Imagine that you have found the house of your dreams and are about to apply for a mortgage. Do you know how much money the bank is going to lend you and the amount you need to have saved to be able to apply for a mortgage?
How much can I apply for in a mortgage?
Although it is feasible to request a mortgage that covers 100% of the value of the property, most banks do not grant loans of this type. As a general rule, banks usually grant only 80% of the value of the home that is intended to be mortgaged. This implies that the remaining 20% of the cost of the house must come from your own savings.
What is the amount needed to apply for a mortgage?
In addition to the 20% of the value of the home that is normally not covered by the mortgage, it is also necessary to take into account the expenses associated with the property purchase process. These expenses are usually equivalent to approximately 10% of the value of the property. In other words, to buy a house and process a mortgage, it is required to have approximately 30% of the value of the house in the form of savings.
Can I get a mortgage without savings?
Applying for a mortgage without having savings is a viable option, although it is not considered the most advisable. In most situations, banks view these types of transactions with caution due to the higher risk involved, given the high degree of indebtedness involved. However, this does not mean that it is impossible to access a mortgage without having savings.
There are several alternatives that can make it easier to obtain a mortgage in this situation:
Have an endorsement
The easiest way to get a mortgage when you do not have 30% of the value of the property in savings is to have a guarantee or guarantor. The guarantee is a third person who assumes the responsibility of covering the mortgage debt in case of default. Thus, if the mortgage holder cannot afford the payments, the bank can turn to this third party to take care of them.
Rent with option to buy
Another way to acquire a home and apply for a mortgage without having savings is through renting with the option to buy. This option allows the buyer to rent the desired property for a period of up to 5 years. After this period, the purchase is completed, considering a discount in the acquisition price equivalent to the total amount of rent paid during that time. In this way, the amount to be disbursed is reduced, thus facilitating access to a mortgage, since the full amount of the purchase price is not required. To access this option, it is essential to formalize a rental contract with an option to purchase at the beginning of the rental period.
100% mortgage loans
100% mortgages are those that offer complete financing for the acquisition of a home. Due to the high risk of non-payment that they imply, fewer and fewer banking institutions offer them. However, it is true that they are a way to access the purchase of a property without needing prior savings to apply for a mortgage. Even so, it will be essential to have 10% of the cost of the home to cover the expenses related to the management of the purchase of the property.
100% home loans come with a very high financial burden, which also comes with a higher risk of default, which means a higher chance of foreclosure.
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