Sunday, October 29, 2023, 10:21
Applying for a mortgage is one of the biggest investments that anyone can make in their life, which means that it is also one of the most important moments financially. Faced with such a responsibility, being well informed and seeking advice helps ensure that the term, the payment and the financial effort are appropriate for the client, and that they can cope with it throughout the life of the mortgage.
In this regard, Manel Valles González, commercial director of the Eastern Territory of Banco Sabadell, presents in a new informative pill, available today on la Verdad.es, the keys to take into account when making a financing decision like this which will involve maintaining a present and future relationship with the entity.
According to the expert, the first point to take into account is knowing what expenses are going to be assumed, such as those for sales, as well as furniture or renovations. Therefore, the amount that will need to be financed must be estimated according to the total expense that will be incurred. “We must keep in mind that most financial entities are going to finance around 80% of the value of the home,” he says.
Indicates that the objective is to have finished paying the loan at the maximum of 75 years of age.
It is also important to know what part of the client’s income they are willing to allocate to paying the mortgage. According to Valles, the financial system estimates in general terms that around 30-35% of a family unit’s income could be used to pay recurring installments that would include the mortgage. “The analysis of this return capacity is very important for us as a financial institution, because our main objective is that the client is comfortable with this mortgage that they can pay and that they can enjoy that home that they have acquired with so much enthusiasm,” she clarifies. He adds other factors that affect the ability to pay such as your age and work and family situation.
In the case of Banco Sabadell, the term that it usually grants for mortgages is around 30 or 35 years, although it can be up to 40. The objective, indicates the expert, is that when the client reaches 75 years of age they will has stopped paying the mortgage, so the term will be flexible depending on the age at which it is formalized.
“It is important to seek advice from specialists when faced with a decision like this”
“Ultimately, and as in all decisions in which the financial institution advises the client, the aim is that they can comfortably pay the mortgage but that when they reach a certain point in their life cycle, they do not have a significant financial burden,” clarifies Manel Valles. .
In any case, the client can decide to modify the term of their mortgage, the only thing they have to keep in mind is that it will not be the same treatment if what they decide is to shorten it than to lengthen it. If what you want is to make an early repayment, you can do so at any time and decide whether to lower the installment and maintain the term or maintain the current one and shorten the term. On the other hand, if what you want is to extend the term of the mortgage, it will mean reconsidering the burden and, in most cases, involves a series of expenses.
“That is why it is important when deciding the length of the mortgage to formalize it in a way that I am comfortable with, and it better be a longer term because I will always be able to make early repayments,” clarifies the expert.
New quota
Another decision that marks this mortgage application is the choice of the interest rate, which historically has been formalized between a fixed rate or a variable rate. The fixed rate establishes a specific interest rate for the entire life of the mortgage, which means that the client always pays the same installment.
On the other hand, the variable rate will usually have the Euribor as a reference, and a differential will be added to this rate, which means that the interest rate paid by the client is reviewed annually or semi-annually, causing their payment to increase or decrease. decreases according to its evolution.
“Both modalities have their pros and cons,” clarifies Valles, since for years the interest rate has been low or negative, which has caused the fixed-rate client to continue paying the same and the variable-rate client has benefited from this. casuistry, the opposite situation to that which has led to the current rise in the Euribor. Therefore, faced with a decision of this type and taking into account that the individual client also evolves, Banco Sabadell has launched a different type of mortgage that it has called a mixed mortgage.
The proposal, launched to meet the needs of its clients, establishes a term in which the interest rate will be fixed and the client pays the same installment, which can be 3, 5 or 7 years and, subsequently, You start paying a variable fee, referenced to a variable interest rate that is usually Euribor plus a differential.
«The advantage of this mortgage is that the first years in which the client formalizes it usually coincide with years of large expenses, not only the moment of furnishing the apartment, but also at a time in which the client usually has reduced his savings. », says the expert, pointing out that today it has become one of the options that most interest his clients.
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