The purchase of a property is a large investment that in many cases is financed by a mortgage. Before applying for a mortgage, we must be informed in order to avoid mistakes, which could lead to problems. These are some of the most common mistakes to avoid when applying for a mortgage:
1. Not doing your research and sticking with the closest bank.
Before taking out a mortgage, it is important to research and analyse different financial products. It is essential not to stay only with the offers presented by our nearest bank, but to explore other options that offer better financing conditions, a more favourable repayment period, or a lower interest rate.
2. Not paying attention to the set-up costs
It is necessary to take into account the total cost of the mortgage loan, from the amount to be borrowed, the interest and the commissions. It is common for banks to add an origination fee to the mortgage. This fee usually amounts to between 0.5% and 2.5% of the value of the property, so you should pay due attention to it.
3. Not taking into account the flexibility of the mortgage
The flexibility of the mortgage must be taken into account. The interest rate and the characteristics of the loan may vary, depending on the financing requested. You should be attentive to find out if the services offered are the best or if they could be improved. For example, there are mortgages with the benefit of an initial grace period that allows you to save on the first months' payments.
4. Not knowing our debt capacity
It is essential that we know how much we can afford to pay without getting into difficulties. We must not exceed our debt capacity. To do this, it is necessary to consider all our income, expenses and savings, to find out if we have enough money invested to meet the mortgage repayments.
5. Not being informed
It is important to be informed about the financial market and to know all the types of mortgages that exist in order to know which one best suits our needs. We must understand the different costs involved in the mortgage, read the contracts carefully and ask professionals about any doubts we may have. In addition, we must keep an eye on interest rate rises in order to be able to react to them.
Taking out a mortgage to finance the purchase of a property may seem complicated, but if we avoid the most common mistakes, we will be able to get a mortgage that meets our needs. Researching well, knowing your debt capacity, paying attention to the origination fees and understanding the different types of mortgages available are the key to finding the mortgage that fits what you are looking for.