How to compare mortgages?
With the new technologies, new ways have emerged to be able to compare mortgages without going from branch office in branch asking the conditions of each product of mortgage loans that we offer.
How to compare mortgages
Another very important factor that financial institutions and banks still fail to accomplish is that they are often more transparent in their information, the quality of information they give to their customers will be more valuable. For the moment the mortgage loans more transparent in terms of their conditions, interest rates, etc., are those that offer their products on line. And this is partly because they are exposed to the general public. Although others opt for the customer to give their data to receive certain information or have to move to a branch to know the conditions, and other data of interest when hiring a mortgage.
Therefore, although the new technologies provide us with tools such as insurance, it is important to go to the websites of banks or financial institutions or even to branches (if the data does not make them public on the website) to see The conditions of the small print.
Another aspect that should not be neglected, is that not all mortgages are suitable for everyone; Each one will have to adjust to the mortgage that best suits his particular situation. It is not the same to buy a first home, to buy a second home when the first no longer has mortgage charge; Just as it is not the same to be an official to have a temporary employment contract, because the mortgages that we can access will be different.
Important elements to compare mortgages
Amount they finance
As we know, banks do not usually grant mortgage loans for the total value of the real estate, being the usual maximum for which grant the loan 80% of the value of the property. But some this percentage is reduced to 75%, 70% or even 60% depending on whether you need a mortgage for first or second home. Therefore we have to see what is the amount of money we need and mortgages can give a loan that reaches that amount.
The deadline is an important aspect, because it is the one that determines to a greater extent the monthly quota that we are going to pay. In such a way that the longer the short term will be the monthly fee, and the smaller the term the higher the monthly fee will be.
The best option is to hire the shortest time possible, within the conditions in which we can pay the monthly payments duly. This is because the more we extend the mortgage, the more interest we will be paying for it.
Type of mortgage
The first thing we need to know is that mortgage loans vary if they are for first or second homes. And the second thing is that depending on whether the purpose of the loan is the purchase of a home or the subrogation of another mortgage, the conditions will also be different. Therefore, before we start comparing we will have to know what kind of mortgage loan we are suing and see which banks offer them.
Type of work
Although it is not common, there are mortgages that only are focused on a certain type of client, depending on their work activity. Although this is not one of the requirements or conditions to be said by banks in advance, but it is likely to be communicated after the bank reviews the prospective customer’s documentation. Although there are often not many mortgage loans aimed at a customer profile, such as MUFACE agreements for officials.
Mortgage loans can be a fixed type, variable type or mixed type.
The fixed rate is easier to compare, because the one with a smaller TIN with the same term will be the best option.
In the variable types usually also there are no problems when comparing because almost all mortgage loans use as a reference type the Euribor plus a differential; So the one with the lower differential is the best option. Another thing is that they do not use the same type of reference, in which case the comparison is complicated, because the reference type over time will not oscillate in the same way. In addition, we must support TAE as an additional indicator.
In mixed types The comparison is more complicated, because we have to be attentive to the fixed type and the variable type. The usual thing is that they set for the first year or the first 3 or 5 years a fixed type, and thereafter a variable type. Therefore, the task to know which is the best option is more laborious.
When ordering a mortgage loan, the bank or financial institution usually does a series of operations for which it charges certain commissions. And these commissions affect TAE.
The different commissions that we can find are when comparing mortgages are:
Commission for total and partial withdrawal
Subrogation Commission (limited to 0 ‘ 5% of mortgage total for mortgages from 2003)
Commission for modification of conditions
Commission for Novation
In the same conditions on a mortgage, we will choose those mortgage loans that have lower commissions.
The only compulsory products when hiring a mortgage loan is home insurance, which in any case can be contracted with the same financial institution or bank or with another. But we don’t mean this.
We mean that banks and financial institutions sometimes force us to a series of non-compulsory insurance, as well as conditions that could eventually make mortgage loans more expensive.
Therefore, the less conditions imposed on us by a mortgage loan, the better it will be.
Clauses and small print
Finally you have to be attentive to the small letter of the tell, because sometimes contain clauses that might not interest us.
One of the most common is the soil clause, which limits the minimum interest rate that will be applied to the loan, so if we have a mortgage loan with variable rate and this is less than the minimum of soil, we can not benefit from it. It is therefore essential to read the small print of the contracts carefully and decide whether or not to accept such conditions.