If you are planning to buy a house, but doubt about how you will achieve your goal, experts say that to know if a mortgage loan fits your profile, you should ask yourself some questions that They will determine if you are about to make the right financial decision, such as what is your ability to pay? What options exist in the market? And why is it worth applying for a loan?

According to Francisco González Cruz, a member of the Mortgage Committee of the Association of Banks of Mexico (ABM), mortgages are the star product of banking and it offers families a patrimony, while the bank allows it to cover the needs of customers throughout their lives.

During a virtual forum of #BancaExplica, the specialist on the subject commented on the main aspects that you should consider before contracting a mortgage loan. Here we present them to you.

What is ability to pay?

There are two relationships that are considered by banks.

Payment-Income

To grant a loan, banks analyze the payment-income ratio, that is, how much the credit applicant is going to pay, with respect to the gross income they have. The acceptable ranges that are handled in banking today are more or less between 30 and 40 percent.

Example:

If you earn 20 thousand pesos (monthly income)

The ability to pay is calculated by multiplying 20,000 X 40% = 8,000 pesos.

In other words, you could spend 8 thousand pesos paying your mortgage.

Normally, the mortgage payment varies depending on the rate and the term, but if the average is considered, which is 20 years and with rates between 8 and 9 percent. Thus, the typical payment is 10,000 pesos, that is, 10 pesos for every 1,000 pesos.

Then, the payment would be 8,000 / 10 x 1000, which will result in the amount of credit that could be accessed, considering the 40 percent cap.

Debts-income

Another of the percentages considered by banks is the debt-income ratio.

That is, all the payments that the applicant has in the credit bureau are added up, such as cars, credit cards , consumer credits and the monthly payment to be paid on the credit is added. These percentages are around 45 to 55 percent.

Example:

If you earn 20 thousand pesos per month

Considering a payment capacity of 55 percent in terms of debts against income, he would have 11,000 pesos to allocate both to the mortgage payment and to the payment of all the credits that he already has contracted.

Credit bureau

The bureau itself has a bureau score, which is taken into account by the banks within the evaluation of a credit, to determine if a client is subject to financing.

Characteristics to consider in the credit bureau:

1. Payment behavior
2. Use levels of credit lines
3. Number of credit

“The higher the your score will have a greater chance of the mortgage loan you are applying for being accepted or approved”, said the ABM specialist.

Amortization schemes

There are two main amortization schemes:

Equal payments:

The payments that the client makes on a monthly basis are the same throughout the life of the loan considering the interest and principal components, it is the most well-known and traditional scheme.

You pay around 9 thousand pesos.

Advantage: There will never be an increase in payment, it is focused on people who have a higher level of acquisition and ability to pay, with consolidated income.

Increasing payments:

It allows you to start with a lower payment compared to the equal payment scheme and have a fixed annual growth during the life of the loan. This growth causes the credit to be settled within the contractual term.

The first payment is 7,900 pesos. A fixed annual growth of 1.9 percent. Approximately in 7 years the payment is equalized to the equal payment scheme.

It is focused on clients who are just beginning their professional career, with a salary career and growth in the future.

What are the startup costs?

Appraisal:

It is required to make an appraisal of the property that is left as guarantee. The cost is between 2.3 and 3 per thousand (what the property is worth is divided by one thousand and multiplied by 3).

Credit study:

Very few banks have this cost, those that charge it around 750 pesos per operation. Both the appraisal and the credit study are paid before the mortgage is contracted.

Commission for credit opening

Normally charged at signing of credit and around 1 percent. Some banks do not charge it, depending on the type of credit contracted.

Do not forget the notary expenses

They include notary fees, taxes and duties. It is the highest expense in a mortgage loan, so it must be considered. In addition, the cost to be paid depends on the state and conditions of the property. Between 5 and 7 percent of the value of the property.

Yes, you also pay for insurance

The mortgage loan normally includes three insurances: life, damages and unemployment.

Life:

Damage:

Unemployment:

What is the CAT and why is it important?

The CAT or Total Annual Cost includes is a cost rate, where the costs of a credit are grouped and which allows this comparison to be standardized, banks can offer low rates, but high commissions, in whose mix of factors makes it difficult to compare or the general advantages offered by a credit.

The CAT includes post-signature costs, pre-signature costs. The latter, as already mentioned, considers the costs for appraisals and credit studies, as well as the opening commissions charged by a bank.

Post-signature costs include all types of payments that the client makes in terms of capital, and interest, monthly commissions that can be charged in a monthly payment and insurance.

In the comparison, in any bank portal or simulators, which show the CAT, it is important that the value of the property, federal entity, among other aspects of the credit, will give a better result.

The loan can be used to purchase a new or used home, replace a mortgage, build, buy a piece of land or pre-sale a property.

What's next? Documents and processes

Documents:

Documentation for formalization

There are five main stages, with a total of 20 and 30 days to sign the mortgage loan contract.

Documentation integration

MRA

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