How to get a mortgage

If you are thinking of buying a house, but you need financing to take the step, take good note of the four steps you should never skip if you want the bank to grant you a mortgage.

Asking for a mortgage seems like a simple task: just like any other loan, it should be enough to go to the bank, present some documentation that proves that you are a solvent customer and wait for approval. However, these types of products designed to finance the purchase of a home have much more crumb.

If you need to hire a mortgage to buy your future home, but you have no idea where to start, in Kelisto we tell you what are the four basic steps to get it successfully.

1-Save

The first step you must take to get a mortgage is to save. At present, practically no bank will give you all the money you need to buy the house you like: it is usual to keep 80% of its purchase or appraisal value (the lesser of the two), unless You are a very solvent customer, which would allow them to go up to 90-95%. Therefore, if the house you have looked at is worth 300,000 euros, no entity will grant you more than 240,000 euros, which would force you to have 60,000 euros in your pocket.

To this we should add an extra item: the formalization costs of any loan of this type. With the new mortgage law it has been totally clear who will have to pay the expenses of the mortgages and it has been determined that the consumer only has to pay the appraisal costs and the notary costs, in case he wants a copy of the deed. Therefore, these costs have been drastically reduced, but you still have to prepare an extra 400 euros for an expert to determine how much the house you want to buy is worth.

2-Account

When a bank grants you a mortgage, it is lending you a large amount of money that you will not pay back for a long time. Hence, entities want to make sure that their clients are solvent enough to be able to return their debt, no matter what. What does that mean? They will not want your mortgage fee to represent more than 30% of the money you earn each month. In this way, the possibility of default is avoided in the event of things like:

That the Euribor rises and, with it, the share of your mortgage is triggered
That your income be reduced considerably (for example, because you remain unemployed) and can not continue to face your payments.
This calculation is not only part of the policy of the banks: it should also be burned into your mind if you want to prevent the payment of your mortgage from becoming an ordeal.

3-Decide if you prefer variable or fixed type

In recent years, fixed mortgages have also become an option for all those who want to buy a house. If only two years ago this type of loans only accounted for 10% of the total, now they account for almost half the market. The reason? The downturn that their prices have experienced: only three years ago, mortgaging at a fixed rate meant paying an interest of between 4% and 5%. Today, you can find offers at a fixed rate from 1.6%, as you will see in our ranking of the cheapest fixed mortgages in the market.

When deciding if you prefer a fixed or variable mortgage, you must ask yourself a first question: what risks can I or do I want to take? Fixed mortgages offer total peace of mind, since your quota will not change throughout the life of the loan, which does happen with the variables, whose monthly payment can increase or decrease at the rate that the Euribor does. Of course, that stability has a price, since, in principle, you will be paying a higher interest than you would pay with a variable. Therefore, you should ask yourself if you prefer to assume an extra cost in exchange for gaining peace of mind, or if you are willing to take certain risks in exchange for the possibility of ending up paying your bank less.

In addition to making this reflection, keep in mind that fixed mortgages and variable mortgages have differences that go beyond the interest rate they apply: for example, fixed mortgages charge some commissions that are not present in those of variable rate and all They set their interest based on the return period chosen by the customer.

4-Compare offers

The last step you should take to get financing is to compare offers with tools such as our fixed mortgage comparator and our variable mortgage comparator. Only in this way can you find the ones that best suit your profile, compare the interest that each one of them applies and, above all, analyze the rest of the conditions that apply, such as the commissions or the linkage that they require.

Beyond the interest charged on a mortgage, the fees that your bank could charge you are an element to take into account, especially, the opening (paid when you take out the loan) and the early repayment, which are the ones that You would have to pay if you pay all (or part of) your debt early.

In addition to this, you should not forget to analyze the linkage of each offer. With few exceptions, banks will require you to contract with them several extra products if you want to access the lowest interest of their promotions. Keep in mind that many of the related products can be an important disbursement, as is the case with home or life insurance, so it is essential that you analyze if you really worth it.