Buying a house to own, for many people, is a life goal, since it allows ensure an inheritance for children or take it as a medium-long term investment, avoiding paying rent (increasingly expensive). But there are many unknown aspects, especially in the case of mortgages. Antonio Lorenzo has been a mortgage broker regulated by the Bank of Spain since 2019 and has extensive experience advising those looking for advice on financing their home.
And there are many hidden extra costs, such as interest, which it is always good to know about before going to the bank, since it is a ‘burden’ that will be borne for the next 15, 20 or 25 years. In this sense, on the YouTube channel of ‘Inspira Brand’the expert has revealed the three fundamental keys to take into account to avoid problems with banks when applying for a mortgage loan.
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All this in a context in which the price of housing continues to rise and more and more testimonies are read from people who claim that earning a salary of 2,000 euros, they own several apartments.
But starting from scratch, one of the banks’ first demands is usually that the future owner have saved 20% of the price of the home and to this we must add the management costs. And what about those people or families who want to buy a house but do not have all the starting money in their account. For them, the expert has good news. “It is possible.”
The secret to financing 100% of the home
The mortgage expert highlights that it is possible to finance the entire home and that in some cases the expenses derived from the operation can even be covered. This is possible by resorting to what is called “double guarantee”.
It is not the same as a personal guarantee where someone (for example, a father or mother) commits their salary. In the case that Lorenzo explains, what is used is a second property. “A home free of encumbrances”, that is, one that does not have an active mortgage and that is paid.
More and more parents are endorsing the purchase of a home for their children with their own home. “They are not going to give more than 80% of the appraisal of the first home and more than 60% of the appraisal of the second,” explains the broker.
“Getting into debt doesn’t have to be bad”
Lorenzo is clear that getting into debt does not have to be a synonym for something going wrong. “Great fortunes go into debt until they are mad,” he points out in the podcast, “but with a nuance, good debt is one in which the income you earn is greater than the expenses you generate.” That is to say, “if you buy a house to live in, you are not going to get income from there and then it will possibly be bad.” Although, as with almost everything, there are exceptions.
“I can admit an exception, that since the rent is higher, you do save money. But, for example… we all like a 50,000 euro car, but financed? Well, you just killed the car, the house…”. “Going on vacation asking for a loan is crazy, you have to prioritize.”
Movements in accounts that alert banks
Banks are increasingly strict when granting a mortgage and there are certain operations that put them on notice. One of them is unjustified transfers or suspicious movements.
This is where credit card debts come in, or movements derived from gambling and betting. This often means that mortgage applicants are overdrawn.
Regarding the future of housing in Spain, the horizon is pessimistic. “Prices are going to be increasingly higher and out of the market, a home will practically be a luxury.”