For those who can afford it, this is a good time to fund the buying a home. And it is that Spanish banks, which need to earn money to improve profitability hampered by the coronavirus crisis, they market very attractive mortgages with guys that they hover around historical lows.
Even so, from the HelpMyCash.com comparator they remember that having good interest does not ensure that you pay little for one of these loans, as there are other aspects that can increase its price. Therefore, they have developed a simple manual in which they explain how you can save the most possible money in hiring a mortgage.
1. You have to adjust the amount and the term
According to this comparator, the first thing to look at is the amount. Banks usually finance up to a maximum of 80% of the home’s value, so you have to have savings to pay the remaining 20% plus an additional 10% to pay the purchase and sale expenses. However, if the client has more own funds, they can consider using them to reduce the capital of the loan, because the less money the entity lends, the less interest will be generated.
Also important choose a repayment term suitable. If this is longer, the installments will be lower, but as interest accrues for longer, you will have to pay more in the long run. Therefore, it is advisable to establish a repayment period that allows you to pay affordable installments and which, at the same time, is relatively short (installments should never exceed 35% of what is paid).
2. The interest has to be attractive
The interest rate is a fundamental aspect of a mortgage, because the lower it is, cheaper will be the fees to pay. For this reason, it is advisable to look for loans that have a reduced interest. At a variable rate, interest is currently considered attractive less than Euribor plus 1%, while at a fixed rate it should not exceed 1.75% at 20 years or 1.85% at 30 years.
Within the market we can find various products that meet this condition. In the first group, the Kutxabank Variable Mortgage (from Euribor plus 0.89% for direct debit payroll and take out home insurance and a pension plan) or the ING Orange Mortgage (from Euribor plus 0.99% for direct debit income and sign home and life insurance). And in the second they do, for example, the Ibercaja One Step Mortgage (1.50% at 20 years in exchange for direct debit payroll) or the Coinc Fixed Mortgage (1.59% at 20 years without bonuses), among other.
3. Bonuses, the fair ones
The interest, of course, is usually reduced (or subsidized) for the hiring of other bank products: insurance, accounts, cards, pension plans … These can cost money, so it is important to choose well the services that will be signed with the mortgage so as not to pay more than the bill.
In that sense, it should be noted that a low-interest mortgage may be more expensive than one with a somewhat higher rate. for the higher price of the additional products that includes. Consequently, when comparing several offers, you have to take out the calculator to see which of them would be cheaper as a whole.
4. Better without commissions
Fourth, the ideal is that the mortgage loan hired has no opening commissionIt is an expense that can cost hundreds or even thousands of euros to the client. It’s fair to say, however, that most banks no longer charge it. A good example of this is the offer of Bankia, whose Mortgage Without Fixed Commissions (from 1.85% to 30 years for direct payroll) does not include this charge.
Likewise, if possible, it is advisable to avoid commissions for early repayment (to advance capital), subrogation (change bank) or novation (modify conditions). Many entities do charge them, but there is always the option of negotiating so that they are not included in the contract.
And one last commission that few people have in mind is that of maintaining the account to pay the mortgage, whose cost is usually between 30 and 70 euros per year. This can be avoided by signing a loan that does not include it, through direct debit of the payroll (banks do not usually charge it if this requirement is met) or with a negotiation with the entity so that it does not charge it.
5. If the bank pays some other expense, the better
Finally, from HelpMyCash.com they assure that there are certain banks that offer to pay constitution expenses that correspond to the client, such as the appraisal or the cost of the registration verification. The joint cost of these two items does not involve a large outlay (about 350 euros on average), but if the entity takes over, so much the better for the client.