Choosing a mortgage: what you need to know
If for most of us buying a house is a dream, choose the cheapest mute is the means that allows us to crown it.
In this article we will try to give you some advice on how to choose the mortgage that best suits your needs, to move with full knowledge of the facts among banks, consultants and quotes, hoping that they can come in handy when you decide it’s time to feel “finally at home” in your new home!
Choosing a mortgage: the first steps
The first thing that comes naturally when it comes to choosing a mortgage is to turn to your bank. Nothing bad, indeed. It is more comfortable, employees know us and can give us useful advice and explanations on technicalities (which we will see later in the article), but we must never forget that each employee is primarily the interests of his company.
It is therefore better not to limit yourself to just consulting your credit institution, but it is good practice to listen to more bells, so that you can have as much information as possible and compare the various offers that there are on the market.
One question that needs to be asked when it comes to choosing a silent person is: “Am I able to do everything myself or is it better to rely on a consultant?
There is no exact answer to this question: if on the one hand we can save and reduce costs by cutting any intermediation, or even rely on the web to compare and find because of ancillary expenses reduced to a minimum – of beneficial mortgages, on the other hand you have to take into account that a mortgage is an expense that will affect our family budget for a long time and if we do not feel that we are familiar with the subject and the time to devote to the study and the necessary bureaucratic requirements, it is better to rely on consultants.
In case you want to turn to a credit broker, our advice is to entrust you to a professional regularly registered in the list of credit brokers of the OAM, the Body of Agents in financial activity and credit brokers. A good credit broker, as well as being prepared and specialized in the banking sector, will be able to provide you with all possible options and direct you towards the solution that best suits your needs.
Choosing a mortgage: what you need to know
The Spread: this is the actual cost that the bank charges for the granting of the loan. The spread is added to the interest rate of the loan requested and defines the fixed cost of the mortgage: the lower the spread applied by the Bank, the lower the interest to be returned on the loan.
The interest rate is equal to the value of the spread + reference index chosen (in the case of variable rate the reference index will be the Euribor, while the reference index for fixed rates is the Eurirs – or Irs).
the APR: The final cost of the mortgage does not depend only on the interest rate you are going to pay, since there are also ancillary expenses. This is where the APR comes into play, i.e. the Global Annual Effective Rate, which indicates the cost of financing already complete with additional costs of expertise and investigation provided for the signing of the loan. It must also be ensured that the rate proposed by the bank is not simply an entry rate, but that it remains stable throughout the duration of the loan.
Fixed / Variable Rate Loan: We can decide whether the instalment we are going to pay will be at a fixed or variable rate. As the terms suggest us, if we choose a mortgage to fixed rate the value of the installment that we will go to pay will always be the same for all the duration of the mortgage, while choosing the variable rate the cost of the installment will be able to decrease or to increase in base to the variations of the Euribor index.
Mixed Rate Loan: the mixed rate loan proposes intermediate solutions with respect to the two examined above. Who opts for a product to mixed rate has two options: the Mutuo variable with Cap, that it concurs to underwrite a mortgage to variable rate with a maximum limit beyond which the rate of interest will not be able never to rise, and the Mutuo to mixed rate, that concurs to change the rate of interest periodically passing from variable to fixed and viceversa.
In the choice of one of these two options, apparently advantageous, it is necessary to keep in mind however that in these cases the bank foresees greater costs for the mortgage, due to the additional coverage that usually is not foreseen for the traditional house mortgages.
Choosing a mortgage: the Prima Casa facilities
The list of manoeuvres implemented by the Government to restart the real estate sector must include the tax breaks confirmed to a large extent by the Stability Law 2018.
One of the most important advantages concerns guarantees for obtaining a loan: thanks to the first home mortgage guarantee fund, the State undertakes to act as a guarantor for the bank to obtain mortgage loans for the purchase of a property, for restructuring or for energy efficiency, while the banks, on the other hand, will not be able to demand additional guarantees from the borrowers in addition to the mortgage on the property and the guarantee provided by the State.
Another facility provided for by the Stability Law concerns interest rates on first home loans, and makes it possible to obtain a loan at a calmed rate no higher than the average overall effective rate, the percentage of which is published every 3 months by the MEF.
The subsidised first-home mortgage rate 2018 is an advantage reserved for young couples under 35 and families with only one parent.
In this regard, we remind you that Immobiliare San Pietro has decided to offer a free consulting service for all those who wish to participate in the call for young couples to obtain a regional contribution of up to 35,000 euros on the purchase of the first home.