Mortgage Loan Recommendations
Given that the acquisition of a home requires deep reflection, the decision on the purchase of a property, as well as the application for the appropriate mortgage loan, What Is Mortgage Loan?
it is advisable to follow a series of recommendations.
- First of all, before buying a home, you should assess whether it is really worth buying or renting. Each option has its advantages:
- The purchase is a long-term investment, but it involves a significant financial outlay. Normally, as the time of the loan passes, a little less is paid each time, while the rent can be updated, usually upwards.
- The rent, normally, does not imply the mandatory expenses derived from the property of the house, such as insurance, taxes, or community expenses. Generally, the rent supposes a lower price than the installments to be paid in the purchase option. Likewise, the costs of initiating a rental contract are not as important as those associated with buying a home (entry, formalization costs, deed, agency, notary, etc.).
Once the option to purchase a home has been decided,
it is essential to know in depth the economic possibilities for the purchase, remembering that not only installments must be paid, but also the payment of the entrance fee. Likewise, it will be necessary to anticipate that the different installations can be met throughout the life of the loan and to know what its impact will be on the family economy. In this sense, and as a guide:
- The totality of the monthly installments to pay the family debts (including those of a mortgage loan), should not exceed 40% of the monthly income of the family unit (the remaining 60% must be able to be used for the daily life of the family: eat, dress, pay bills and, where appropriate, be able to save).
- For this reason, it is highly recommended that, before embarking on applying for a mortgage loan, you carry out simulations regarding these indebtedness limits.
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When purchasing a home, it is very important to know a series of prior issues,
such as the price of the home to pay and the price that we can pay, its environment or location, as well as its internal characteristics:
- With respect to the price of housing, it is necessary to take into account not only the financial resources that the consumer currently has available but also the forecast for the future.
- Regarding the environment of the house, it is necessary to take into account, on one hand, the surrounding environmental factors (noise, pollution,…) and, on the other hand, the characteristics of the environment itself (proximity to the workplace; communication with schools; the existence of leisure centers, gardens, parks, hospitals, pharmacies, supermarkets; connections with public transport; existing communications;…).
- With regard to the internal characteristics of the dwelling, it is necessary to take into account, among other aspects: access to the dwelling, construction conditions, and common facilities and services, as well as the distribution of the dwelling and interior
(interior layout, orientation, and lighting, among other aspects).
- If you are interested in a home, it is always advisable to consult trusted people with knowledge of real estate and construction issues, who can give an opinion on the home that has been visited. If it is a second-hand home, it would be interesting to have the opinion of the neighborhood that will know first-hand the situation of the home, as well as the problems that, if any, may exist.
- Check with several financial institutions to be able to choose the one that offers you better loan conditions.
- In your mortgage loan, assess the interest rate (fixed, variable, or mixed) that might interest you. In the fixed rate, the monthly installment to be paid remains fixed throughout the loan, however, it is usually higher than the variable rate and with shorter repayment terms. In variable interest, the rate is reviewed periodically and is normally adjusted to the Euribor, however, the repayment terms are usually longer. In the case of variable interest, never accept spreads that are too high.
- Be especially careful with certain reference indices such as the IRPH, as well as with the incorporation of certain clauses in the loan contract such as the floor clauses or with the contracting of the loan in a different currency from the one in which you obtain your income (that is, different to the euro), what is known as multi-currency mortgages.
- You should know that if you are going to request information about a house that is being planned, under construction, or built, in your first transmission, the establishment that sells said house must provide you, free of charge, with the so-called Abbreviated Information Document. Likewise, the company that sells homes will make available to consumers an Information Note on Price and Payment Methods. medicine dilvery app