Mortgage Advice for First Mortgage
21 February, 2023 | Alba Tebar
Are you about to buy your first house in Spain? It is normal to have lots of doubts regarding this topic. As in every first time in life, doubts can overwhelm you and the fear of starting a new project can block you. In these cases, it is quite common to ask for advice from your older relatives that have already bought a house and have their mortgage already paid. Asking for your relative’s advice is always a good idea, of course, but the thing is that times have been changing. And so are the rules of the game.
In that sense, asking for help from a professional and objective source is the best you could do. In Hipotecasplus we have been working in this field for a lot of years, so we have a lot of experience in the mortgage and income sector. So, if you would like to have some good advice to help you choose the right mortgage and the right bank entity, do not hesitate to contact us! We can offer you support, guidance and the best tricks to make from this experience a good memory. And we can guarantee you that we will fins the best mortgage of all the market that better fits you and your personal interests! There’s always a perfect mortgage waiting for you.
Furthermore, we have also written this article in order to inform you about the most important things you should know before buying a house. Being properly informed about some aspects related to mortgages is a good way of ensuring success in that new project you are about to start. So, keep reading and… take a notebook and a pen: it’s time to take some notes!
How to choose the best mortgage of the market
As we have previously mentioned, there is no right or wrong mortgage, in general terms. However, what there is, is a lot of different options among the market, and there will be one that is the best for you. Let us explain the general details and requirements you your have in order to obtain a good mortgage, and let us polish the details with your personal needs to do the final “match”!
- Borrowing capacity.
One of the main factors that influence a lot when talking about mortgage is your borrowing capacity. You should not be spending more than 35% of your monthly income in order to pay mortgage. Nevertheless, this percentage could be expanded until a 40%, if needed and depending on the case. This advice is also corroborated by the Banco de España, so it is important to keep that in mind.
What is more, remember that your borrowing capacity is highly appreciated by bank entities. By this way, they have the security you will be able to return the loan with no troubles.
Banks will also positively appreciate your savings. As much as you have, the more possibilities you will get to have your mortgage approved. That is because savings are crucial when buying a new house. Virtually all banks offer non-residents between 50% and 70% of the purchase price, depending on whether you reside in the Eurozone or outside the Eurozone. You have to pay the rest with your own pocket. In a word, the best thing you cloud do before buying a house is making sure you have savings corresponding to, at least, the 30% of the property’s value.
- Decide between fixed or variable interest rate
A fall of 17% in mortgages is expected for this 2023, as a result of the general increase of priceswe have been experiencing since the previous year. As a result of that scenario, bank entities will promote variable rate mortgages in 2023. Variable rate mortgages are those in which the interest rate is lower compared to fixed rate mortgages. Variable rate mortgages, and they are directly affected by Euribor.
Arrived at that point, it is important to highlight that it is almost impossible to say if the fixed interest is better than the variable one. They both will depend on many different factors, and what can be better for one person, might be the worst for the next one. So, as we always say, always take advise from an expert-like Hipotecasplus– and try to adjust at the interest rate that will benefit you and your family the most.
- Do not contract combined products if you do not need them
One of the best pieces of advice we can give if is to not trust everything banks will try to sell you. They mostly make their economic benefits by selling certain products that they link to mortgages and other personal credits. However, you must know that, most of the times, they are not a guarantee of success or even a way of getting discounts on the payment of your mortgage debts.
So, in that sense, remember that it is not necessary to take out home insurance or domiciliate your payroll as a previous step to sign a mortgage. As the estate credit law established in 2019 as a measure of transparency, there is no mandatory linkage between mortgage loans and the contracting of other products offered by the bank.
- Take an eye at TAE (Equivalent Annual Fee)
TAE is a term that includes both interest and associated expenses, and is basically the type of interest that indicates the cost or effective return of a product. These associated expenses would be the possible commissions charged by the bank, mortgage cancellations, and products linked to mortgages, among others.
In addition, this is a fundamental aspect that has to appear in the pre-contractual information that your bank is obliges to provide you. So, you should pay attention to this when comparing different mortgage options, in order to choose the best one of all of them!
Anyhow, taken as a whole, if you have any doubts or need some external help and orientation regarding this process, you can always ask for it at our experts from Hipotecaplus. We have been working in this field for lots of years, so we have a lot of experience regarding mortgages! Remember, feel free to ask us anything you would like to know or need to clarify if you are about to buy your first house. We will be more than happy to help you! And, what’s more, you can get in contact with our offices without any commitment!