Most common terms and conditions for mortgages

Learn about the most common conditions you will encounter when applying for a mortgage loan

The granting of a mortgage loan is subject to a range of terms and conditions that are generally common to all banking institutions. First there are the initial conditions, which primarily have to do with the minimum income level the customer must have and the customer's profile as a saver.

In order to ensure the viability of the financing, banks require certain conditions to be met. These are shared in common by almost all mortgage loans, although these can vary somewhat from bank to bank.

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Income level

The customer's monthly income serves as the starting point for concession of any mortgage.  This amount may vary depending on the number of borrowers applying for the mortgage and the interest rate associated with it, whether fixed or variable.

For certain types of applicants such as retirees or civil servants, this income requirement tends to be lower, since the stability of their income makes the mortgage loan less risky for the bank

Debt

Although income level is a variable condition that changes with each bank, the customer's economic solvency is common to all of them. In this regard, the granting of most mortgage loans is subject to the absence of outstanding debts for the customer requesting the loan.

 

Financing limit

For a first home, it is typical for a bank to offer financing for up to 80% of the appraisal value or purchase price. This percentage decreases to 70% in the case of a second home.
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Repayment period

Mortgages most typically offer a repayment period of between 20 and 30 years. However, there are also mortgages existing with repayment periods from 5 years up to a maximum of 40 years, although more extreme terms like these are not commonly found.

The guarantor

Another essential requirement for concession of mortgage is for the customer to have a guarantor. As a general rule, a guarantor must submit the same documentation as the loan applicant, and the income and economic solvency requirements are similar.
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