What is and how the mortgage works
Buying a house is the dream of a life that comes true. Finally no more rents to pay or landlords who demand a thousand precautions.
Almost all of them aim to build their own home, but very few can afford to buy a home with cash.
Much more frequently, people are forced to take out a mortgage to pay for the property.
The mortgage is an agreement that the private individual makes with the banks in order to perfect the purchase of a house.
Usually the agreement provides that the purchase is preceded by the payment of a cash fee as an advance on the house. The remaining amount is paid by the buyer in monthly installments, which have a certain interest rate agreed with the bank.
There are also 100% tied mortgages, i.e. mortgages that cover all the cost of the house without initial advance. Much loved by young couples and by those who in general cannot afford to give an advance, 100% mortgages are however difficult to accept especially by home owners who have to sell. The latter, in fact, always prefer to cash a sum before finalizing the sale.
Fixed rate mortgages
Among the various possibilities of the mortgage there are fixed rate mortgages. This choice is normally carried out by those who do not want surprises during the payment phase. The fixed rate mortgage requires that there is a fixed interest to be paid each month. For example, fixed rate mortgages with 2.30% interest provide that the new homeowner must pay a 2.30% installment every month compared to what they should give if the amount of the house is simply paid in installments without interests.
Fixed rate mortgages are usually preferred by those who take out a very long mortgage, from 20 to 30 years. For such a long period, in fact, interest rates can change even substantially, or in any case many events may occur that undermine the stability of the country’s banks. Opting for the fixed rate protects those who pay by chance showers or sudden increases in rates for some reason.
Of course, fixed rate mortgages also have some disadvantages . Indeed, rates may drop dramatically for a certain period of time. You want for monetary instability, you want for favorable moments, who benefits from a variable rate is at that moment in a position of convenience, paying much less than expected.
As explained above, therefore, the fixed rate prevents taking advantage of these moments of rate drop, which are certainly advantageous, but at the same time it protects against strong upward jolts.
Calculation of the installment of the fixed rate mortgage
How to calculate the installment of the fixed rate mortgage? Keep in mind that banks make a calculation when the mortgage is requested, but it is always better to have made your own calculations first so as not to get lost.
One of the first and easiest ways to calculate the fixed rate mortgage payment is to use online portals . Portals such as Mortgages Online or online credit allow in fact to insert all the clauses of the mortgage and have the installment calculated in a simple way.
Another way to know the fixed rate mortgage installments can be to use the portal calculators for the sale of the house .
A portal like Immobiliare.it, for example, guarantees the calculation of the mortgage for each property. Immobiliare.it usually leans on Credit agri mortgages, therefore it is able to calculate the installments only on that bank.
Finally, a really simple and homemade method to calculate the mortgage payment is to use Excel spreadsheets .
By entering the data of the value of the house, the amount of the advance and the remaining amount to be tied to the mortgage, and then adding the interest rates, it allows you to have a clear situation in front of how the mortgage will be presented by your bank.
The best fixed rate mortgages
Now you will probably be curious about the best fixed rate mortgages available on the market.
Always by turning to portals such as online mortgages, you can learn about the current situation of fixed rate mortgages and find out which is the most advantageous for you.
For example, a loan like Good Lender Credit’s at 1.70 and 1.85% banks, for example, provides for a monthly installment of 354.80 USD with free periodic expenses and reduced preliminary costs. This mortgage is advantageous for houses that do not exceed 150 thousand USD, for example the home of a young couple.
The fixed rate mortgage for the purchase of a second home proposed by Setrem with an installment of $ 515.76 per month should also not be underestimated. In this case the Tan is at 1.20% and the Taeg at 1.69% with delivery on act.
Mortgages, however, are not only asked to buy houses, but also to renovate them. This is why we must also explore mortgages for restructuring such as that proposed, once again, by Good Lender Credit. With a monthly installment of 238.98 USD, Tan at 1.40% and at 1.65%, this mortgage also includes free periodic expenses and reduced preliminary costs.
How to apply for a fixed rate mortgage
In short, the request for a fixed rate mortgage seems easy. Just ask the bank for an installment with calculated interest and bring a sum up front, and that’s it. Unfortunately it is not that simple.
The request for a mortgage, in fact, also provides many guarantees to be respected. First of all, the age of majority is the first requirement.
Even the not too advanced age is fundamental: for example, above 65 years it is no longer possible to ask for a mortgage, or in any case a lot of resistance is opposed by the banks, since life expectancy does not generally exceed 20 years from the moment of the request . To take out a mortgage, then you need economic guarantees . Normally you have to show the last two or three payslips, or bring your own turnover in case of VAT number.
If a person does not meet all the requirements for taking out a mortgage, what should he do? As a rule, guarantors can be appointed (often the parents), who endorse the mortgage and act as intermediaries between the mortgage holder and the bank.
In this way the young buyer is unable to pay an installment, the bank knows that he has the right to request it from the guarantor, who pays instead of the signer. Often this procedure is used simply because young people, although they can afford the mortgage financially, do not have contracts in order that allow the mortgage to be taken out at bureaucratic level.
2019 advances on fixed rate mortgages
What will happen in the near future on fixed rate mortgages ? Given Italy’s economic instability, fixed rate mortgages will probably be even more preferred than variable rate mortgages. In addition, mortgages may be tightened even more due to precarious employment contracts.
This will take even more guarantees to turn one on. In any case, the mortgage remains one of the few safe investments to put your savings in the brick in view of an improvement in the Italian economic situation.