If every time you do a financial search online or talk to an advisor from your bank everything you hear sounds like Chinese, do not worry.
As we always tell you, the financial sector is full of complex terms unknown to most that can further complicate your search for financing, and unless you work in the profession, confusion can be important.
Today we want to clarify the eight most relevant terms that you should know before going to any bank or signing a mortgage operation.
The capital is the amount of money that the bank is going to lend you in your mortgage without taking into account the interest, that is, it would be the amount of capital you need to be able to buy your new home.
Zero balance certificate
This paper will be one of the most desired to get throughout the mortgage life of your loan and is that when it is in your possession it will mean that your obligation to the bank has ended and the property is 100% yours. This certificate must be issued by the bank when the time comes.
Provision of funds
It refers to the amount of money that the financial institution can demand in advance, before the mortgage concession. This money will be necessary to cover certain expenses associated with the operation such as registration, commissions, fees, appraisal and other costs.
Remember that it is difficult for a bank to finance 100% of the operation so having savings will be an extra point in your favor.
The guarantee is one more figure in the mortgage that implies a guarantee of collection. It can be represented by a natural or legal person and it is usually the bank itself that requires it depending on the risk of the operation. The person who represents this role will respond for you and your possible defaults with all their assets. There is also the figure of the partial guarantee that is that person who responds for time and determined capital of your mortgage obligations.
If you are going to opt for a mortgage at a variable interest rate, it is important that you know the mortgage reference index par excellence that will be applied to your banking operation.
To this index will be added a percentage that will vary depending on the bank with which you contract the mortgage and the totality will be the interest rate to be supported.
Since the Euribor changes. A review will be made every six months or a year to your operation also modifying your mortgage payment.
The cadastral value is determined unilaterally and objectively by the administration from the data contained in the Cadastre. It is mainly used for the payment of taxes, such as municipal capital gains or Real Estate Tax (IBI).
Loan repayment occurs when you want to pay off a portion of the mortgage. With each installment you pay each month you are amortizing the principal of the loan. Every time you advance money will be closer to the final moment of the mortgage.
We speak of early repayment when additional capital is returned to that provided for in the amortization table. This early repayment can be total or partial. When it is total it is a cancellation of the mortgage or total amortization while, if you only pay a part of the mortgage, it is a partial amortization.