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Which is the best home loan?

What is a mortgage?

A mortgage is a product offered by financial entities that allows you to receive a certain amount of money earmarked for the purchase of a property, in exchange for undertaking to return, through regular repayments, this amount plus any interest generated. The main collateral for the return of the loan is the property itself.

Who can I take out a mortgage with?

Who can I take out a mortgage with?

Normally they are granted by financial entities, usually banks or other financial credit establishments. In the interest of everyone’s safety, these entities (including UCI, Unión de Créditos Inmobiliarios, S. A., E.F.C) are subject to the supervision of the Bank of Spain, in terms of both the control and the development of their activity and the protection of their clients’ rights.

You can make overpayments or partial repayments in advance: money that is paid that is more than the agreed monthly amount to reduce the debt. Repaying all of the debt in one go is called redemption or full early repayment.

  • This is the total amount of money that you are going to borrow. As stated above, the majority of financial entities are currently going to lend you a maximum of 80% of the total value of the property.
  • This is the price that the entity will “charge” in exchange for lending you all of the money.
  • This is the period of time agreed with the entity to return the capital and the interest. Normally you sign a long-term agreement so that the regular payments are affordable (nowadays the longest term is usually 30 years, provided that you are under 75 years old by the end of the loan term).
  • These are the amounts you will regularly pay and that, in the foreseen term, will allow you to pay off all of the capital borrowed plus the interest. Normally these are monthly repayments.
  • These are the amounts that some financial entities charge for providing their services.

Before you start

It is important that you are clear about the following concepts, to be safer of which is the best home loan for you.

What types of mortgages are there?

Normally mortgages are grouped depending on the type of interest that applies.

Bearing this in mind, mortgages can be fixed rate (whereby you always know what you are going to pay), tracker (whereby the repayment is regularly calculated based on a base rate at that moment in time) or mixed (in which at the beginning a fixed rate is paid as the interest rate does not change, and then switches in the remaining years to a variable repayment, which can go up or down, depending on the standard variable rate).

Depending on your situation you will have to choose the best mortgage loan for your needs.

How to choose?

It is important that you request a calculation of the various different mortgages suitable for your case from different entities.

Then you will clearly be able to see how much you would pay per month with each of the options and you can do your own calculations more easily.

Remember to consider and analyse the combination of products that you can add to your mortgage with other entities and that you are advised on the individual price of each product.

So, if you’d rather, why not visit a specialist who can help show you the ropes?

Everything clear?

Go to the next page to keep moving forward.