What is a mortgage?
A person requests a mortgage loan from a bank, financial institution, or private individual, using a real estate asset (such as a house) as collateral. In exchange for the loan, the client will pay monthly installments and previously established interest, in addition to the principal amount. If the loan is not repaid, the lender has the right to recover their money by auctioning off the real estate asset.
When entering into a mortgage loan agreement, it’s advisable to seek legal advice to choose the best option for your business or personal needs.
What types of mortgages exist?
- Fixed-rate mortgage: Where the interest rate and the payment remain fixed throughout the loan term.
- Fixed-rate mortgage with principal payment at maturity: Typically happens when the lender is a private individual, and the credit term is short (usually one to three years). In this case, the borrower only pays interest during the credit term and repays the principal at the end of the term.
- Variable-rate mortgage: The interest rate is reviewed every three or six months, or annually, adjusting to market conditions. One of its advantages is enabling longer repayment periods (up to 30 years or more).
- Mixed-rate mortgage: An initial fixed interest rate is charged for usually 3 or 5 years, after which the interest becomes variable.
To ensure fair treatment, we’ll verify all aspects of your mortgage: the currency to be used, late interest charges, amortization periods, loan opening fees, expenses related to the mortgage, insurances, and various clauses.
