He mortgages 120 %
To buy an apartment always transports a series of expenses: notary, record, taxes, VAT or ITP who suppose approximately 10 % of the amount of the housing. Also, the banks usually offer in his mortgage loans not more than 80 % of the value of appraisal of the apartment, therefore we would need a considerable quantity of savings before to the buy of an apartment. This not always is possible. Some persons will need to finance 100 % of the apartment and moreover, finance also the expenses.
For it some entities have created the mortgages 120 %, that is to say, you mortgage in that the bank will give us 120 % of the value of appraisal of the apartment. The true thing is that few ones are the entities that offer it and in all the cases they demand that the mortgage loan should be provided with sufficient guarantees to cover this extra quantity. Otherwise, in case of non-payment, the bank would remain unprotected since it might happen that the value of the apartment was not covering the debt.
Disadvantages
The principal disadvantages are that these loans have major commissions and major interest rate than other mortgage loans since the bank receives from itself this way the insurance that the Mortgages suppose 120. Normally there is demanded also the hiring of other bank products as cards, pension plans or insurances of the hearth that in the end join the amount of our monthly quota.
The Mortgage 120 in Spain is requested normally by the immigrants who want to buy an apartment. It is not a service that the banking institutions publicize but across a financial agent, for example an agent associated with a real estate company one can gain access, always presenting guarantees.
Always at the time of granting mortgage loans had born in mind on the part of the banks that the apartment, in the course of time, would increase his value increasing this way the guarantees for the bank. With the current real estate crisis it is already not so clear that the apartments raise his value imparablemente, therefore at present the mortgages 100 % or 120 % are more difficult to achieve that a few years ago and, how we have said, with major costs.