Monthly Archives: May 2018

5 tips to choose a mortgage

5 tips to choose a mortgage

Choosing a mortgage is one of the most important financial decisions in the life of any consumer. The reason? It is a very long-term loan, which requires a large amount of money and conditions that are sometimes not easy to understand.

To help you take the right steps before hiring a mortgage, we have selected the fundamental questions that you will have to analyze to find a good offer:

1- Decide between a fixed mortgage and a variable

As with any loan, a mortgage also involves the payment of an interest. However, in this case you can find two options among which you must choose:

Variable Mortgage: the variable interest is calculated by adding two elements: a reference index (normally, the 12-month Euribor) and a differential, which is a percentage fixed by each bank and which never changes. For example, if the 12-month Euribor was at 0.5% and the mortgage you want to ask for has a differential of 1%, the interest you would have to pay would be 1.5%. Now, the Euribor is revised.  Every month, so, depending on the level that this indicator mark, the interest to be paid may increase and decrease and, with it, the monthly payment for the mortgage.

Fixed Mortgage: As its name indicates, it is an interest that does not change throughout the life of a mortgage. Each month you will have to pay the same fee.

2- Set an appropriate return period for your circumstances

When choosing how many years you will have to repay your debt, remember that the longer the term, the lower the monthly payment will have to be, but the interest will be higher.

3- Do not lose sight of the maximum percentage you need to finance

Generally, banks do not usually grant more than 80% of the appraised value (or purchase) of the home you want to buy. That is, if the property you want to acquire costs 180,000 euros, the normal thing is that the entities do not give you more than 144,000 euros. Of course, there may be offers where that percentage is somewhat higher (or lower) and it will be necessary to take accounts to know if your proposal really fits with your economic circumstances.

4- Analyze all the commissions that you will have to pay

In addition to the expenses associated with the purchase of a home and the formalization of a mortgage, you should not forget that many offers include other additional expenses. The most common are study and opening commissions, early repayment (total and / or partial) and novation . When choosing a good mortgage, do not forget to compare all these costs to know which can be the cheapest option.

5- Examine what extra products you should contract with each mortgage

In some cases, banks may offer a lower interest when contracting some of their financial products, such as: Life Insurance, Home Insurance, Current Account or Pension Plans.

Take into account all factors, compare and calculate well the monthly cost of your future mortgage is something that is worth investing time.

Common Mistakes To Avoid When Buying A New Home

Common Mistakes To Avoid When Buying A New Home

It’s said that a house is made of bricks and beams but a home is made of love and dreams. But before you can turn your house into your dream home, you will have to buy it first. Purchasing a new home is a big decision as far as the finances are concerned. For first-time home buyers, it is easy to get overwhelmed by the whole process and commit errors along the way. If you are not careful enough, you may regret your decision at a later date. To make sure that you take the right decision, steer clear of these common mistakes when buying a new home:

Looking for a property before looking for a lender

Many buyers begin house-hunting before talking to a lender and getting a pre-approved loan. Committing to a property without having the finances ready can be a big mistake on the part of the buyers. In such situations, the builder’s salesperson often comes forward to help arrange the finances for the buyer. Now, this is something that you need to avoid at all costs. If you go ahead with such a plan, you can land yourself in financial distress by having to pay a very high rate of interest. So, the first thing that you need to do is find a mortgage lender. Get in touch with a couple of lenders and select the one who offers you the best financing options.  Start your house hunting only after you have a mortgage lender to finance the deal.

Giving home inspection a miss

If you are interested in a certain property, make sure that you get a home inspection done by a qualified professional. Sometimes home buyers skip this step in order to save on the costs of hiring a home inspector. But they don’t realize that spending money up front on an inspector is better than having to deal with other expenses related to the house in the future. You wouldn’t want to save on the inspector’s fees today and pay for expensive repairs at a later date, would you? Also, if the inspector finds any fault with the house or its construction, you can use this information to negotiate with the seller and lower the price of the property.

Not negotiating with the seller

More often than not, new homebuyers avoid negotiating with the seller. The reason is that they do not want to come across as disagreeable and let go of the house that they found to be perfect for them. But they fail to realize that the seller is there to sell the property and is ready to negotiate in order to crack the deal. As a buyer, buying a home may be one of the most important financial decisions of your life. That is why you need to negotiate in a professional manner and try to make the deal work in your favor. Before you negotiate the final price for your home, look at the sold home prices of the houses around your new location. This will give you an idea about the average price of the properties in that locality.

Ignoring to inspect the neighborhood

Once you like a home enough to make an offer, pay attention to the locality as well. A great home built in an unsafe locality won’t be a great choice, isn’t it? There are several other things that you need to keep in mind when considering the neighborhood of a home. For instance, you need to see how time-consuming it is to commute from the locality to your office. Try to find out how far are the nearest grocery store and other essential services from the house. If you have kids, see if there are any good schools in the locality. Do not make the mistake of going ahead with the deal before inspecting the locality thoroughly.

Rushing into the deal

There can be no greater mistake than rushing into a deal when you are buying something as pricey as a home. Even if the builder’s salesperson insists you to close the deal quickly, take your time to think about your decision repeatedly before signing on the dotted line. When it comes to making the final decision, do not let anyone rush you. Understand that once you invest in the property and then realize that you have committed a mistake or overlooked an important point, you won’t be able to change anything. So, be sure of everything first and then buy the home.