All about mortgage loans savings
Do you need a mortgage loan financial solution? Know all the steps to take and count with certified help when buying a house. Casas do Barlavento is available to accompany you in all stages and advises you to go the best route, with the purpose of saving on your monthly payments.
Bank Evaluation
When you ask a bank loan to buy a house, first the bank entity will check if your financial condition is viable to do a loan, which implies evaluating your professional situation and all your patrimony.
The second step to be taken by the bank will be an evaluation of the property concerned, which will be paid by you. To get the best bank credit, you should check all the existent offers in the market, but for that, you will always have to pay for the evaluations made by each institution. There are some good news though, as there is a bill to be approved for the portability of bank evaluations, which means you only have to pay for one evaluation and this one will serve for 6 months, for every bank you check. With this action you’ll save several euros, since a qualified evaluation by an expert can cost around 200 euros.
According to bank evaluations, by February of this year, each square foot was worth 1239€, 13€ more than the previous month and the increase in relation to the previous year was 6,8% of the average value. (Know all about new bank evaluation increases, here).
Interest rates arrangements
Banks can offer three possible arrangements of interest rates: fixed fees, floating fees or mixed fees. It is important to consider which is the best arrangement for you as this choice will establish the monthly cost of your new property.
Fixed fee, as the name suggests, never changes the value during the contracted period with the banking identity. The floating fee, swings according to the index that is added to spread, in this case for a mortgage loan the index used is Euribor. The third possible arrangement is a mixed fee, which joins the other two fees into one, for example, you can have at the beginning of the contract a fixed fee, but later on switch to a floating fee. This arrangement varies from bank to bank.
After your mortgage loan is approved the best way to save is by paying attention to new bank offers, as there is always the possibility of transferring your credit, but for such to be a fast and easy process, consider hiring a specialist consultant. With this transfer process you can save hundreds of euros per year.
APRC and Spread
Before you ask for a mortgage loan you need to get acquainted with some recurring terms in bank language, because when you understand them, you probably will be able to save some money as well.
Spread is the profit rate from the bank, your mortgage loan final interest rate results from the sum of Spread with the index. Before you get your first bank credit, consider all available market offers, because spread varies from bank to bank and it can be negotiated and reduced when you get a PSP (Pension Saving Plan), insurance or wage account.
APRC (annual percentage rate of charge) is the rate that will show what you will actually pay at the end of your loan, including bank charges, interest charges, insurances and all costs associated with a bank loan. Therefore, it is important to pay attention to each bank’s spread and if possible, negotiate it, but even more so to the APRC of the same credit, as by this indicator you will understand how much you will actually pay at the end of the deadline agreed with the bank.
Effort Rate
The effort rate will influence the bank’s lending to the costumer. To make that happen, the household effort rate shouldn’t be over a quarter of the monthly income. But what is the effort rate exactly? It is a calculation made by the bank to define if the effort rate is high or ideal for the credit, for that, all instalment payments are verified, like consumer credit, car credit or credit cards. For this calculation the expenses of water, electricity, communication or food are not added.
If you have a high effort rate, you can always improve your situation by settling some credits or even consolidating them into a single one. This way, you will pay interests to a single bank entity, as well as the commissions linked to your account. Through the best financial management and a significant monthly amount decrease, always consider asking for a consultant’s help to get the best offers for consolidated credits.