With the arrival of the “bomb mortgages” when it comes to signing mortgage loans, you have to take out the accounts well to know how much the fee would be if the Installment payments rises.
Financial institutions are offsetting mortgage loans with high spreads
The Installment payments is the index most used when benchmarking mortgages, and with the fall in house prices and the aforementioned benchmark, financial institutions are offsetting mortgage loans with high spreads. These measures mean that the few mortgages that are signed now may end up becoming a time bomb in the future.
Back in October 2008, the Installment payments reached maximum peaks with an interest of 5.526%, which along with the current spreads were much more comfortable but still constituted a risk of default.
Right now everything indicates that the situation is reversing. The indicators are at lows, having closed September with 0.54%, with interests that are currently around 2.5%, which in the future could become a Pandora’s box: given that the average quota of credits mortgages of 150 thousand USD with a 25-year term and a differential of 2.5% could go with the Installment payments from the current 711 USD to 1,012 with indicators of 4%.
“Whoever finally decides should take into account that in” Contact Finance “mortgage loans it is the one that requires the least connection. ” In any case, it can be seen that the most competitive offers are given on the floors of banks, due to the fact that the banks became mega real estate and in order to give out to all the amount of properties that have been made because they weigh negatively on them in their portfolios they have come out to offer better conditions.
This is how we can find that Nice Bank has come out to offer 100% financing, something really unthinkable right now, if you buy a flat in your Finance real estate agency. It also shows other competitive advantages such as the differential over the Installment payments which is 1.75%, with financing terms of up to 40 years.
Nice Bank has also taken a similar strategy, in its light mortgage, it applies a differential of only 1.25% also with a maximum term of 40 years financing all the appraisal values.
Requesting fewer requirements and conditions
Regarding Contact Finance, we must emphasize that it is characterized by requesting fewer requirements and conditions to access mortgage loans. You are marketing with a differential of 2.69%, up to 80% of the appraised value of the property.
The mortgage starts from 2.25%, but with a floor of 3%, while financing 70% of the value of the house with a differential of 2.50%. In addition, it is only necessary to domicile the payroll, receipts and contract the home insurance.
In the case of traditional banking, the most accessible mortgage loans are marketed by Bankinter, with a 1.95% differential on its Variable mortgage, although it can only be financed for up to 30 years. Something similar offers the Nice Bank, for the Mortgage, which allows to finance the change of house.
Key points before signing
It is a key point that, before signing, the resulting commissions for novation and subrogation must be carefully studied. In this sense, it is advisable to negotiate these two downward commissions, mainly if later it is convenient to change the conditions of the current mortgage loans, thus protecting yourself against the rise of the Installment payments.
The clauses of the floor, a minimum interest, and a maximum ceiling, remain in force. It is advisable to run away from any minimum interest rate as it will not allow you to benefit from possible drops in the Installment payments.