Three Keys To Reducing Mortgage Loan

2021-01-27   |   by CusiGO

Submit a brief that has no doubt about the possibility of debt repayment, compare the best offers, and carefully study the loan related products. According to experts, these are the key to laying the foundation for good negotiations with banks on mortgage loans and determining the best price. If official statistics show that spending on housing is at an all-time low, the use of these assets will give mortgage rates an advantage.

The average interest rates on variable and fixed mortgages were 2.19% and 2.77% respectively in November, according to data released on Wednesday by the National Bureau of statistics. But Marcel Beyer, chief executive of iahorro, stressed that “market supply is one thing, and the other is totally different is the world of possibilities behind it, which can be obtained through comparison and negotiation.”. By comparison, the bank’s average nominal fixed interest rate for customers in November was 1.03%, 1.74 percentage points lower. According to the data provided by the company, there is a 1.4 percentage point difference from the nominal average interest rate (0.79%) of the variable mortgage signed through iahorro. Despite the correlation, the company receives about 2000 queries per month.

But how can users save so much money on their mortgage? “First of all, we have to be clear about our financial position,” they pointed out, from comparison. In this regard, Lola Alcover, Secretary General of the General Council of real estate agents (coapi), recalled that after the real estate bubble burst more than a decade ago, banks no longer Lent as easily as they used to. For customers with larger initial savings to meet a larger percentage of the purchase price, he points out.

They also choose borrowers based on their expected income and pay monthly mortgage instalments within five years of signing, “focusing on their job security, geographic connections, origin, family or work, This guarantees time continuity and liquidity, “Alcover said. He added that agencies would also study “the personal stability of applicants in calculating possible future changes in their family burden.”.

All of this has obvious practical consequences. Among other things, staff members will have special privileges, especially “those who have no previous debt and have a certain foundation for where they buy real estate,” in the expert’s words. Deep rooted marriages will also be welcomed, “in which both husband and wife have stable jobs, indefinite contracts, qualifications and a good income.”. Or a single person with a good career, “no family burden, a high level of savings,” Alcover stressed.

Once you have analyzed your situation, you should consider your choice and the one you are most interested in according to your personal data. “If we don’t have a high income and we want a 25-year or 30-year mortgage, then fixed mortgage may be the most appropriate alternative, so we don’t have to deal with the volatility of the eurozone in the long run,” iahorro stressed. On the other hand, it is an interesting option for a high-income person seeking to repay a mortgage in a short time, as it will take advantage of the lowest level in the eurozone.

In any case, it is essential to compare different offers. “The choice is there, you just go out and look for it,” Bayer insisted. For Alcover, “there are several offers that not only make more accurate choices, but also are very useful for negotiating with financial institutions and promoting the balance or improvement of specific issues such as interest rates.” Not only that, he believes, but commissions and expenses are also “decisive” parameters. Therefore, it is necessary to determine the equivalent annual interest rate (TAE), which, together with the nominal interest rate, also includes other expenses that lead to the increase of loan cost.

In addition, banks often provide customers with some contacts. The real estate credit law, which came into effect in mid June 2019, prohibits institutions from compulsorily purchasing these additional services, such as insurance, from the same bank for the purpose of making mortgage loans. “Now they offer an option to increase interest rates or loan spreads and call it portfolio products,” Alcover explained.

In this regard, iahorro warned that “it’s not always the best choice to trade more bonds at a cheaper price”, because in the end, the mortgage cost reflected in the Tae may be higher than that without a bonus. This is particularly harmful to users, especially given the current mortgage market situation, the euro zone banks, which have been in a disadvantageous position for many years, have pushed down the price of floating mortgages, but also put great pressure on fixed mortgages.

As a result, a 20-year mortgage with a fixed interest rate of 0% traded by a Danish bank has set a precedent in Europe. Will the same thing happen in Spain? “While there’s nothing technically to stop that, we’re going to face an unusual situation that may not apply universally, but only to customers with the best profile,” iahorro predicts. However, they do think it is possible to approach 0%. “In December last year, we signed the first 0.65% fixed mortgage agreement, and since October, we have repeatedly found that the fixed interest rate is 0.70%,” they said