When you are trying to get into the renting business and don’t have enough money a mortgage may seem like a good idea, what are the points to consider when you are going to choose one?

If you want to choose a mortgage that suits your real needs, it is very important for you to understand the following terms:

The amount of money you are going to apply for.

Most of the time when you are able to cover up to 20% of the total amount the bank will consider you an affordable prospect, if you are unable to reach that goal with your own money it is very probable that the banks will not see you as their preferred consumer and you will have to bring to the table additional guarantees and or get higher interest rates.

Interest Rates for the Mortgage.

There are three different rates: variable, fixed and mixed. With the variable interest when interest rates are at a low level, you will pay a cheaper fee, but when interest rates go up, you will pay more. The fixed rates, although more expensive, gives you the confidence that you will pay the same rate until the end of the loan. The joint interest comprises a fixed interest rate early in the life of the loan (for the first 2 to 5 years) and then passes to a variable interest.

Mortgage Amortization Period.

A longer repayment period means paying more interest over time. Moreover, the fee you will pay every month will be lower. By contrast, in a short repayment term, you pay less interest, since the capital goes back in less time to the lender and this lowers the final cost of the mortgage. On the other hand, a short repayment term, implies a higher quota, as more capital is amortized in less time.

Related Products

It is pretty common that banks want to offer you other products that may improve the conditions of your mortgage, such products may be credit cards, multi-risk insurance and life insurance; remember to ask for the cost of each one of these products and if you are really interested in them compare with similar products available in the market, because they may be a waste of money at the end of the day.

Bank Commissions

Commissions are like any other factor in business, negotiable, because some banks can charge more than others, remember that there are just five types of commissions. Opening and study, partial redemption, cancellation, subrogation (change of entity) and modification (novation in financial terms), always try to negotiate these commissions because many people I know have had some commissions reduced to zero.

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