The fixed mortgage is a legal figure that guarantees the fulfillment of certain contractual obligations contracted between two or more parties. We are talking about real estate loans, among others, where the house itself to be acquired, or some other, serves as collateral for the creditor on behalf of the debtor.
In this type of financing, a determined payment in previously agreed installments, with the surcharge of certain interests, counts. The latter will remain unchanged until payment in full. If the debtor does not comply, the creditor is legally entitled to foreclose on the property.
Fixed mortgages and their characteristics
Definitely the stability offered by the fixed mortgage is what many prefer when it comes to budgeting their money with stability for the future. However, it presents some characteristics to consider and that not everyone looks favorably upon, such as:
- The installments usually involve a larger amount of money than those corresponding to the variable rate mortgage.
- The interest implicit in the payment of derivative installments is also higher.
Thus, applying this system entails paying higher amounts in monthly, semi-annual or annual installments, as previously agreed.
This without being affected in any way by the fluctuations of the reference index known as Euribor.
Mortgage interest rates
If you have ever taken out a mortgage loan, you should already be familiar with the terms associated with the inherent interest. But if this is not the case, we inform you that they are usually represented by the TIN and the APR, especially linked to the fixed mortgage. But let’s see what they are all about:
- NIR: This acronym stands for Nominal Interest Rate. In short, such interest mode implies a fixed payment applied to the amount of money lent by the bank granting the loan. This is based on the concept of payment for the corresponding concession.
- APR: Refers to Annual Percentage Rate, also called Annual Percentage Effective Rate. This takes into account for the calculation the nominal interest on the loan stock, transaction fees, certain operating expenses and the frequency of payments. It is used to compare market offers.
- Mixed Rate: Such an interest mode involves an optional combination of fixed and variable rate rates. An example of this could be the application of fixed values during the first years of the loan and then applying the variable rate.
These elements are very important when evaluating what the market has to offer for your best interest, in which case you should be assisted by real estate specialists. So if you intend to become a beneficiary of a mortgage loan, it is best to familiarize yourself with them.
Requirements for acquiring a mortgage in Spain
Whether you intend to acquire a fixed or variable rate mortgage, there are some requirements that you must meet equally. These are certain conditions that allow you to meet the minimum profile required by financial institutions. And among them we have:
To have in savings at least 30% of the total value of the house to be acquired (although there are exceptional cases that imply lower amounts).
Earn enough money to be able to pay the loan installments.
Having a stable source of income, such as a formal job.
In addition to the above, it is also important to have a satisfactory credit history in your bank account. And at the same time provide the guarantees or collateral required by the financial institution.
General considerations on the payment of quotas
Once you acquire your fixed mortgage, monitor how much of your payment is taken to satisfy the interest derived. Once this is done, you will know how much you amortize the capital. We are talking about the money borrowed initially, since this way you will be able to better monitor the fulfillment of your contractual obligations.
