How to avoid the rise in rates to get a good fixed mortgage

Spanish banks do not want their clients to take a fixed-rate mortgage.

10 June 2022 Friday 00:30
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How to avoid the rise in rates to get a good fixed mortgage

Spanish banks do not want their clients to take a fixed-rate mortgage. Its strategy is now to grant more variable mortgages, whose interest is increasingly higher due to the rise in the Euribor (it closed May at 0.287%, the highest value since 2015). So that applicants do not opt ​​for fixed rates, entities have raised them drastically: they have gone from being below 1.50% at the end of 2021, to more than 2%, which is the percentage currently applied by the majority from the bank.

Given these increases, contracting a fixed mortgage with an attractive price is an increasingly complicated task. However, according to the financial comparator, it is not an impossible mission, no matter how much the banks insist on making these products more expensive to give more access to their variable mortgages. Its analysts assure that a fixed rate of less than 2% can be obtained (“which, although more expensive, is still a very competitive interest”, they emphasize) if a few simple steps are put into practice.

The first thing to do is contact a broker or mortgage broker. The work of this professional basically consists of obtaining the best conditions for their clients. As he knows the financial market in depth, he knows which banks to ask for the mortgage to obtain a lower fixed rate than the one offered by most entities.

The broker will also negotiate with the banks to try to improve their initial conditions: to lower the interest rate or reduce the number of associated products such as insurance, for example. Consequently, the fixed mortgage that can be obtained with the help of an intermediary usually has an interest of around 1.50%, which is lower than what the entities offer the client when he requests financing on his own (more than 2 %).

For their work, brokers usually ask for fees of between 1% and 5% of the amount of the mortgage (although some do not charge the applicant anything because their commissions come from the banks). Now, as HelpMyCash explains, the client will only have to pay if they accept an offer obtained by the intermediary and finally sign the mortgage. If you back down or opt for the loan from another entity with which the broker has not contacted, you will not have to pay a single euro. Hiring these professionals is usually a good deal in the long run because, with the interest rate reduction they get, the client will end up paying less for their mortgage.

From HelpMyCash they advise the client to ask the broker which banks they are going to contact (the broker must, by law, provide this information). In this way, you can request financing from the entities with which the intermediary does not work to see if one offers you better conditions. The ideal is to go to a minimum of three banks to have several options on the table.

When requesting a mortgage from these banks, it is advisable to negotiate to try to get better conditions. And it is that many entities are willing to lower their interest if the applicant enjoys a good economic situation or fits into a profile that they are interested in exploiting. Openbank, for example, offers a fixed interest from 2.02% (in exchange for direct depositing the income and taking out home insurance), but is willing to reduce it to 1.92% if the amount of the mortgage is 150,000 euros or more.

When the client has gathered several proposals (those from the broker and those obtained on his own), he will be able to compare the conditions of each offer and assess which bank offers him the cheapest fixed mortgage. For this, it is important to look at the interest rate (the lower it is, the better), but also at the associated products that must be contracted to achieve it, such as insurance, cards, etc. It may be the case that a high-interest, uninsured mortgage is cheaper, in the long run, than one with a lower rate and multiple insurances.

You also have to look at the commissions that the bank can charge. In general, entities no longer apply an opening commission when contracting the mortgage, but many do charge a fee if the client modifies the conditions after signing (novation), transfers the loan to another bank (subrogation) or settles the debt before of time (early amortization). The recommendation made by the financial comparator is to contract a mortgage that does not include them or to negotiate with the bank as much as possible so that they are not included in the contract, especially if you have a good financial profile.



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