Given the current rise in the Euribor rate, it is important that you review your loan, whether to anticipate difficulties in paying the installments or because there are better options on the market. Get to know some situations that open the door to an eventual reduction of charges with your home loan.
Best options on the market for home loans
Just because you decided to take out your home loan at a particular bank, this does not mean that you are “stuck” forever with that bank. If there are better options on the market, can and should change. In many cases, you can save thousands of euros in interest.
For example, suppose the spread of your home loan is around 1.5%, for an amount of €150,000 over a period of 40 years. If you negotiate with your bank, or find another one that makes you an offer of 1%, you will pay €36.5 less per month. This amount may seem insignificant, but in 40 years, it will manage to save around €17,500. If the amount requested from the bank is higher (e.g. €250,000), this savings reaches €29,000.
On the other hand, you should pay attention to the products you need to subscribe to in order to enjoy a bonus from the bank. Sometimes the associated costs exceed what you can save in reducing the spread. So, pay attention to the MTIC (Total Amount Charged to Consumer), TAN (Nominal Annual Rate) and APR (Global Effective Annual Rate) of the contract.
Also read: Your Housing Credit does not take a vacation: renegotiate conditions and save!
Difficulty paying monthly installments
Another reason to renegotiate the mortgage with your bank is the possible difficulties in paying the monthly installments. If you are faced with a possible situation of default, you should go to your bank as soon as possible to find solutions. There are several instruments to mitigate the impact of installments on your monthly budget.
First, spending on your home loan is not just related to the installment itself. You should also consider the life insurance, multi-risk and other products that you had to subscribe to receive the spread. In addition to the provision, All these products can be traded. Therefore, the margin to reduce your expenses is still considerable. Alternatively, you can always purchase these products outside your bank, if the savings actually exceed any penalties.
Also read: Mortgage credit terms: Do you know the new limits?
Flat rate period is ending
If the period of fixed rate is coming to an end, you should go to your bank to negotiate the conditions of your home loan. Regardless of the term you were subject to during the fixed rate, it is recommended to analyze the conditions. Whether you want to make a variable rate or fixed rate, the goal should be the same: save.
If you are not comfortable with the variable rate, due to the uncertainties of the moment, consider the option of contracting a flat rate again. However, due to the current Euribor rates, you probably won’t get the same conditions you enjoyed until now.
Unlike the variable rate, where you can change it at any time, the fixed rate does not. In addition, the commission in case of early repayment is four times higher compared to the variable rate. For example, if you want to pay off your home loan in the amount of €100,000, you will have to pay around €2,000 if you have a fixed rate. If you have a variable rate, the value drops to just €500. So, before hiring a flat rate, carefully evaluate the pros and cons of each of these options and what makes the most sense for you.
Also read: I’m going to buy a house: What is the best term for housing credit?
Consolidate your credits
Whether to alleviate your financial difficulties or to proactively reduce your expenses, consolidating your credits can help you in many ways. By merging all your credits into one, you can save hundreds or thousands of euros a month, depending on your situation.
However, keep in mind that you cannot consolidate your credits without meeting certain requirements. namely, the fact that there are no payments in arrears and the need to have a guarantor or give a guarantee to the bank. If you are unemployed, know that despite having the possibility of requesting the consolidation of your credits, the most likely is that the bank will refuse, considering that you are a risky customer.
Maqs, attention, although credit consolidation has advantages in the short term, as it will help you to reduce your rate of effort, it may not be a solution for the long term. By joining all your credits into one, you pay more interest until the end of the contracted term. Therefore, You should take advantage of the financial slack after consolidation to pay off your loan over time.
Also read: Do I need to have a property chosen to apply for a home loan pre-approval?
Changed financial situation
Although many people negotiate home loans when they are in trouble, know that there are also advantages when your financial situation improves. A more stable job, with a higher remuneration, or less charges with other credits, are advantages for negotiating better conditions with your bank. In practice, this gives the bank greater assurance that it is able to meet its obligations.
In some banking institutions, it achieves a reduction of spread significant if you have earnings above a certain amount. Likewise, if you have movable assets can also have other advantages in contracting products and services with the banko, which also help to reduce housing credit charges.
So don’t resort to your bank only when you feel difficulties. Quite the opposite. DYou should turn to your bank whenever your financial situation changes, whether for better or worse.
If you have these and other accounts to do, you don’t have to do them alone. O Doctor Finance, completely free of charge, can be by your side and help to find the best financial decisions, simplifying the processes, both in home loans and in credit consolidation.
Also read: How to prepare for interest rate hikes on home loans?