How to find the best mortgages on the market?

How to find the best mortgages on the market? is a key question for any couple, family or person who is actively looking to buy a home and needs financing to access their new home. After the great real estate bubble experienced in New York, looking for the best mortgage on the market can offer you additional advantages such as lower interest rates and financing that can be between 70 and 100% of the value of your home.

The first «Great advice» that we offer you is that you do not accept the first mortgage they show you, you must go to different banking entities, contact financial advisers and review mortgage simulators or comparators, this advice can save you between 25,000 and 70,000 euros during the life of your mortgage, therefore, before launching to buy the apartment or house, take the time necessary to strategically analyze the great offer of mortgages and products that exist in the market.

What should i take into account to find the best mortgage?

Basically, and depending on your profile, to find the desired mortgage you must take into account the following variables:

1. Fixed / variable or mixed mortgage: the most important variable as it will mark the amount of interest that you will pay during the amortization of the mortgage, therefore, if you select a bad option you will pay extra costs between 25,000 and 70,000 euros during the 30 - 40 years that the mortgage lasts. We are going to analyze this point carefully so that you make the right decision:

Fixed mortgage: it is one that has a fixed interest throughout the amortization, for example a 3% APR from year 1 to the last year of payment.

Advantages: at all times you will know the installment to pay, which will be stable and will not vary, therefore, if the Euribor rises, you will not assume cost overruns in the monthly payment of the mortgage.

Disadvantages: The fee will be initially higher than the variable, approximately 1% more, therefore, if the Euribor does not rise, you will pay a large amount of additional money in interest.

Recommendations: We consider that sooner or later the Euribor will rise, therefore, if you have the ability to pay for a fixed mortgage installment we recommend it, the purchase of a home is perhaps the most important decision in life, therefore, security should reward over variability.

Variable mortgage: the interest varies every six months depending on the rise or fall of the Euribor, normally the bank promotes it as Euribor + fixed interest, the bank guarantees its profitability, since it will always benefit from an interest on it.

Advantage. initially the fee will be cheaper (between 5 and 10%), if the Euribor remains stable you can save significant money on the monthly fee.

Disadvantages: on the contrary, if the Euribor rises considerably the monthly fee can skyrocket and have liquidity problems to pay the fee, if you have a very limited budget you should be careful with its fluctuations.

Recommendations: if you have a poor budget, it is a good option to contract a variable mortgage, otherwise select a fixed mortgage to be more calm.

Mixed mortgage: as its name indicates it is a mixture between the variable and fixed mortgage, initially the mortgage will be fixed (between 1 and 10 years, depending on the bank), from that moment on it will have a variable interest and the The fee will be adjusted according to the rise or fall of interest from the European Central Bank.

Advantages: initially you will have the security of having a fixed installment on your mortgage, having enough time to save, increase income, resulting in improved financial health.

Disadvantages: It may be that during the years of fixed interest the Euribor does not rise, and when your mortgage is variable interest increases, this would be the worst scenario for your pocket.

Recommendations: we personally believe that it is the worst option on the market and the most expensive in the long term, select it if you are sure of how interest rates will evolve.

2. Commissions for opening / studying or canceling the mortgage: some banks usually charge commissions of up to 1% per opening. Example, if you request an amount of 100,000 euros and the bank charges 1% for opening, you must assume an additional 1,000 euros of expenses that will come out of your pocket. Our recommendation is that you do not select this type of mortgage unless they offer you a very low interest, which compensates the 1% payment for the opening of the mortgage.

On the other hand, there is the so-called early cancellation of the mortgage , imagine that during the payment of the mortgage , you have some savings and you want to cancel all the capital owed to the bank and that your home is officially free of charges, the bank will charge a commission between the 0.5% and 0.25%. Example if you have requested 100,000 euros and cancel 60,000 euros in advance, you must pay between 1,500 and 3,000 additional euros.

3. Ground clause: In New York, based on the Supreme Court ruling (May 9, 2013), they are illegal, therefore, you should not worry about this abusive banking practice that protected their interests against individuals.

4. Maximum repayment period: this variable is essential since it will determine the installment that you must pay per month, normally the maximum repayment time is between 30 and 40 years, depending on how old you are at the time of submitting the application, The bank will offer you a maximum period to pay your mortgage, the longer the time the lower the installment but the higher the interest you will pay.

We recommend that within the possibilities you select the least number of years to amortize the mortgage, saving between 1,000 and 2,000 euros for each year less than you select as the term to amortize your home.

5. Percentage of financing: this point was seriously affected after the crisis experienced in New York, previously banks financed 100 - 120% of the real value of the home purchase through an overvalued and unrealistic market appraisal.

