Legal tip 156. A guide for successful house-buying. Part III
Friday, October 2, 2009 @ 11:55 AM
SeePart I and Part II
Some tips on mortgage loans
A mortgage loan is that in which besides the personal guarantee, a property is affected as a guarantee of repayment. This is what may them have lower interest rates than other forms of loans with lower collateral. The importance of the investment (housing) also allows the repayment term to be longer for a greater ease of payment.
Before you apply for a mortgage loan it is important to know the appraised value of the house, which needs to be done through licensed appraiser.
Once you know the appraised value, the next aspect to need to consider is your incomes for which our advice is not to over tighten the belt (no more than 30% of your income must be spent on housing)
The mortgage loan usually covers 70% to 80% of the price of the appraisal.
Regarding the maturity timeframe, please note that the longer the time the higher the interests.
It is essential to find the perfect combination of interest rate and maturity term for the operation to be coupled to your real possibilities.
The opening fee ( comisión de apertura) is the price that the entity charges you for evaluating and processing the loan, it is usually a percentage of the loan amount with a minimum amount.
The fee for early repayment is a form of insurance which covers the risk assumed by banks by the fact that the operation can be terminated anytime by the will of the customer. For loans with variable interest, this commission for early repayment is limited by law to 1%.
The commission rates that banks passed on to the client must be reported to the Bank of Spain and is available to anyone who wants to see it.
What is the TAE? The TAE ( Tasa Anual Equivalente), annual percentage rate, is the result of a mathematical formula that incorporates the nominal interest rate, fees and timing of the operation.
When comparing mortgage offers based on the TAE, always take into account that they all are not cut with the same pattern: compare similar loans, a fixed rate on with another fixed rate one, a variable with variable, and within the variables, make the comparison with those which have the same reference index.
( to be continued)
Have a joyful weekend!
Maria
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Maria