In general, it is not recommended to take out a mortgage loan if you do not have a significant volume of savings.
And this is mainly for two reasons: because banks rarely grant mortgages at 100% financing (covering the entire cost of housing) and because with these products a higher debt is incurred and consequently the risk of operation.
However, if you are determined to finance the purchase of your home with a loan of this type and the bank does not make you hit from the financial comparison GetMyCash advised to keep the following concerns and to avoid problems of over – indebtedness.
Make sure you can pay the fees
First, before you even go to the bank, you have to calculate if you would be able to pay the mortgage monthly payments with your current level of income. Keep in mind that the amount of 100% mortgage loans is higher (the entire acquisition is funded, not just a part), so the price of the installments also grows.
Specifically, you should not dedicate more than 35% of your salary to the payment of the monthly payments of the mortgage and the rest of your financial debts (the other credits). If the mortgage loan you are contracting is a variable rate, you will have to calculate if you could continue paying the monthly payments without problems in the event that the Euribor rises. If this is not the case, the bank will most likely not approve your request.
Do not finance mortgage expenses with a personal loan
100% mortgages cover the entire purchase price, but rarely finance the deed of the loan and the new property. The cost of this item usually equals between 10% and 15% of the value of the home. Therefore, if it costs us about 100,000 dollars, you must have saved between 30,000 and 35,000 dollars to pay them.
But what happens if you don’t have those savings? Some consumers choose to finance the deed expenses with a personal loan, a very little recommended solution according to GetMyCash. Keep in mind that the interest on a consumer credit is around 8%, so asking you for one of these products would make you pay a lot more money each month and could cause you to have debt problems.
Beware of additional guarantees
Another drawback of the mortgages that finance 100% of the house is that many banks, to mitigate a little the risk of delinquency, require the client to provide one or more additional guarantees: another property, a co-owner, a guarantor … If they ask you To add a guarantee, you must be aware of the risk that the person who supports you will assume, because it will respond to your defaults with all your present and future assets.
On the other hand, if you are asked to put another property as a guarantee (yours or your parents, for example), which is known as a double guarantee, it is recommended that you ask that the liability of each home be limited. In other words, you have to demand that the contract states that the additional property will guarantee only 20% of the debt. Thus, when you have paid off that part of the mortgage, the double guarantee will be suppressed.