Financing house purchase: how to choose the mortgage
When you decide to buy a house, you do not always have all the equity capital you need and you need to ask for help from banks and credit institutions. For many people, a mortgage is a must, but when you start talking about mortgages, interest rates, libor and much more, it is difficult to see which is the best solution.
So here are some clarifications on the three most common types of mortgages to help you choose the right one for you. The premise: Remember that all credit institutions can only finance you for 80% of the value of the property, which means that if you buy a house for 300,000 CHF, you must already have 60,000 CHF and you can only apply for a loan for a maximum of 240,000 CHF.
If you want to know now what will be the amount of interest that you have to repay for the loan, the one for you is a fixed-rate mortgage, where the monthly installment of the mortgage will remain fixed for its entire duration. While this protects you from sudden increases in interest rates, the bank may ask for a small percentage more, with the result that in the immediate future your installment will be more substantial.
In the case of variable-rate mortgages, the interest rate changes with the change of the financial markets, so that the instalment of the loan can undergo various fluctuations and increase, but also decrease. For the law of large numbers, variable-rate mortgages are the best in the long run, but if you intend to repay your financing for the purchase of the house in less than 10 years is a solution that you should consider carefully asking for help to your financial advisor.
Libor mortgages with zip code
If you want to choose a variable-rate mortgage, you can always apply for a Libor mortgage with a CAP.
The Libor mortgage is a variable rate mortgage that in the calculation of interest refers to the Libor, or the London Interbank Offered Rate, but thanks to the CAP sets a maximum ceiling on the percentage that can reach your interest rate. In this way your mortgage instalment will be variable and can decrease and increase depending on the markets, but can never go beyond the threshold defined by the CAP, so you always have a sustainable monthly installment. You can also decide to switch to a fixed-rate mortgage to replace it. Your mortgage must always be sustainable for you and your family.
Banks do not allow you to take out loans for the purchase of a house if your income is not able to cover the expected installment, but before the bank says “No”, try to understand what your monthly expenses are and always take out a sustainable financing that you will be able to repay without too many sacrifices.
Some credit institutions allow mixed mortgages to be taken out where part of the capital is repaid with a fixed-rate mortgage and another variable-rate mortgage or Libor.
This way you can get the benefits of all three solutions and avoid nasty surprises in the future! Our tip: when you choose to buy a property with a mortgage, find your ideal home with the help of our real estate consultants, but then talk directly with your trusted financial advisor to see if you can make your dreams come true or if you have to wait for a promotion to afford the house you have chosen!
How to choose the right house according to your needs
There is no such thing as a perfect house, but there is a perfect house for you! If you are thinking about changing your home, read our news and find out what parameters you need to consider before you start your search.
The number of rooms
One of the basic parameters to be defined when looking for a new home is the number of rooms you want to have. In this evaluation the number of members of the family nucleus can be decisive, but also the desire or not to enlarge one’s family and the passions that one wants to cultivate within the domestic walls. If, for example, you are a fan of painting or music, an extra room could be comfortable, just as a small green space is indispensable for gardening enthusiasts.
When assessing the number of rooms do not forget:
- The number of bathrooms. Do you want one of your own and one for your guests, or just one bathroom is enough?
- The laundry room with or without shower. If you’re a sportsman, you might want to have a space to take a quick shower and leave your sweaty clothes behind after your workout.
- The cellar. Don’t you want to give up a cool place to keep your own wine supply?
- The garage. Your car deserves a safe place to rest at night, as do your motorbike, bikes and ski equipment.
Once you have identified the characteristics of your ideal home, you need to understand your budget. How to do this? Entrust yourself to professionals who will be able to advise you and guide you in defining the monthly expenditure to be allocated to your future home and the amount of the mortgage loan that can be granted. Idea Immobiliare is an expert in consulting for mortgage financing and has been working for years with the most important credit institutions in the area.
Before you start to see potentially interesting houses, you must define the area in which you would like to live according to your needs, such as the presence of kindergartens and schools if you have children, the proximity to highways if you travel often for business, the proximity of clubs and restaurants if you love social life. But remember that the more the area is central, the more costs increase, so it is not certain that with your budget you can buy what you want.
If, on the other hand, you don’t want to give up a large and spacious house but are looking for it at a reasonable cost, the solution is to move from the centre to the quieter outlying areas. Now that you have defined the number of rooms, budget and area, you just have to start seeing potentially interesting properties. What are you waiting for?