When looking for a mortgage, sometimes it is not enough to use an online mortgage comparator, or to ask the bank or the typical friend who knows about finances. To make sure we do it right, we need to know how to compare mortgages, and for that we need to know the key points to look at.
What to look for to compare mortgages
If we want to compare mortgages in the most effective way, we will have to look at the following points:
Interest Rate: By means of which the mortgage rate is calculated, so it is probably the first thing to look at. Of course, we must watch, since the interest that the bank gives us may not be quite real. We should look at the following:
- Is the mortgage fixed or variable? If it is fixed interest, the type the bank gives us is immutable. However, the most common is that it is variable
- If the mortgage is variable we will offer a differential that is added to the Euribor or IRPH. For example: Euribor + 0.59%. Logically, the lower the differential, the better
- Do you have an initial fixed interest rate? Some mortgages offer a fixed interest rate during the first few months or years, which then change to variable. A low initial fixed interest usually hides a high variable, and vice versa. So you do not have to get carried away by one of them, and make calculations with the two
- Does soil interest? It is important to note that it does not have a floor clause , or that it does not exceed 2.50%, as it would not allow us to enjoy the lowering of the Euribor
Mortgage fee: You have to go down with a lot of lead when you want to sell us a mortgage by talking about the fee. The share is the most variable point of the mortgage loan, since it changes according to the Euribor and other factors. For example, if you talk about a monthly fee of 300 €, but it is a quota with capital shortage and calculated with a low Euribor, the next year we can find a 600 or 700 $. We have to make bullish calculations to make sure we can pay the quota in the worst possible conditions.
Percentage of funding: It is another of the determining factors, since according to our financing needs we can be out of some offers. Most mortgages fund up to 80% of the value of the property, so if we need more money we will have to search between the floors of banks or young mortgages.
Commissions: They are one of the most negotiable points with the bank. The most common are the opening commission, the commission for early cancellation (total or partial), the novation commission and the subrogation commission. A common opening fee ranges from 0.50% to 1%, which represents a cost of between 1,000 and 2,000 $ for a mortgage of 200,000 $. If we can find one without commissions, we can save a good pinch.
Related products: We do not tire of repeating the effect they have on the total cost of the mortgage. These are links, such as domicile payroll and receipts or insurance and pension plans, which (1) are either necessary to open the mortgage (2) or allow us to lower the spread. Always ask the price of these products and make accounts including them, since they are usually quite expensive.
Flexibility: Some mortgages offer more flexibility in repayment than others. We refer to periods of shortage, deferment of quotas and even free repayment. If, by our type of work (a commission, perhaps) we are interested in this type of mortgages, we should look for among the best mortgages.
These would be the main points that we should look at when comparing mortgages. Although we must never forget one general, the most important: the small print. Nothing else works if we have not read the fine print and have been given an abusive clause.
If we read and, above all, understand all the information about each mortgage, we can compare with knowledge of the cause.