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What is a home loan?

Know the types of characteristics and requirements to get a mortgage loan.

Real estate and sales law
What is a home loan?

The mortgage loan is a financial instrument that entities use to lend money to individuals or companies. You must not forget that the property remains as collateral in case of partial or total non-payment during the entire loan period .

You have to repay the borrowed amount through periodic payments (monthly, bi-monthly, quarterly etc.)

This financial instrument is designed for people who, due to their purchasing power, cannot acquire real estate, be it a home or business premises, paying for it at the time of purchase.

In order for you to apply for a mortgage loan, you need to meet a series of requirements, present a variety of documents, and comply with the procedure.

When you ask for the home equity loan, you have to sign a deed before the notary, which has to be registered in the Property Registry.

Next, we explain several of the mortgage loans that you currently have:

Normal or in currency

This type of mortgage loan depends on the type of currency with which it is paid.

Fixed, mixed or variable

To make this classification you have to look at the way to establish the interest rate of the loan.

In the first place, you have the fixed interest rate loan, in which the fee that is set by the bank at the time of formalizing it is the same during the entire period of the same

Second, there is the mortgage loan with a mixed interest, in which during the first years you will have a fixed installment. After this period of time, you will be assigned a variable interest rate taking the Euribor index as a reference.

Last, but not least, you have mortgage loans available with a variable interest rate that is established taking into account the Euribor index. This index varies every day, but the most common is that the interest rate is updated every 6 months and the value of the Euribor is taken on the same date.

Conditions to request the mortgage loan

Financial institutions are the ones that each establish the necessary requirements to request a mortgage loan. The first is that the age of the borrower is between 18 and 75 years old.

Another aspect that the institutions will evaluate is the income and / or the type of employment contract that the interested party has.

Also, they will verify that the borrower is not included in an official delinquent list.

Each financial institution will ask you for some personal documents.

Next, we list the documents that will be required of you most frequently:

- The National Identity Document.

- The last payroll.

- The document of your working life.

- The Tax Identification Number (NIF) if you are a company.

- The periodic and annual payments of VAT, in case of being self-employed.

- The last declaration of assets and income.

- Receipts for payments of other loans, if you have them.

- Certificates that justify the level of income, annual bonuses and extra payments.

- Justification of the periods in which you have been without work or when you have changed companies.

With this information, the financial institution will determine whether or not you are a risk profile and what the conditions that your loan will have.

It is normal that you have many doubts when signing your mortgage. But what can you do to avoid making mistakes or falling into the fine print of the banks?

CONTACT to Audacia Abogados, so that we can help you and know what commitments they have. We won't let them fool you.

Real estate and sales law

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