Are you about to make the most substantial financial commitment of your life? Do you want to buy a house or an apartment? Here are some telling numbers about mortgage credit. This is a long-term loan guaranteed by a mortgage. But how is it different from current credit? Small overview:
A pyramidal structure
The mortgage loan generally covers 80% of the value of your property. Equity constitutes the remaining 20%. Most of the financing organizations divide the real estate debt into two rows. The first covers 66.6% of the value of the property and the second rank 13.4%, which must be amortized over 15 years but at the latest at retirement age. Mortgage credit therefore forms a sort of pyramid with the first rank at the bottom, then the second rank and then the equity at the top (excluding debt).
Granting criteria for a mortgage loan
In order to determine if you can benefit from a mortgage loan, financial institutions take into consideration three determining criteria:
- You must have 20% equity (10% neither from your pension fund nor from repayable loans).
- The charges (interest + depreciation + maintenance costs) must not represent more than 33% of your income.
- To obtain financing up to 80%, the pledge value retained by the bank must correspond to the purchase price of the property.
Loan costs and interest
To calculate the cost of a mortgage, you have to take into account the amount of debt (80%), the duration of the contract and the interest rate, which can change, depending on the variant you choose.
- Fixed interest rate: determined by the financial institution and which will remain unchanged throughout the duration of the contract.
- Variable interest rate: this can change depending on the capital and money market. It can be changed up or down at any time.
- Libor interest rate: based on the Loan And Save Bank Offered Rate, it is adjusted every 3, 6 or 12 years.
Questions? Call a specialist!
Since a mortgage loan represents a lifetime commitment and therefore, the best thing to do is to call in a specialist! An experienced professional such as Loanflix-Services can compare the best offers and provide you with a free quote without obligation !