You don’t need 20% savings, but 30 at best. The average time it takes to sign a mortgage can make you lose your apartment and also your deposits. A lower TIN does not mean that your mortgage is cheaper… Problems that no one told us we would run into before signing the mortgage.
The current may not be the best time to buy a home, neither due to market price nor due to the situation of the property. interest ratesbut the truth is that the number of purchases has skyrocketed in the last period. In fact, it already reaches the levels of 2007, the moment before the explosion of the real estate bubble, although today with a very different volume of supply.
The disproportionate rise of rental price It would be one of the most obvious causes of this growing desire to become an owner, along with the shortage of houses and apartments available, since it implies an absence of alternatives.
If this is your case and you have decided to purchase a property sooner rather than later, you will probably appreciate knowing some precautions that every future mortgage holder should keep in mind before making an offer on their future home.
You need much more than 20% savings
The 2008 crisis, with its trail of unpaid mortgages and evictions, conveyed an important lesson to Spanish society: no one should buy a house if they do not have the capacity to save.
From that experience arose the impossibility of requesting more than 80% of the value of the home. It is true that, at the present time, those under 35 years of age can enjoy financing advantages up to much higher percentages, up to 95% of the value.
For the majority of the population, if they wanted to access an apartment for 300,000 euros, the bank could only grant you a mortgage of 240,000. But that does not mean that with savings of 60,000 it is possible to access that purchase, since it has high expenses associated with it. The most important of them, the corresponding tax: if you buy a new home, you would have to have 10% VAT. If it is second-hand, the ITP (Property Transfer Tax) varies between 4 and 10% depending on the province.
But the disbursement does not end here: Notary, Property Registry, writing…And let us be thankful that the costs of opening the mortgage have disappeared, which until 2019 were assumed by the buyer.
We would talk at this point about the need to have at least 30% saved in advance, but this would only be in the best of cases. In recent years, it has been normalized that the real estate agencywhich is generally contacted by the seller, does not charge him but rather the person who buys. We are talking about exorbitant percentages, between 3% and 6% of the sale price: for the apartment that we gave as an example, of 300,000 euros, you would have to pay 18,000 to an intermediary that you have not chosen, for little more than showing you the home , and although for the visit he did not even bother to find out how much the community fee is paid.
In total, including VAT and in the event that you have to pay this type of intermediary service, we would need to have almost 110,000 euros of savings for a home of 300,000.
A mortgage sometimes takes many weeks to sign.
The deposit contract constitutes the formalization of a purchase-sale agreement. It establishes at what price the home will be sold, under what conditions and, generally, sets a maximum period for sign the deeds.
In that period of time you must have signed the FEIN and reflect for 10 days on the mortgage conditions agreed with your bank. A slow process, with many steps, that can be completed in 30 days if everything goes well, but can also take 3 months.
The conditions of a mortgage have to fit you, the chosen bank has to check your solvency and decide whether to establish a contractual relationship with you and, if not, you will have to start from scratch with another.
It is not uncommon for the agreed time to expire, and the potential buyer is forced to lose the buyer’s money. deposit contractwhich for a house of that amount could be established at 10,000 or 15,000 euros. For this reason, the deadline always has to be negotiated. As a recommendation, three months would be a reasonable period for both parties.
Don’t compare mortgages just by their TIN
Two fixed mortgages at 2.1% can mean a very different monthly payment. The difference is mainly found in the associated products.
It is essential that you know in detail how much more it will cost you if they force you to take out home insurance with them, life insurance that perhaps you do not need, what you lose by direct debiting your payroll with them, when perhaps another entity provides you with monthly remunerations, the cost of an alarm that you would not otherwise hire…
Do the math before deciding the monthly expense that all of this entails and compare. A 2.5 without associated expenses may be much more profitable than a 1.8 with the entire package of commitments.
There are few entities that offer attractive percentages without associated products, but they exist. Of course, the more security your customer profile conveys, the better. It is influenced by your employment situation, monthly income, absence of other debts, etc.
It is also common for banks to request a lower commitment associated with variable and mixed mortgages. Interesting options if we take into account the foreseeable drop in rates in a matter of a few years, and the possibility of renegotiating, in any case, once the period marked as stable has passed, whether it is one year, three, five or ten.
Rate on your own, not with the bank
The specific company that is in charge of appraising your home can make the difference between whether you are granted a mortgage or not. Any bank should accept the document of every appraiser as valid. approved by the bank of Spain. However, those who work directly with a smaller group of them usually opt for the four or five of their preference. The ideal thing, to avoid taking risks, is to consult with the entity which appraisers it perceives as most reliable. Among them, you must be in charge of finding out Which appraisers usually rate the lowest? and which ones have a reputation for doing so slightly upwards (it’s really easy to find out, just by reading customer reviews).
If you are just saving money for the down payment, you want the appraisal value the higher the better; that is as close as possible to the sale price or slightly exceeds it. That it exceeds it by much is not convenient for you either, first because it will not affect the amount that the entity grants you (80% is based on the lowest value, whether it is the purchase or the appraisal), and second because it can raise the transfer tax in the event that the difference in value is evident.
Once you receive the document with the value that the company considers the house to have, you will have to do your math. Are you satisfied? Will you need more than 80% of that value to be able to make the purchase? If the appraisal has been lower than you would like and that value makes the purchase impossible, because you do not have as much liquidity, you can pay for a new appraisal.
If it turns out better, you will have spent 300 euros more, but you will have avoided losing several thousand euros from the deposit contract. In the event that the appraisal is done with the bank, there will be no more opportunities: they will not send a second one. company to see if, this time, you are satisfied with its result. For this reason, and although the process may seem less agile or comfortable, it will always be better to appraise on your own.
