Mortgage News February 2021

Mortgage News February 2021

To keep you updated on developments in recent weeks in the mortgage market, we have compiled the most important news about mortgages in recent weeks:

Mortgage News
Mortgage News February 2021

02/26/2021: Coinc makes fixed mortgage cheaper

Coinc decided to reduce interest on its mortgage. Specifically, interest rates have been reduced from 1.35% to 1.25% in 10 and 15 years, and from 1.35% to 1.30% in 20 years and from 1.40% to 1.35% in 25 years (interest remains for 30 years at 1.40%). To get these prices, it is not necessary to contract any product for the entity.

02/26/2021: Mortgage Loan Company fell by 7.6% in 2020

According to the National Institute of Statistics, mortgage contracting in 2020 was reduced by 7.6% compared to 2019, mainly due to the Coved-19 pandemic. This body also published that in December 2020, the signature of these products decreased by 14.8% compared to the same period of the previous year. 

02/17/2021: Liberbank launches Green Mortgage and BBVA publishes its terms

Liberbank has launched oxygen mortgage, an Energy Efficiency A home purchase loan with interest from Euribor plus 0.68%, being rewarded for contracting several products (direct payroll, insurance signature, investment in funds ...). BBVA, for its part, announced its mortgage terms: interest from 1% fixed to 15 years in exchange for a direct debit payroll and get home and life insurance.

02/12/2021: Openbank amends all its mortgages

Openbank has adjusted all of its housing loans: it has eliminated discountrates for customers who finance less than 80% of the purchase and reduced the rest of the interest. It now offers a variable rate of Euribor plus 0.95% and a fixed rate of 1.30%, with the reward requirements met.

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What are the conditions for applying for a mortgage?
 Mortgage requirements
Save 30% of the house price
Long-term, indefinite contract
Low or no debt

Before considering the option of a mortgage, we should ask ourselves whether the bank will approve our application. Each entity follows its own risk criteria to determine whether the client is able or not, but is usually assigned all according to the following criteria:

1. Save 30% of the house price
As a rule, through mortgages we can finance a maximum of 80% of the house we want to buy (which is known as a loan for value or permanent value). Thus, it is necessary to save the remaining 20% plus an additional 10-12% that we must use to pay the title deed and loan. 

Let's imagine, for example, that the house we care about costs 100,000 euros, excluding taxes. In this case, we will need to save the equivalent of 30-32% of this amount, any special funds ranging from 30,000 to 32,000 euros 

2. Indefinite contract and certain seniority
Another key aspect of obtaining mortgages is to have a good job and the economic situation to provide security for the bank. In this sense, in general, a job is required with an indefinite contract and a certain seniority, which makes it clear to entities that we can retain our business and pay the fees without complications. 

In addition, of course, it is necessary to get a salary or a relatively high salary. The higher our income, the easier it will be for us to pay monthly installments and even save if we are at any time exposed to a temporary reduction in our wages.

3. Lack of debt
Although it may seem obvious, it does not hurt to remember it: to access mortgages, it is necessary not to have too much debt due. In this sense, the Bank of Spain recommends allocating up to 30-35% of net income to pay off financial debts. If future mortgage installments (in addition to other credits we pay) exceed this limit, our application is very likely to be rejected. 

In addition, no non-payment should appear in our credit history, either in CIRBE or in late payment files such as ASNEF. If this happens, the bank's risk department will release the alert and our application will be automatically rejected.

What types of mortgages are there?
Mortgages can be divided into several types depending on the maximum financing, its purpose and the target ... However, the most commonly used classification is the classification that separates them according to the applicable interest. Based on this parameter, we can distinguish between three categories:

Fixed mortgages: Always have the same interest, which is the interest agreed with the bank at the time of signing. It allows better control over spending, as fees will remain constant throughout the semester.

Variable mortgages: Interest consists of a difference (a fixed number agreed with the bank) plus a standard that can fluctuate up or down. The most common is Euribor for 12 months.

Mixed mortgages: a mixture of the two previous categories. At the moment, they tend to have a first chip with fixed interest, generally between three to ten years, and then go on to get a variable rate.

There are also other somewhat more private mortgages, such as shared interest loans whose installments are calculated at a variable rate and a fixed rate. However, they are non-traditional products that are hardly marketed in Spain.