Be very careful when taking out a subsidized mortgage

Mortgage loans are one of the products that most bank users hire since they are made for the purchase of a home. Where, the number of mortgages constituted on houses is 30,600, 3.9% more than in June 2017, according to the data provided by the National Institute of Statistics (INE). The average amount is shown to be 123,896 euros, an additional 5.1%. On the other hand, the average amount of mortgages registered in the property registers in June (from public deeds made previously) is 151,006 euros, 13.9% more than in the same month of 2017.

Such is the relevance of mortgages that many users consider if it is necessary to contract some class make sure formalizing this real estate procedure. Well, to that end, the only policy that needs to be hired is the one that takes into account fires. Current regulations in Spain require that owners have insurance of these characteristics to anticipate this incident at any time. On the contrary, home insurance, despite what many users may believe, is not mandatory, but optional.

This type of insurance, on the other hand, is highly recommended to subscribe since it helps to preserve the content and the container of the property. Contribute among others coverage some as important as water damage and electrical damage to appliances, home maintenance and DIY, replacement of keys and locks for theft or theft and even civil liability and legal protection for you and your home, among some of the most relevant. Even though there are many options that you can select through the offers made by insurance companies.

Why do banks require insurance?

You will certainly find that some of the mortgages marketed by banks require you to purchase home insurance and perhaps other different formats. Not because it is required by current regulations, but as a commercial strategy to promote the conditions of contracting the mortgage loan that you are going to contract. One of the objectives of including insurance of these characteristics is based on lower the differential of mortgages. In other words, so that this financing product is much more competitive and in the end you save a few euros in the operation.

The inclusion of one or more insurance of these characteristics makes it possible to lower the interest rate by a few tenths of a percentage in relation to its original rate. Generally bonuses do not usually exceed 1%, but at least it will help you contain the financial effort that you will have to make to buy a new house. If you do not accept these special conditions, of course, you will not have access to these special mortgage offers. Not in vain, it is the condition imposed by financial institutions.

Effects on mortgage credit

It is a condition that is present in the so-called subsidized mortgages and as a commercial strategy so that your monthly payments are more affordable from that moment on. However, they usually include some type of insurance that has little or nothing to do with the home. You will have no choice but to analyze if this expense compensates you at the time of performing the operation. Because the money you can save through the mortgage bond can go through the expense of insurance.

This is exactly why you should analyze whether or not it is really convenient for you to hire this insurance product. It may not be like that and the most profitable thing is that you resort to other financing models, even without bonuses. In the long run, they can be more profitable in defending your personal interests. Beyond other approaches you have in the insurance sector. Because what it is, after all, is that the policy you take out is useful to you. Something that does not always happen in all situations or in all users. It is a factor that you should always pay attention to when you go to to sign the contract of any mortgage credit.

Advantages in the bonus

Mortgages definitely include a number of advantages that you should analyze in great detail. Because they are not only derived from the actual use you give to home insurance or other formats. But through some benefits like the ones we expose you below:

• Get that kind of interest be reduced As minimum. Its direct effect is that you will have cheaper monthly payments for the duration of the mortgage contract.
• They are developed with a total exemption in commissions (opening, study, early cancellation, etc.) and in the expenses in their administration or maintenance. From this dynamic, there is no doubt that you will have another source of savings when buying your new home.
• It is a commercial strategy that is present in much of the offers and promotions that financial institutions have been doing in recent years. Obtain a more competitive interest rate on the operation.
• It is very common that this class of mortgages are not linked to a product linked to the fixed interest rate. If not, on the contrary, they are included in the variable rate, where there are more differences between the lines of credit.

Disadvantages of the voucher

The mortgage bonus, on the other hand, also implies a series of damages that you must carefully assess when analyzing this special product. As an example, through the following situations that we are going to clarify for you below and that you should pay attention from this precise moment.

• The insurance that you must take out may not be of great advantage to your interests as a user. You may even already have it hired with another insurance company. In this circumstance, it will be an unnecessary expense that will significantly increase the cost of the operation.
• This class of mortgages is not only linked to a series of insurance products. But in addition to hiring other financial instruments (pension plan, savings program, investment funds, etc.). It is the strategy that banks use to lower the interest rate of these financial instruments.
• In several cases, mortgage bonuses They are very small and you may even wonder if it is really important to highlight making this sacrifice. In other words, formalize one or more insurance that you may not need at that time.
• It will only be a profitable operation if the lowering of the mortgage interest rate it is truly appreciable. You shouldn't settle for a few tenths of a percentage, but you should at least lower the spread to 1%.
• If what you are looking for is a subsidized mortgage, you should know that it is a product on the rise and that you will find more and more models with these characteristics. This means that you must compare them all until you get the one that best suits your profile as a banking user. Even with the help of a real estate advisor who can provide you with new information so that you can make the right decision.

Other banking requirements

In this class of mortgage loans, the requirements may be higher. As an example, you have to link payroll or ordinary income in the credit line. Likewise, even though it is more infrequent with the direct debit of the main household receipts (gas, electricity, water, etc.). Where it starts from a very well-established commercial strategy and that is based on the fact that as you have more contracted products or greater links in your income, the conditions of the mortgage will progressively improve. Whatever the case, not above 1, 5% or 2%, which is the maximum limit for these accounting movements in mortgages.

On the other hand, it will be very convenient that you do not take out a mortgage for the mere fact that it is subsidized by these conditions that we talk about in this post. This should be secondary when making decisions about what is best for you. Because it may be that in the long run the mortgage it is more expensive for you. Not surprisingly, you keep in mind that the bank looks out for its own interests, not yours. To this end, consumer associations warn of the danger posed by this class of mortgage loans. More than you can have in the first place.

From this scenario, we must pay attention that subsidized mortgages are a modality within what these financial instruments are. With its advantages and disadvantages and that only you should assess whether it is worth hiring them or not. At first it may surprise you but when you analyze them you will surely detect some other inconvenience in your subscription. To this end, you should not get carried away by the first impact of these promotions, but on the contrary, be more thoughtful to assess all their conditions, which are many. More than you can have in the first place.