Present a profile that does not sow doubts about the possibility of repaying the debt, compare the best offers and study with a magnifying glass the products linked to the loan. These are the keys to laying the foundations of a good negotiation with the bank when requesting a mortgage and ensure the best price, according to the experts. If official statistics indicate that the cost of financing the purchase of a home is at historically very low levels, using these assets will make interest rates on mortgage loans even more advantageous.
Last November, the average interest rate of the variable and fixed mortgages signed to acquire a home was 2.19% and 2.77%, respectively, according to data published this Wednesday by the INE. But, “one thing is the market offer and quite another is the world of possibilities behind it and which can be accessed by comparing and negotiating ”, highlights the general director of iAhorro, Marcel Beyer. In the case of this banking comparator, the average nominal fixed rate that it managed to achieve for its clients in November was 1.03%, which is equivalent to 1.74 percentage points less. Slightly smaller and, however, relevant, was the difference of 1.4 percentage points with the nominal average rate of variable mortgages signed through iAhorro (0.79%), according to data provided by the company, which receives around 2,000 consultations each month.
First of all, the profile
But, how can the user get to save so much on his mortgage? “In the first place, we must be clear about the financial profile we have,” they point out from the comparator. In this sense, Lola Alcover, secretary of the General Council of real estate agents (Coapi), recalls that, after the bursting of the real estate bubble more than a decade ago, banks no longer lend money with the ease of yesteryear. Now “the entities prefer, and reward, those customers who have a higher initial savings to attend to a greater portion of the purchase price ”, he points out.
Likewise, they select the borrower based on the expected income and with which they are supposed to pay the monthly mortgage installments in the five years that follow the signature, “emphasizing the security of their employment, their geographic link, by origin, family or work, which offers a guarantee of continuity over time in the face of mobility ”, Alcover points out. The entities will also study “the personal stability of the person requesting the loan, when calculating possible future variations in their family responsibilities,” he adds.
All of this has clear practical consequences. Among other profiles, officials will be especially privileged, especially “those who have no prior indebtedness and demonstrate a certain roots in the place where they acquire the property ”, in the words of this expert. Established marriages will also be welcomed, “in which both spouses have a stable job, with a permanent contract and seniority, and good income.” Or a single person, but with a good profession, “without family responsibilities and with a solid level of savings,” Alcover highlights.
Compare to press
Once their situation has been analyzed, the user should study the options that exist and which one may be more interesting according to their profile. “If we have a modest income and we want a 25 or 30 year mortgage, it is possible that a fixed mortgage is the most appropriate alternative to avoid having to face long-term the fluctuations of the Euribor”, That is to say, the index to which almost all variable mortgages refer, underlined from iAhorro. An option that, on the contrary, will be interesting for a person with a high income who seeks to pay off his mortgage loan in a short period of time, since, in this way, he would take advantage the lowest levels in which the Euribor is found.
In any case, the comparison of the different offers is crucial. “The options are out there, you just have to go out and look for them,” insists Beyer. And for Alcover, “having several offers on the table not only allows a much more accurate selection to be made, but is also very useful to carry out negotiations with financial institutions, when pressing to equalize or improve some points specifically like the interest rate, among others ”. In his opinion, not only this, but also commissions and expenses are “decisive” parameters. For this reason, it will be essential to look at the equivalent annual rate (APR) which, together with the nominal rate, also includes the other expenses that end up making the loan more expensive.
And the associated products?
Many times, in addition, banks offer their clients some connections. The Real Estate Credit Law, in force since mid-June 2019, prohibits entities from imposing the contracting of these additional services – for example, insurance – with the same bank, in order to grant the mortgage. “Now they offer them as an option to reduce interest rates or the spread of the loan, and they call them combined products,” explains Alcover.
In this regard, from iAhorro they warn that “obtaining a cheaper fee in exchange for more links will not always be the best option”, since it is possible that, in the end, the cost of the mortgage reflected in the APR is higher than if there were no bonuses. This would be especially detrimental for the user, especially considering the current situation in the mortgage market, in which a Euribor that has been in negative territory for years pushes the prices of variable mortgages down, but also exerts strong pressure on the fixed ones.
So much so that 20-year mortgages with a fixed interest rate of 0% marketed by a Danish bank have already set a precedent in Europe. Can the same happen in Spain? “Although there is nothing that technically prevents it, we would be facing an unusual circumstance and that, probably, is not applied in a generalized way but only to clients who have the best profiles,” they predict from iAhorro. However, they do believe that it is possible to get very close to 0%. “In December, we signed our first fixed mortgage at 0.65% and, since October, we have found fixed rates of 0.70% several times,” they say.