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Buying with Mortgage

 PRACTICAL ADVICES

1. Most mortgage loans are repaid by constant payments that include interest and loan repayment. This is usually the most convenient procedure.
2. This web page lets you calculate the monthly payment on your loan. Each property has already mortgage calculator.
Table: all you have to do is to multiply the amount of your loan by the figure that appears in the "box" where the loan interest rate line crosses the repayment term column and then, divide the result by 10.000. By this way, you will find the monthly payment on your loan.
3. Although mortgage loans are the cheapest on the market, it is advisable to use as small a loan as possible. For this reason, it may be convenient to save beforehand in a "housing account".
4. Each consumer must look for the combination of interest rate and term of repayment that best fits his or her possibilities. A longer term than necessary means paying interest for a longer time, and a term that is too short means that the payments may be difficult to keep up with. It is important to choose a convenient combination.
5. Loans may be at variable or fixed rates. Fixed rates do not allow you to benefit from falls in interest rates but they do avoid increases. Variable rate loans are affected by increases and decreases in interest rates.
6. What is important about a variable mortgage loan is not the initial interest rate, which will be applied more or less for the first year, but the reference rate and the differential. These will define the payments for the following twenty, twenty five or thirty years of the loan.
7. The official reference rates, which are defined and published by the Bank of Spain (the historical evolution of these rates is available on this web page and they are published by practically all the newspapers) are usually applied by credit institutions.
8. These reference rates are used to establish up dated interest rates for variable rate mortgage loans. The revision is automatic, about every twelve months, and does not wait for the European Central Bank to revise interest rates.
9. These and other details should be in the informative leaflet and the definite offer that your credit institution gives you when you request your loan.
10. It is important that you understand everything completely. Make use of the Guidebook for Mortgage Loans issued by the Spanish Mortgage Association and, in any case, consult your credit institution.