2023-07-13 07:11:34
Thursday, July 13, 2023, 07:08
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The rise in interest rates has made access to mortgage loans more expensive. The 12-month Euribor, the main reference for mortgages at a variable rate, closed June at 4.134%. That is why it is more necessary than ever to squeeze our negotiating skills to get a loan in the best conditions.
Of course, before starting this search, it should be clear that, as with homes, there is no perfect mortgage: there will always be some aspect that does not finish convincing us. From there, and as indicated by the Bank of Spain (BdE) on its financial portal, we must continue a series of steps:
-Take accounts and be realistic with our borrowing capacity. The financial institution is not going to lend us the money if it is not reasonably sure that we will be able to return it. That is why it will put the magnifying glass on our solvency, it will ask us to justify the level of income, the type of employment contract or the seniority in our company.
You will also want to know if we have any other outstanding debts as a person’s debt ratio should not exceed 30-35% of their income.
-The bank values ​​positively that we have some savings, because it shows, among other things, that we know how to manage ourselves. Banks “do not usually grant more than 80% of the appraised value of the home,” recalls the BdE.
-Pre-select the entities from which we are going to request information. The easiest thing is to compare the offers on their web pages, or go to a simulator or comparator.
-A fixed or variable rate? For this there is no clear answer. In any case, it must be borne in mind that the mortgage will last for many years (the average term of those granted in April was 24 years, according to the National Institute of Statistics, the INE).
-Analyze if it is worthwhile to link a lot to the bank to get bonuses. It will be normal for them to ask us to hire different products or services to get a loan in better conditions.
-The TAE (Annual Equivalent Rate) is the fundamental element to compare the price of mortgages, and it must include the interest, commissions and expenses of the loan, “as well as the cost of other products that the entity may require for the hiring”.
When negotiating our first loan, it is also advisable to “make a list of your priority objectives and the counterparties that you are willing to assume” to achieve them, says Miquel Riera, from HelpMyCash.com.
Search on our own or with a broker
If we decide to search and compare on our own, stresses the financial comparator mortgage specialist, we must follow these steps:
-Request the mortgage in several banks. The more you visit, “the more offers you will have to choose from and the more likely you are to find a bank willing to improve some aspect of the mortgage.”
-Speak, if possible, with the director of the branch, since “he is the one with the most experience in the sector, the one who knows what negotiation margins his bank has, and the one with the greatest freedom to change the conditions of the offer”. Of course, the last word always rests with the Risk department of the financial institution.
-Choose the best offer and present it to other banks. “With a bit of luck, they will make you a counter offer that equals or improves that proposal,” says Riera.
Negotiation capacity and financial situation
The conditions that we obtain will depend not only on our negotiating capacity: the economic situation is a key factor. If it is excellent, says the HelpMyCash.com expert, we can get a lower interest rate and a lower link.
If, on the other hand, we have an average salary, “it will be more difficult to negotiate much better conditions.” Even so, you can fight to get less commissions (for early repayment, novation and subrogation).
We may have a good job and salary. But that we have not been able to save that 30% down payment that most financial institutions ask for to get a mortgage loan. In this case, we can try to get the bank to grant us a mortgage that finances more than 80% of the value of the home, the limit that is usually imposed.
If you have little time to search and compare, have little knowledge of the mortgage market, or simply don’t feel like taking care of the paperwork, HelpMyCash.com advises hiring a mortgage broker.
It is an intermediary that sometimes does not even charge commissions for these services. Others will demand fees, with the advantage that we will know them from the beginning and we will be able to assess if it is worth it. “Of course, those that are paid will only have to pay them if you get to sign the mortgage that they have obtained for you,” clarifies Miquel Riera.
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