The mortgage interest rate has become a popular topic, since it has undergone many public debates, so it is important to know it well and know what it is.
What is the mortgage interest rate?
The interest rate on a mortgage is the percentage of interest that will be paid on the original loan , this rate tends to be paid to the bank long before the completion of the housing payment and can be presented in various modalities.
Mortgage interest rate
Currently, the new mortgage law specifies the mortgage interest rate and this in turn indicates that the percentage of interest on a mortgage in parts can be canceled , together with the payment of the accounts for the amount originally due.
Remember that a mortgage is a commitment , because you agree to return to the bank the value of the loan plus interest in a certain period of time and your new home will be the guarantee of this. The interest is, in summary, the profit that the bank will obtain for lending you its money.
Interest rates according to the type of mortgage of your choice:
Before talking about whether the best option is to pay a mortgage or live on rent, it is necessary to know the types of mortgages and which are the best mortgages in each possible case.
▶ Fixed mortgages are the most stable, since they maintain the same amounts of payments and interest costs throughout the life of the loan. This type of mortgage does not depend on external factors, but on the decision of each financial institution and their payments are usually domiciled to a payroll account.
▶ Variable mortgages have different rates throughout the life of the credit, usually in these types of mortgage loans; Although they have a fixed rate established by the bank, their interests are calculated based on current economic indicators and depend on their variation at all times. In unstable economies, they are not recommended, as the monthly installments to be canceled may change abruptly. As an advantage, these mortgages have longer payment terms than others. Variable mortgages depend largely on the purchasing power of the creditor of the same and this, must have at least 25% of the cost of housing as a backup.
▶ Mixed mortgages have a hybrid operation because they combine the stability in the value of the installments of a fixed, and two types of interest, somewhat emulating the calculation of a variable mortgage. Their interests are divided into two: a fixed interest and a volatile interest, formed by a differential plus the current benchmark or economic indicator. This type of mortgage has more competitive interest but its negotiation is more complicated.
Can I ask for a mortgage loan if I don’t have a guarantee?
A savings-free mortgage can be a possible solution for people who don’t have savings to back up their loan. However, they are not highly recommended because they do not have support, they have greater interests because they represent a greater risk for financial institutions.
It should be remembered that the mortgage interest rate does not vary much between institutions, however different they may be, as the law regulates them. It is important to know all the details to know how and when interest should be paid.