The minimum value, which records the Euribor index, the base rate for the majority of mortgage loans issued in Spain, which ended November with the figure of 0.079%, according to the Bank of Spain, contributes to the fact that more people choose to buy a residential real estate.
Moreover, as the Euribor is down more than ever, this fact also affects the interest rates on mortgage loans, which are also declining in recent months. In fact, comparative calculations show that in an average of ten mortgage loans issued in December 2014, the index Euribor stood at + 1.61%, which was reduced to Euribor of + 0.98% in the top ten best mortgages last December.
However, the signing of a mortgage loan is not so simple. The issue of the loan of this type connects the customer with the bank for several years. For this reason, before applying for a mortgage it is important to consider several significant factors such as:
1. Applicable interest rate
As we already mentioned, a key variable in terms of economic costs is the rate of Euribor plus the rate of interests to pay, therefore, so that lower is the Euribor rate and interests rate, more the customer will save in the long term. Today, you can find a mortgage in which the differential is less than 1.00%, while the other banks offer rates of 3.00%. We will help you choose the right option.
2. Other banking products
Signing a mortgage loan requires, as a rule, the purchase of other banking products. Usually they help reduce the interest rates.
The most common products are direct debit of payroll or some receipts in your bank account, buying a pension plan or other investment products, minimal use of the card or the maintenance of a minimum balance in the account.
3. Bank additional commissions
Another important aspect to consider are additional fees and commissions established by the bank in the case of applying for a mortgage. For the opening, forwarding, subrogation, novation or early partial or full repayment of the mortgage … While there are many banks that do not charge many fees (or even any), while others have many additional costs.
Therefore, before signing a mortgage, you should talk to an employee of the bank, to try to get the minimum cost. It is particularly relevant to possible changes in the conditions of the loan, if later you want to change its characteristics.
4. The efficiency of the bank
You must also take into account the efficiency and accessibility of the bank where the mortgage is registered, and if they meet your overall needs.
For example, if the bank has enough branches and ATMs in your area (near the workplace or home, for example) or which actions can be made via the Internet, if you are the user of on-line banking services.
5. The existence of the clause floor
In principle, the application of this clause is not contrary to the law, established by the Bank of Spain and by the Mortgage Act. However, it is very different when it has an offensive character and when financial institutions do not notify you about its presence in the mortgage loan contract. As noted by the Spanish agency responsible for this matter, "the existence of that provision means that when you reach a certain limit, a decrease in the interest rate will not mean a reduction in the payment of the mortgage fee."
Therefore, it requires that banks and savings explain the conditions of the mortgage loan in an understandable way for all applicants, to ensure transparency and protection of interests of customers.
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