the French quota constant.
- Deadline for depreciation. Time limit for repayment of the loan (now this term varies widely, moving from 20 to 50 years).
- Interest rate. The amount, expressed as a percentage, to be payable to the applicant for payment of the loan amount has been provided. There are several types: the fixed rate remains constant throughout the life of the loan, the interest rate variable multiple updates as agreed in the contract in the rate of mixed blends the fixed interest during the first stage of the life of the loan becomes variable from the time that is set previously in fixed mortgage interest is variable, but to pay the monthly fee remains fixed, so that if you raise or lower rates, the repayment term increases or decreases.
Most of the mortgages with variable interest will be reviewed periodically based on the Euribor for the month in which the review.
Euribor
Is the main official benchmark that is used for setting the interest rates on a mortgage. Represents the simple average of the daily interest rates applied to transactions in a cross in the market for years interbancarios1 deposits of major financial institutions in the area of monetary union.
The amount of the loan, the repayment period and interest rate determines the monthly fee to pay, hence the importance of comparing these values together because ultimately, this share is going to have to assume the buyer during their mortgage. As already mentioned, this fee includes part of the amount to be provided, plus interest on the loan within that period.
Either way, it is recommended not to get carried away by attractive offers in installments, interest rates, grace periods (the period of time, at the beginning of the loan, which pays only the share of interest), etc. . and ignore other key aspects such as costs and fees associated with mortgages.
In this sense, a home buyer has to bear the costs of the taxation of housing, registration, management and notary public, plus taxes and fees associated with the financial loan. These costs may include:
- Tax on documented legal acts. In the case of mortgages, taxes the first copies of the scriptures of formation of the mortgage. The rate to be applied varies depending on the region and the amount of the loan.
- Commission to open and study. Percentage, usually negotiable, which charges a financial institution for costs incurred as a result of processing the mortgage loan contract.
- Commission for cancellation or early repayment. Rate applied by the financial institution in the case of partially or totally cancel the Mortgage prior to the deadline fixed for redemption. On variable interest loans the commission is limited to 1%, while fixed interest loans, it is generally higher. Thus, with a high commission for cancellation, an early repayment of the loan or negotiate a new mortgage with better terms, may not be an economical alternative recommended.
- Committee of subrogation. Rate applied on the loan when you run the option to change the mortgage of a financial institution to another, with the possibility of changing the interest rate, keeping the time and amount to be recovered.
Ultimately, hiring a home loan should take into account each of these factors before selecting the mortgage that best suits according to socioeconomic and personal circumstances of each.
A value that can help to compare the variety of products available in the mortgage market is the annual percentage rate (APR). This value is obtained by applying a mathematical formula which allows results comparable mortgage offers from different financial institutions. This formula applies the values of interest rate, the repayment period or commissions, but does not include other costs such as valuation, management, notary or taxes.
Outside the context of general content that affect all types of mortgage loans, will also be considered a result of those loans or protected activities in collaboration with various public authorities.
Protected action on mortgage loans
Many different types of housing in Spain are associated with the aid to which they are entitled, the so-called agreed loans, sometimes also known as qualified loans, although both can be considered roughly equivalent in form. These loans are granted by public banks and private fruit of cooperation agreements signed between the government and those entities.
Loan conditions agreed under the State Housing Plan 2005-2008 sets the maximum amount of the loan in 80% of the writing or award of housing. The repayment term is up to 25 years and the initial effective interest rate shall be agreed annually by the Council of Ministers (for the year 2007 was set at 4.35%).
The State Housing Plan also incorporates the possibility of benefiting from these loans as agreed, in the event of purchasing second-hand housing to meet the requirements legally. In this case it is important to know that those who receive housing aid will have limited the selling price in the following sales or transfers during the period established by the Autonomous Communities, which may not be less than 15 years from the date of acquisition.
Also, keep in mind that if the first access to purchase the property (should not be or have been the holder of a second home) and family income does not exceed 3.5 times the statewide Public Multiple Effect Income ( IPREM), where purchase of housing or Special Conditions and General Price in the acquisition of protected dwellings used, the amortization of fees associated with a mortgage will help (loans agreed subsidiación) to facilitate the family burden posed mortgage payments. In the same way, this type of housing may also be receiving a State Aid Direct Input (AEDE), whereby it is possible to reduce the amount of the loan agreement.
Hipoteca Joven
It should also be noted that many state or municipal governments have signed cooperation agreements with financial institutions to offer products that facilitate young people’s access to housing. They are called “Hipoteca Joven.” These loans typically have terms more favorable than those generally provided free by the financial market and, if available, can be a good option for young people wishing to buy a house.
