The mortgage loans are an agreement between the client and the bank with which it is agreed.
This entity entails certain conditions that we have to fulfill if we want to obtain financing, this pact, in turn, will bring some interests that have to be specified.
It is very important to understand these aspects at the same time to apply for mortgage loans , otherwise we have to make sure not to advance with the process without being previously informed.
Mortgage loans and their purpose
- The purpose is common and maximum in these cases: you need a loan to pay the purchase of a property.
There is no endorsement and an entity is used to obtain mortgage loans in order to take the first step in the acquisition of a home.
Now we can briefly review some features of mortgage loans focused on first housing.
Mortgage loans for first home
- Usually get mortgage loans for our first home is much easier than if you demand for another reason, let’s review below why these reasons.
The first home mortgage loans carry less risk of default
When applying for mortgage loans a great aspect that is taken into account is whether it will be used for the purpose of a first home.
- This is because, in case of not having credit to make payments, the last thing we would decide to make a default is a first home, because a place to live is a right that is not going to let escape.
- In case our home is located in the center, it is much easier to sell, because the urban nucleus is a very coveted area for its positioning.
Mortgage fixed interest
- One of the factors that are taken into account when choosing a fixed interest mortgage is not to carry surprises in the long run.
There is not a lot of news that comes to us from mortgage loans in which the interest was not fixed and varies without leaving reaction time to its owner, leaving him without any possibilities other than to accept the growth of his mortgage.
Mortgage fixed interest or variable interest main differences
- Although it seems a very clear difference at first sight, there are some more that can not be ignored when weighing different options, let’s go over them.
- The main difference, in a fixed interest mortgage interest does not vary over the life of the contract agreed by the client and the bank.
- On the other hand, those that are not fixed interest mortgage tend to have a lower interest and we must take this into account when choosing a mortgage.
Advantages and disadvantages of a fixed interest mortgage
- Despite having explained that it is a fixed interest mortgage and having briefly compared it with a variable interest rate, the first one has its respective advantages and disadvantages.
We must know which are to recognize those that best suit our particular case.
- More interest:
- Even being in a good time for the fixed interest mortgage the interest of this one is greater than the one of its opposite, this one usually wades between 2% and 3%.
- Reduced negotiation:
- When offering a fixed interest mortgage entities tend to be less flexible in the other factors, for example: we find a good mortgage fixed interest but that leaves us a shorter time than desired to return the credit.
- A shorter term:
- The entities that grant the fixed-rate mortgage know that they can propose a shorter term for the repayment of the loan and at the same time offer a somewhat lower financing.
- High Commissions:
- Taking into account that it is not as much as in the past, the commissions continue to be higher, ending up with variable interest doubling to mortgages.
Variable interest mortgage
- The variable interest mortgage , unlike the fixed interest mortgage has the characteristic of having interests that fluctuate each time a revision is made.
The variable interest mortgage offers a lower interest and this makes them a more attractive option, achieving, with this, being the most requested in many countries.
Another characteristic is that of being able to vary the interest, this will not vary every month or every year, but at the moment of making a revision of the contract, the interests can go down as well as rise.
Advantages and disadvantages of a variable interest mortgage
- Having explained what a variable interest mortgage is about, we will analyze the disadvantages that these entail.
We will know which are to recognize those that best suit our particular case.
- A reduced interest:
- The interest is lower, which varies a lot, being below 3% and is not fixed.
- Much more flexibility from the bank
- The possibility that interest rates rise may cause the bank to offer us more opportunities in our variable interest mortgage .
- Longest term
- The variable interest mortgage can offer us a longer time range
- Minor commissions
- Having reduced a lot in recent years, the fees are at historic lows.