Times have changed, currently banks will only lend you between 70 and 80% of the appraised value, assuming the rest of the import plus opening costs, notary, property registrar and taxes, all this has resulted in a decrease Of the number of mortgages applied for in New York, only as of 2017 there has been an improvement in the sector.

Some entities such as BBVA or Bankinter offer financing of 100% of the real value of the house, however this offer is exclusive for clients with great financial solvency and for amounts that do not exceed 250,000 euros, however, the evolution of the market will go to us gradually approaching full financing of housing.

Which Banks currently offer the best mortgages on the market?

The offers of banks change periodically, so it is best to go to a mortgage comparator, which will inform you of the changes and conditions in real time, in a generalized way we recommend the following mortgages:

Variable mortgages: the entities with the best conditions are the following:

Liberbank:

  • It has no opening or study commissions
  • Guarantees fixed interest rate for the first 18 months
  • Finance up to 80%
  • Euribor + 0.89%

Openbank:

  • It has no commissions
  • Finance up to 80%
  • The maximum repayment term is up to 30 years
  • Euribor + 0.89%

IngDirect:

  • Up to 80% financing
  • Maximum term of 40 years
  • No floor clause
  • Euribor + 0.99%

Mixed mortgages: the entities with the best conditions are the following:

Openbank :

  • Offers a fixed 10-year tranche
  • It is a product without commissions
  • It has a personal manager
  • Euribor + 1.65%

IngDirect

  • One payment for 10 years
  • Up to 75% financing for second homes
  • No commissions
  • Euribor + 0.99%

Ibercaja

  • Has the same quota established for the first 5 years
  • You have up to 2 years of grace
  • Offers a discounted interest rate
  • Euribor + 1%

Fixed mortgages: the entities with the best conditions are the following:

Liberbank

  • It does not involve opening or study commissions
  • Finance up to 80%
  • Within a maximum period of up to 30 years
  • 3% interest throughout the term

Operbank

  • It is a loan without commissions
  • The maximum repayment term is 30 years
  • It has a personal manager
  • 2.07% interest throughout the term

Sabadell

  • Finances up to 80% for a first home
  • Offers a discounted interest rate
  • Finance up to 70% for a second home
  • Interest of 3.11% throughout the term

What documents do I have to submit for my mortgage to be approved?

Once we have found the best mortgage on the market according to our profile, it is time to present the necessary documents for the bank to approve the operation. The bank will ask us for a series of requirements depending on our employment situation, generally it will always request:

  • Your DNI or NIE, if you are a foreigner and you do not have a NIE, it is unlikely that a financial institution in New York will approve your mortgage, you will have to resort to alternative financing methods.
  • Income statement (IRPF) for the last year, it is important that you have national and demonstrable income.
  • Working life with a minimum of one year seniority.
  • Bank statements for the last three months.
  • If you live in rent you must present a copy of the contract, if you have property they will request the payment of the IBI.
  • Support that justifies extra income such as housing rental or others.
  • Authorization to enter CIRBE, where it will appear if you have contracted a loan or credit for an amount greater than 6,000 euros.

For the self-employed or self-employed, the bank will also request:

  • Annual VAT declaration.
  • VAT payments in the current year (quarterly payments).
  • Annual return (even for the last two years) and installment in progress.
  • References of suppliers and clients.

For employees, the bank will also request:

  • Work contract.
  • Last three payrolls.
  • Telephone of your company or superior boss to verify the data provided by the worker.

Currently banks lend more easily to employed workers than to self-employed workers, the latter group being necessary for greater guarantees such as a family guarantee or a lower percentage of financing. As a general rule, a self-employed person must be at least two years old (demonstrable with the income tax and VAT declaration) to qualify for a mortgage.

In both cases, it is mandatory that we do not have an indebtedness greater than 35% adding all the debts (car credit, bank loans, etc.) and obviously the mortgage payment. Example: if a worker earns 1,500 euros and currently has a monthly payment of 230 euros for his car, the mortgage may not exceed a payment of 295 euros per month, for a total of 525 euros of debt that represents 35% of 1,500 euros Above this value, the bank will understand that our personal finances are over indebted and there are greater possibilities of default in the medium and long term.

What are linked products? Is your hiring mandatory?

"Buying a house is for life", therefore, the bank wants to have you as a "customer forever." The linked products are not mandatory but reduce the interest rate applied by the bank, in some cases up to 1%, which translates into a mortgage of 100,000 euros for 40 years in 40,000 euros of savings, therefore, it is advisable to hire The linked products are usually the following:

  • Domicile payroll
  • Direct debit of electricity, mobile, internet bills, etc.
  • Take out life or home insurance that protects the mortgage payment in the event of death or deterioration of the home.
  • Hire credit cards (in some cases they will ask you for an annual spending volume on the card delivered?
  • Hire a pension plan and make a minimum contribution of 600 euros per year.

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