What do banks look for when granting a mortgage?
We tell you what banks look at to grant a mortgage to a client who requests one. Don't waste time asking banks what the requirements are and read our article to be informed.
If you still have doubts or want a financial advisor to advise you for free on your real possibilities of accessing a mortgage, just contact us and we will assist you quickly by phone or in person.
What do banks look for when giving a mortgage?
Banks look at 3 things to grant a mortgage to a client: the client's profile, the client's need and the asset to be mortgaged.
If the operation passes the 3 filters correctly, the client will be able to access a mortgage. In the event that any of the filters could not be passed, whatever it may be, the client will not have a mortgage, although it may be possible to solve it depending on the situation.
The client profile:
This is undoubtedly the part that banks review the most before approving an operation. Several requirements come into play here that the client must meet to access a mortgage. These requirements vary a little depending on each bank, although in most cases it is quite similar.
Economic solvency, ability to repay the loan, not exceeding 35-40% indebtedness, having access to money, job stability, not having embargoes or pending payments, guarantors, double guarantees, and many other factors are those that the bank studies carefully.
While some entities only need you to show your income and income from the last year, others request the last two or three.
Furthermore, the conditions vary depending on the bank where you apply for the mortgage and also when you apply for it.
If when you apply for a mortgage the interest rates are low, the banks are in the process of granting mortgages, housing is in a bullish moment and the country's economy is healthy, it is more likely that you will get the mortgage much easier and in better conditions than in times of economic crisis and very high interest rates.
If you want us to prepare a study of your profile for free and advise you on your options for accessing a mortgage and under what type of conditions, all you have to do is request it.
Customer need:
Once the client profile has passed the bank's filters and the bank has considered that it meets the entity's requirements to apply for a mortgage, it is necessary to study what the client needs and this is where the problem comes.
Banks, although they have conditions that are flexible, in most cases they cannot offer the client what they need in a personalized way, especially in terms of the purchase percentage.
Most clients need between 80 and 100% of the value of the home to be able to access a mortgage, while most banks refuse to finance more than 80%, so many mortgages remain in this phase.
There are also cases in which the client requests a fixed rate mortgage to avoid scares and the entity does not market that product or it has very poor conditions.
When I refer to bad conditions I mean a very high interest rate or subject to many unnecessary ties.
If your bank offers you what you need, you can now proceed to the last step, appraise the home and buy it. Otherwise, if your bank does not offer you the amount you need or does not offer you good conditions, you will have to go from bank to bank negotiating the mortgage under the conditions you need.
Our financial advisors, when they present a client's mortgage, do so in several banking entities simultaneously and negotiate with each entity to obtain the mortgage adapted to the client's needs and in the best market conditions.
That way we save you time and money. We save you time because you don't have to go from bank to bank negotiating your mortgage, because we do that. And we save you money because by getting a lower interest rate, you save money every month on the mortgage and the expenses it has.
Property to be mortgaged:
The third and last thing the bank looks at when granting a mortgage to a client is to examine and appraise the property that is going to be mortgaged and on which the burden will fall.
In this process the bank examines two things. On the one hand, the loads, vices, evictions, occupants and any limitations that the home has. If the property had any burden or limitation that could not be eliminated, the bank will refuse to grant the mortgage.
Finally, the bank will appraise the home to verify that the home more than covers the amount requested by the client, and to determine its value.
If everything has gone well, you only have to finalize the minutes and some details and documentation and you can go to the notary to sign your new mortgage.
If a process has gone wrong, you should see if it has a solution or not. If the bank does not give you the mortgage there is no solution, if the appraisal has come out low you will have to look for another home.
Each person has a different need and needs a different mortgage and it is a mistake not to properly filter the market before signing with a bank.
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