When buying a property, knowing how you are going to pay it is one of the main concerns. Keep reading and find out what are the disadvantages of acquiring a mortgage loan, don’t stop reading!
Disadvantages of Acquiring a Mortgage
Paying a property is not easy, it’s not enough to take a couple of Euros from the ATM and give them to the owner. It’s a fairly high investment and not everyone can do it without help.
This is why there are loans or mortgage loans, to help you with large investments. It sounds perfect, right? Well, it depends on your needs. Not everything is what it seems.
Find out what are the disadvantages of acquiring a mortgage:
1. Initial fees
To opt for mortgage loan, you will be asked for an initial credit. Since no bank will give the applicant 100% of the value of the property.
For many, paying between 15 and 30% is already a lot of money, which will take a long time to gather.
For others this percentage is not a problem; everything depends on your requirements.
Although, you shouldn’t forget that you must also have extra money; in addition to the initial, to cover the expenses of the real estate commission, lawyers, housing inspectors and more.
The buyer shall bear all this and not the bank.
2. Contract modifications and penalties
Once you have your mortgage, you should be very attentive to the contract and the modifications you may have regarding payments, dates, rates, amounts and more.
Some banks may penalize you and force you to pay arrears; for not paying on time or not paying the established amount of money.
Even if you didn’t know that a change was made in the contract.
3. The cost of the property ends up being higher
The trick of mortgage loans is to obtain money thanks to the interest they charge you for lending you money.
And yes, you can easily pay in several years, but you end up paying much more money for the property than if you had paid it on your own.
4. Not being able to pay monthly payments
One of the biggest concerns of people who want to opt for a mortgage is not being able to pay monthly payments on time.
It’s obligatory and you cannot leave it for later.
Because of this, it’s important that if you are going to opt for a mortgage loan, you ask for advice very well when looking for the type of credit.
Although keep in mind that, in general, these loans don’t exceed more than a third of your monthly income.
5. The cost of the monthly payment increases in case of incidents
All that is life insurance, insurance against natural disasters or casualties, will be added to the monthly payment of the mortgage loan.
That is to say, although having all these insurance helps you to prevent future altercations, they also involve a good sum of money that you must pay in monthly installments.
It wouldn’t only be the cost of housing plus interest, but also the fees of all the insurance that the property has.
Thinking of Investing in a Property? Visit Mallorca and contact your real estate agent! They can offer you different methods and payment methods so you can buy your house at the best price.