mortgages for shorter periods

Its main advantage is that the consumer pays less interest charges, but the mortgage payments are too high

The collective imagination tends to think that a mortgage always walk hand in hand with a long repayment term. And in these times where the supply of credit for the vast majority of banks is characterized by release mortgages to 40 or even 50 years. But the truth is that financial market live another kind of lending solutions. Of course, hiring a mortgage whose repayment term is short is not a decision that depends on the tastes and preferences of each, but what matters is the ability to pay the contractor.

There is a moderation of both the average amount of maturity as to which mortgage loans are contracted. However, until 2003 the average time on the signing a mortgage not exceeding 21 years, which means that in just five years the period has increased by six years. It is clear that in our country “takes” the long term. But in practice it is one thing that is firm and quite another period of time when the city gets rid of your mortgage burden, because in times of economic boom, the loan amortizes much earlier than contracted.

By observing these measures may seem even stranger that anyone desiring a shorter term mortgage. However, as explained Lorraine Muller, chief economist of the AHE, is a type of product that caters to real situations. For example, in the numerous revivals of housing that have taken place in recent years, recruitment of this financial product was the answer why many chose; citizens who buy second homes accounted for over 40% of the value of new building because they had managed to sell their first home at a price bubble. Therefore, could afford to hire lower mortgages and installment amounts below the average.

Not forgetting that this is the mortgage, according to Muller, more appropriate, for their short terms and small amounts, for those living in areas where housing prices have not exorbitantly expensive. According to the latest housing index produced by the IESE Business School, the provinces in which the amount of square meters of old housing is cheaper are those of Badajoz and Lugo.

There are other situations where this type of mortgage is seen as the only solution. And is that the age of the holder of the mortgage is decisive. When the contractor is an adult of a certain age, it must be the short term. In the vast majority of loans to 40 years, a clause in the institution imposes is that the maturity of the mortgage holder the maximum age can not pass 75 years. Thus, those around 35 years and who wish to sign a long-term mortgage should take into account his age does not play much in his favor.

credit to: Rosa Cuevas

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