Factors when applying for a mortgage

When we sign a mortgage with our bank or building society, we are signing a contract for a duration, this can be 25 years depending on how much you are borrowing and how old you are. A very long-term relationship in which all conditions must clear from the very beginning.

Therefore, we must carry out a preliminary investigation and information work that allows us to know everything that a mortgage includes.

Bargaining power

It is true that there are quite a few characteristics that cannot be negotiated, but if we have the ability to modify some to our liking we should not miss the opportunity.

But we must not forget that this negotiation capacity also depends on our profile as a client (type of income, employment situation, savings, etc.)

The famous interest rate

In this step we find different options.

  • The fixed rate: with it we will pay the same installment throughout the years of the mortgage that we have contracted, or for a fixed term which once expired we can renegotiate the terms.
  • The variable rate: which will depend on an index to which an interest rate will have to be added. As its name suggests, this index may vary each year in our favour (cheaper) or against us (more expensive)
  • The mixed rate: during the first period of our mortgage the rate will be fixed and after a certain year, it will be variable.

commissions

These also raise the price of our mortgage and are of various types (study, opening, early repayment, compensation for withdrawal, etc.) Some of them have limitations and are clearly regulated.

Other expenses that we will also have to face correspond to the moment of formalizing the mortgage (notary, appraisal, registration), although currently there are sentences that question who has to take care of these payments, the entity or the client.

Linked Products

They also entail an additional cost, and therefore, we must know what those products are and how expensive our quota is.

Insurance, pension plans, life insurance or household savings are some of the most common products that banks offer us. However, before acquiring one of these we must study if the discount that results in our mortgage is worth it or if instead the cost of these linked products is higher than the discount.

Do a thorough reading of the mortgage loan deed

For many it is something unknown, but the buyer has the right to read and review the deeds before signing. It is at this moment when we must review all the clauses and conditions, go to the notary to resolve any doubts, and even seek advice to better inform ourselves if we wish. In this way, we have a small margin of time to make any changes if we do not agree with the provisions of the deed.