Ignorance and lack of information about personal finances is one of the factors that influence the difficulty of finding a good mortgage. In fact, The mortgage market can be misleading, especially when it comes to mortgage interest.
Thus, it is possible to find mortgages with really low interests, especially at a mixed rate. For example, there are many banks that offer these products with an initial fixed amount of less than 2.50% for the first five years; a very sweet price now that the Euribor (the index for calculating variable mortgages) exceeds 4%, as indicated by the financial comparator HelpMyCash.com.
However, they warn that many of these supposedly cheap mortgages have a trick. In most cases, their low rates are offered in exchange for the client contracting a good number of the bank’s products: insurance, pension plans, cards, investment funds… The price of these extras can significantly increase the cost of the mortgage loan, no matter how low its interest may be.
What is subsidized interest?
Fortunately, it is easy to detect whether the interest on a mortgage is reduced or not by contracting other products. According to HelpMyCash, banks are legally obliged to to indicate whether the price of their mortgage loans is subsidized (reduced) in exchange for meeting certain conditions. And if it is, they have to show the rate they apply whether those requirements are met or not.
The case of Cajamar is a good example. On its website you can find the conditions of your Mixed Type Mortgage, whose interest is 3.40% for the first five years and Euribor plus 1.60% for the following if you do not contract any additional product from the bank. On the other hand, its discounted rate is 2.40% for the first five years and Euribor plus 0.60% for the rest of the term if the client directs his payroll to the entity, takes out his home and life insurance, uses one of your cards and invest in any of your funds.
Associated products do not always compensate
As a general rule, The total price of the mortgage is lower if these additional products are contracted, since the reduction in interest usually offsets the cost of the links. Now, if the number of bonuses is high (more than three), it is very likely that this offer will be more expensive than other mortgage loans that have a higher rate but, on the other hand, can be obtained with fewer extras.
For example, let’s say that a person needs 150,000 euros to be repaid in 30 years and applies for the Cajamar mixed mortgage. With the maximum bonus, you will be applied an interest of 2.40% for the first five years, so your first 60 installments would be almost 585 euros per month. However, taking as a reference the prices published on the Cajamar website, the cost of the insurance, the card and the fund would amount to approximately 545 euros per year, so the total to be paid for this loan It would be about 37,825 euros during the first five years.
And now let’s imagine that that same client requests the Flexible Mortgage from EVO Banco, whose interest is a little higher, 2.45% the first five years and Euribor plus 0.60% for the following, but it is subsidized only for direct debiting the payroll and taking out the entity’s home and life insurance. In this case, the first 60 monthly payments would be almost 589 euros, but since the annual cost of the associated products would be lower (just over 380 euros per year for an average profile, according to the entity’s website), the total pay for this loan During the first five years it would be around 37,240 euross; less than with Cajamar.
But money is not everything. It must also be kept in mind that the bonuses They “oblige” the client to have contracted certain products while the mortgage is still alive. And those additional services do not have to be convenient for him. For example, in the case of Cajamar, the maximum bonus is achieved by maintaining a minimum balance of 3,000 euros per year in an investment fund, which is a high amount that the mortgage holder could use for other purposes (with less risk of loss and commissions). ). And you must also take out life insurance, which is only advisable if the applicant wishes to protect his or her heirs (and whose price will increase as the owner gets older).
You have to do numbers and compare
So, how can you tell if one mortgage with subsidized interest is more attractive than another? According to HelpMyCash, the solution is simple: you have to calculate the total price of the loan, that is, what will have to be paid in total for it taking into account its fees, its commissions and the cost of its associated products. Thus, the client will be able to compare several offers and find out which one would really be cheaper.
From the comparator they remember, yes, that bonuses are not carved in stone in mortgage offers: You can negotiate with the bank during the application process to lower your interest without having to contract certain products. The chances of reaching an agreement with the entity will be higher if the client enjoys a very good economic situation or if they entrust the processing to a mortgage broker, who is a professional specialized in obtaining the best possible conditions.