A mortgage is a banking product that is used to obtain financing for the purchase of real estate. The person interested in the mortgage receives an amount of money called the loan capital from a lender, which can be a bank or any other credit institution.

All mortgages are subject to a commitment on the part of the customer to repay the amount borrowed as well as the interest generated. This repayment is made effective through the payment of mortgage instalments. One of the most characteristic differences of mortgages compared to other types of loans is the additional guarantee, which will be the property acquired.

In any mortgage that you can get there are two components that you must take into account. Firstly, you will find the mortgage loan contract, here you will be able to see all the conditions of the mortgage and the obligations you must fulfil in order to receive the capital as a debtor. You will also be able to check the following points of the mortgage:

• The repayment period.
• Mortgage repayments.
• The complete mortgage repayment system.

The second component is the mortgage guarantee. This is a very important part of any mortgage because, if the mortgage loan is defaulted on, the lender has the right to keep the property that has been mortgaged. Before taking out a mortgage you should bear in mind that it is a large, long-term financial commitment. For this reason, you must have a correct, regular and timely income according to the debt you are going to accept and consider the initial savings before getting into debt.

Not only the amount but also the repayment term and the instalment, but these are two of the factors that will decide the total mortgage:

• The valuation of the property. Only authorised appraisers can carry out the appraisal of your home and then be accredited by the Bank of Spain. Some banks and other entities offer from 60% to 80% of the financing, although some banks are currently offering 100% mortgages in some specific cases and as long as the financial profile and economic conditions of the client allow it.
• The client's indebtedness. The lending institutions carry out a study of the client where, through the income and expenses, they can determine the amount of money that you can allocate to the mortgage instalment. In addition, it is important to have between your savings an amount close to 20-25% of the value of the property and another 10% for the expenses of the operation.

Depending on the interest rate established in the mortgage contract, there are different types of mortgages, among which are the following:

• Fixed mortgages. In this case, the interest established in the mortgage contract is fixed, so the monthly mortgage payment will be fixed for the entire term of the mortgage loan, i.e. it will remain constant even if market interest rates rise and fall.
• Variable mortgages. The interest on these mortgages is variable and is made up of the value of the reference index and a fixed differential. The amount of the mortgage instalments is revised annually or half-yearly and the instalments to be paid are updated.
• Mixed mortgages. This type of mortgage is a hybrid of the two previous ones, since during one term they are at a fixed rate and during the rest of the term they have a variable interest rate.

The costs associated with taking out a mortgage are usually 3% of the amount of the loan. The costs associated with mortgage loans include:

• Land Registry.
• Notary fees.
• Costs of the valuation of the property.
• Tax on the formalisation of the mortgage loan.
• Mortgage processing fees.

When calculating the cost of the mortgage we have to take into account a series of factors, among which are the commissions. For example, the origination fee is presented as soon as the mortgage loan application is formalised and represents a percentage of the amount of the mortgage. But there are also some other commissions such as:

• Study and ManagementCommission.
• Earlyredemption fee.
• Commission for formalisationcosts.

If you need funding, and you want to know if your project is financially viable, please send us the following documentation for each member of the Project to info@ecobanka.com

Common documents:

• Photocopy of original DNI or NIF.
• Photocopy of the last 3 payslips of the mortgage holders.
• Bank statements for the previous 6 months for those who are not customers of the Entity applying for the mortgage.
• Nota simple de registro de vivienda en venta.
• Reservation/arrangement/purchase/sale contract.
• Signed application for an appraisal request(for an appraisal report to be carried out, the client must be registered with the Entity applying for the mortgage).
• Authorisation to request the CIRBE (to request the CIRBE, the customer must be registered with the Entity applying for the mortgage).

For employed resident workers:

• Last income tax return, personal income tax return, or substitute document (e.g. Social Security certificate).
• Employment contract.
• Working life (depending on length of service in current job)

For self-employed resident workers:

• Registration with the IAE.
• Last 3 social security receipts and employment record.
• Quarterly VAT settlements and annual summary of the settlements.

In case the client is separated/divorced:

• Separation ruling.
• Regulatory agreement.

In case of self-promotion:

• Building permit (from the municipality where the building is to be constructed).
• Works report.
• Project approved by the Colegio Oficial de Arquitectos y Aparejadores.

If living in rented accommodation:

• Rent payment receipts (to check if the client is able to pay the mortgage repayments)

Additional documents:

• Last receipt of other financing operations in force (to calculate debt ratio).
• Approximate value of the total investment to be made.
• Amount requested and term of the operation.

Additional documents for non-residents:

• Photocopy of residence card, or photocopy of passport for EU citizens.
• Payroll and P60 (UK self-employed)
• Official certificate of income for the last two years (employed persons)
• Position papers showing balances of sight accounts/deposits/securities/real estate.
• Quant movement statements: EXPERIAN credit report (UK citizens).