Which Type of Mortgage is Right for Me?
28 February, 2023 | Alba Tebar
When talking about mortgages, it is quite difficult to know exactly what is best for you and your family. There are plenty of possibilities and they all depend on your personal needs and characteristics. So to say, what might be a good mortgage for you, might not be as good for another person. That explains why deciding which type of mortgage is right for you is closely linked to your personal details and needs.
In that sense, you will find no better option than to rely on an expert in order to find your best mortgage. In Hipotecasplus, we are brokers that have been working on that field for so many years, and can be your solution. We are the bests in finding which type of mortgage will better fit you, and we will negotiate with banks to obtain it, according to your profile. Feel free to ask us any doubt or question you may have regarding mortgages: we will be more than happy to help you!
But, apart from asking us for advice and guidance, you can also check this article and discover which are some of the tricks we all have in order to find the best type of mortgage for us.
What will make a mortgage worth it?
There are plenty of bank entities that will offer you lots of different mortgages and different discounts with the aim to attract you. However, it is important to stay focused on your personal needs and characteristics and choose a mortgage and a bank according to them.
That’s why we proceed to explain to you some of the main points you will need to pay attention to, in order to make sure you choose the right type of mortgage.
Interest rates are one of the biggest things that will determine your mortgage costs. They are the price you have to pay back to the bank for having lent you money to buy your property. Shortly, there are mainly two different types of interest rates: the fixed ones and the variable ones. And, according to your personal situation, one will fit you better than the other. So, let’s explore them deeply.
- Fixed rate. Here, you will always pay the same mortgage to the bank, with no oscillations during your repayment period. Nevertheless, they are usually quite more expensive than the variable ones, because to enjoy the security of paying every month the same fees, has a price.
- Variable rate. In that case, the good part is that you’ll experience lower taxes compared to the fixed rates, and the bank will demand you less commissions. However, the bad part is that you never know exactly how much you’ll have to pay the next semester or year, because that will depend on the Euribor. This is the interest rate at which European banks lend money to each other, and it changes every certain time, according to the market values. Therefore, depending on the value of the Euribor, it will be very expensive for you to have a variable tax. Because, if Euribor goes up, so do your mortgage bills.
If we talk about mortgages, the funding part is essential. Almost everyone needs to rely on a bank entity to buy their future house, so the best thing to do is to look for a bank which gives you a generous funding. In a word: the greater the financing, the better, because this will mean that you will not need to have so much money previously saved.
In general, banks offer a 70% of the appraised rice of the property. However, this percentage can be extend up to 80%. In that sense, if you need to negotiate with a bank the funding grade of your mortgage, relying on Hipotecasplusis the best option you have. Remember, we can extend the % of funding according to your personal needs and interests!
Repayment term and policy
When we say repayment, we are referring to the number of years during which you’ll need to return your mortgage to your bank. Depending on each agreement, the fees you’ll have to pay will be higher or lower.
Furthermore, what you should also be aware of is that, in general, bank entities offer up to 20-25 years as a repayment term.
What’s more, you should also be careful about the cost of total or partial repayments, and discover which is better for you. For example, if you expect to have a income increase or collect a relevant amount of money, it would be a good idea for you to negotiate with your bank to have a repayment cost close to 0.
Bank bindings and policies
Sometimes, banks ask for binding in order to give you better offers and discounts on your mortgage. Consequently, sometimes this will be a good opportunity for you to save some money and get a better mortgage, and sometimes this can lead to a worse mortgage in a long-term perspective. As we always say, it will depend on your current economic situation, on your mortgage needs and on your personal characteristics.
Just for you to know, when we talk about bindings, we’re mostly talking about home insurance, direct payroll and subscribing to life insurance. Those are the most common ones, but you’ll fins a huge rage of possibilities.
Compare mortgages in your area
Taken as a whole, the right mortgage for you will depend on your financial goals and your homebuying situation. So, once you have understood that, and as a summary before we finish this article, remember that you’ll have to check:
- Your current economic situation
- Study the pros and cons between choosing a fixed-rate mortgage and a variable-rate one
- Think about for how long you want to live in that house
- Get some advice from a professional, like Hipotecasplus. If you have any doubt, do not hesitate to contact us for free and with no commitment. We will be glad to help you in comparing mortgages in you area until we find the one that better suits you!