27 Jan 2021

What are the types of mortgages out there?

Published in Real estate

Buying a home is usually such a big investment that you don’t usually have the money to finance it in cash, resulting in most people opting to apply for a mortgage. But what types of mortgages are there?

Buying a home is usually such a big investment that you don’t usually have the money to finance it in cash, resulting in most people opting to apply for a mortgage. But what types of mortgages are there? At Lasose Properties & Investments we tell you about the different options available when applying for a mortgage so that you can choose the one that best suits you.

The three fundamental elements that define a mortgage are

  • The capital: the money that the bank grants.
  • The interest: a percentage that must be paid to the bank on the money that has been lent.
  • The term: the time set for repayment of the money lent together with the interest.

Bearing this in mind, we can find mortgages on the market that differ according to the interest rate, type of instalment, type of property or the client.

Mortgages by interest rate: these are the most common and are divided into three types:

  • Fixed mortgage: with instalments that remain stable throughout the period, so you know how much you are going to pay throughout the period of the loan, but they are mortgages with higher interest rates, a shorter repayment period and some higher fees.
  • Variable mortgage: whose instalments vary during periodic reviews (every six months or annually) depending on the interest rate, but they have longer repayment periods and lower fees.
  • Mixed mortgage: which is a mixture of fixed instalments during the first few years and then variable instalments thereafter.

Mortgages by type of instalment: these are the fixed instalment, which are the most common at present, the armoured instalment, the final instalment and the increasing instalment.

Mortgages that vary on the type of property include those for a primary residence, second home, etc. Those that vary according to the type of client include mortgages for young people under 35, non-residents, certain groups, etc.

The important thing is to look at your individual situation and analyse all the options before making any decisions.

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