7 points I need to know before requesting a mortgage

In idealista.com/hipotecas we received thousands of requests for mortgages each month, and questions always focus on the conditions that we can get from the banks, who gives me the best mortgage, what links they ask me what I get fee, etc.

But equally or more important for its potential impact on our family finances it is to get answers on some less common aspects with a medium- to long term. Here we present 7 remarks we consider need to know before ordering a mortgage: read more

1. The price of housing is more affordable each time, but are more expensive mortgages

Housing has fallen from their peak levels around 30%, which has facilitated access to purchasing many families. However, in this same period, we have gone from having mortgages differential of 0.30% to current levels of around 2%. When do numbers, it is important to know how much we pay for home purchase, and here comes both price and taxes and handling purchases and pay the interest on the mortgage

2. Interest rates are at the lowest levels in history, so that the initial monthly fee will vary upward in the future

The historical average Euribor is 3.03%, having reached 5.39% in July 2008. For a mortgage of € 100,000 over 30 years with a spread of 2% between the current situation and the historical maximum quota varies € 277, 67% more! it is essential to ensure that numbers are going to cope with an interest rate higher

3. The shorter the term of the mortgage, I pay less interest

Typically, when deciding which signed the mortgage term, we look at the monthly fee, making sure you can afford it. Besides taking into account as explained in the previous section, it is very important to know that a shorter period means paying much less interest and when the Euribor rises up my mortgage unless who has a long-term

4. My current income will not be the same in the future

During irresponsible real estate boom years, often could be heard arguments like: “no problem, next year will earn more money”; the crisis is showing that revenues may decrease, and unfortunately a dramatic and unexpected way. It is very important to be aware that this can occur during the life of the mortgage, and thus we must consider how we would organize our family finances if the money coming through the door every month reduced

5. How much money I reserve for unforeseen?

Linked to the above two points, often usually it expects to have just savings to embark on the purchase of the home, or just leave a quantity for the purchase of furniture or do some reform. Our recommendation is to go a step further and assume that although expect something more, or request a slightly higher mortgage, always have savings available to cover contingencies, which can be many: rising mortgage payment, loss of income expected, expenditures for health, education of children …

As an alternative to this more conservative view, there is the option of doing the numbers so that – once purchased housing – save monthly portion of our revenue, so we’re back to “make money box” thinking ahead

6. The support of family: now or later?

Although we have an average age of emancipation of the highest in Europe, the fact is that most young people would like to live independently much earlier than they do, and in many cases remain in the family home to save more money and so buy their first home

The desire to buy, joined guarantors requirements demanded by banks, often lead us to seek the intervention of our parents on the mortgage, which is a risk for them. We must understand what it means to seriously engage our higher on a mortgage, and think whether it would be more appropriate to wait for something else to not need your help, because we might need it later

7. Saving more or mortgaged me now?

As a final thought which brings together all the above points, we must be aware that the mortgage is a long-term loan, which will be in best and worst moments, and therefore it is very important to be clear that we will be able to afford before to commit ourselves to it

The increased supply of rental and possible expectation of further declines in housing prices in the area that we like, uncertainty about the economic recovery and its impact on our domestic economy or the ability to save more for better mortgage or engage our parents avoid buying are just some of the considerations that can lead to delay some purchase of housing and therefore the mortgage application

In short, as they say every situation is different, we can decide that this is the real opportunity we must not miss, or expect something more to our economy allows us to get into a mortgage with sufficient guarantees to avoid unpleasant surprises in the future