Keys to choosing the best mortgage

We show a video that explains the keys to choosing the best mortgage

To take out the best mortgage, it is important to pay attention to different factors such as the interest rate to which it will be subject or the associated fees, among others.

Interest rate

In the current banking market there are, mainly, two types of mortgages based on the interest rate index they use.

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Type of mortgage

Variable rate mortgage

In this type of mortgage, the interest is calculated based on a reference rate that, in Spain, is mostly the Euribor. The monthly payment that the customer will have to meet will vary depending on the evolution of the Euribor, and it may go up or down after every review.

These mortgage loans tend to have a lower interest rate than fixed-rate loans; however, since their cost depends on the Euribor, they are better suited to families with a greater capacity for covering the possible fluctuations in the monthly payment. 

Fixed-rate mortgage

In fixed-rate mortgages, the monthly payment does not vary throughout the life of the mortgage. The same amount is paid every month, even if the market interest rates go up or down.

Generally, fixed-rate mortgages have higher interest rates than variable-rate mortgages. The advantage of this type of mortgage is that they have a fixed cost that will never vary, so they are better suited to families with little capacity to cover increases in the monthly payment. 


When explaining the cost of their mortgage products, banking institutions use two acronyms: NIR and APR.

The NIR is the Nominal Interest Rate, the percentage that credit institutions apply for lending money. This interest is calculated by applying a percentage or rate to the capital lent to the customer. This percentage is applied to the capital outstanding at any given time. The NIR does not include expenses or fees.

On the other hand, the APR is the acronym Annual Percentage Rate, the interest rate that indicates the effective cost of a loan over a set period. It is calculated according to a mathematical formula that takes into account the nominal interest rate of the operation, the frequency of the payments (monthly, quarterly, etc.), the banking charges and some expenses generated by the operation. The APR does allow you to compare between banks the effective cost of the same product, hence it is one of the details that should be paid most attention to when deciding to take out a particular mortgage.

The fees of a mortgage

All mortgages on the market entail the payment of a series of fees, which vary depending on the banking entity. It is important that the customer reviews the existence of these fees, which can raise the final price of the mortgage. It should be highlighted that not all banks charge the same fees, nor is the cost for the customer always the same.

Commitment fee

This fee is paid at the start of the life of the mortgage, for the procedures of arranging and providing the funds of the loan. The cost can be a fixed amount or a variable percentage of the total of the loan.

Fee of the account associated with the mortgage

Some banking institutions require an account to be opened from which the monthly payments will be taken during the time that the repayment period lasts.

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Modifying novation fee

The novation of a mortgage includes any modification that occurs in it once it has been signed and that entails a change in its conditions.

Fee for switching lender

The subrogation of a mortgage consists of moving our loan from one banking institution to another. This carries with it some associated expenses and, moreover, can involve a fee being charged.

Fee for partial or total repayment

This is paid as compensation to the banking institution for the yield that it stops receiving when the loan is partially or completely cancelled early.

Last of all, in order to choose the best mortgage, it is essential to compare all the offers on the market, paying attention to the aforementioned concepts. 

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