After a few years with credit spreads housing above 4% -5% is time for the bank to make downward revisions of the spreads in an attempt to attract new customers and re-grant credit.
In this article, we will introduce you to some factors to consider in choosing your bank. To help us, we’ll consider a hypothetical simulation.
Type of property
To make your housing credit simulation you must provide your personal data and some data concerning the business. In particular, the value of the deed, the estimated value of the valuation, the value of the loan and the desired term (the latter may vary to simulate different installments).
One of the most important factors to consider in the simulation is the Financing / Guarantee item, as you can see in the table below. In most banks, this heading is the main indicator for determining the spread. So, if you want the best spread for home loans you should aim to have as low a rate as possible.
According to this indicator, we have a spread of 1.65% for a loan of EUR 100,000 and an assessment of EUR 120,000, right.
Two Questions About the Housing Financing / Assurance Ratio
- What happens if the Financing / Guarantee ratio falls, that is, if the valuation is well above the expected value?
- And the opposite, that is, if the assessment is lower than the predicted values.
These questions are pertinent even because in the generality of the times and whenever the value of the evaluation varies in the downward direction. That is, it is verified that the value is lower than expected, there is an update of the financing guarantee ratio and consequently the spread.
What happens is that after the client has borne burdens with the request for housing credit and appraisal and see their credit become more expensive, they end up accepting the new conditions because they do not want to start all over again in another bank. Therefore, it is important to know the consequences of such a change, as these may influence the preparation of your budget.
Similarly, anticipating the possibility of trading if the valuation value is significantly higher than the amount predicted is an important step in the simulation of housing credit. The majority of banks do not make any changes in the spread in the downstream direction of the market even if the risk conditions of the operation have significantly improved. Therefore, it is prudent to provide data at the time of the simulation which gives it a margin of safety in case of a potential change.
What to do to avoid these commissions?
There are several banks that do not charge this type of commissions. It is only natural that with the progress of the process that has to be borne by the committee opening the dossier and the evaluation committee. Despite this, there are banks that exempt some commissions.
A study and monitoring of a mortgage lending process can help you save several hundred euros, not only in commissions as in interest and in the premium of various insurance. And best of all is that this process does not have any cost. Why not submit your case and see how much you can save?