Types of mortgage
The banking institutions offer different financing options in order to be able to realise the purchase of a home. Let us look at the most common cases in newly built properties.
A young person who wishes to set up on his/her own, a family that has outgrown its current home... There are many situations in which people find themselves making a request for a mortgage. Although some are more common that others.
The typical case
In the case of first time buyers, a personal credit is normally requested for the maximum years that the bank permits, always keeping in mind that this option is very expensive: for the first years we pay only the interest. However, we avoid the price rise that the property would undergo while we are paying interest.
When the future resident goes to sign the deed, they should request a new valuation and lengthen the mortgage, at the same time cancelling the personal credit.
To change home
Because we no longer like the area, because we have outgrown the home or simply because we feel like it, many of us decide at some time in our lives to change home. We could decided: once more to look, visit, request a mortgage... and it is not so difficult, as long as the home that we are going to buy is already constructed and for immediate handover. If the mortgage covers 80 percent of the appraisal we will not pay anything until the sale of the flat we own. If it covers 60 percent, either we will pay interest or capital and interest monthly.
Mortgages with an interest only period
They involve valuing the home to be sold and requesting the money that is needed to buy the new one, on which for the first one or two years, generally - now there are offers of up to five years -, only interest will be paid.
Not forgetting that...
When buying a newly-built home, we have the option of paying the deposit required in instalments. However, we should not forget that the majority of banks and building societies offer mortgages that only cover 80 percent of the value of the property, the rest corresponding to the part that must be handed over to the developer.
On top of all this 11 percent is to be added to cover costs: seven percent VAT, costs of the register, subrogation and administration, among many others.