Archive March 2019

Mortgage Application: how to apply for a mortgage and the steps to follow

The request for a loan and the subsequent disbursement of the same is linked to various parameters that allow banks or financial institutions to evaluate the feasibility of the transaction and the amortization plan:

The mortgage application

mortgage application

The request for a bank or financial loan is the first step in obtaining the sum you need for the purchase or renovation of a property.

The feasibility opinion
Once a loan request has been submitted, the bank or finance company will evaluate the same according to the following parameters:
– The income of those requesting funding.
– The value of the property.
– The payment guarantees presented.

Presentation of the required documentation
Once a positive opinion has been obtained, it is necessary to provide the financial company with all the documentation for the verification of what is indicated in the loan application.

The financing resolution

financing resolution

Once the various investigations have been carried out on the documentation provided, the bank or the financial company will start the financing by setting the date for the stipulation of the contract.

The contract
The loan is stipulated with the financial company or the bank in the presence of a notary, and must be drawn up by public deed.
The object of the same is a financing by the financing institution towards the customer who undertakes to return it according to a predetermined amortization plan.
Generally, together with the loan counterparty, the mortgage is set up in favor of the lender on the real estate unit of the loan.  

Rate forecasts for variable rate mortgages

The forecasts on Euribor rates are very useful for those who subscribe to a variable rate mortgage, which changes over time. The loans for the purchase or renovation of a property can be fixed rate or variable rate: in the first case.

The interest to be paid does not change for the entire duration of the loan

The interest to be paid does not change for the entire duration of the loan

While in the second it follows the trend of some rates international reference. Among the main benchmarks, the most widespread are the ECB rate and above all the Euribor.

We must first specify how there is no single Euribor rate, but various versions are proposed, depending on the time period to which they refer. So we have the 3-month Euribor, the 6-month Euribor and so on. All these versions, however, measure the same phenomenon: they indicate the weighted average of the interest rates applied by the banks when they sell their loaned deposits. One of the ways in which credit institutions are financed consists precisely in borrowing from other banks the resources in their clients’ bank deposits, applying an interest to them. The Euribor, calculating the amount of this interest rate, therefore measures the cost of the financing faced by the banks and then “downloaded” to customers who request a mortgage.

Precisely because these are very complex calculations

money calculator

Which take into account the actions of many banks at European level, it can be difficult to predict the trend of Euribor rates. Certainly, however, having an idea about the possible future developments of the chosen rate for our mortgage may be important, because these will have serious repercussions on the variable rate of the loan (always burdened by a spread, ie the remuneration of the bank).

Our advice is therefore to turn to specialized websites, which offer detailed information in real time about the Euribor. For example, the portal dedicated by Il Sole 24 Ore offers many interesting data: first of all, one can observe the historical trend of rates, which in any case can give an indication of their behavior. Furthermore, in the lower part of the web page that we have proposed to you, you can see the forecasts on Euribor 360 and 365 rates, which are among the most used by banks to determine the cost of mortgages: for each rate its entity is proposed in a series of deadlines (from 1 month to 12 months). But pay attention: the Euribor is updated daily and, even if the daily fluctuations are not excessive, it is always good to take this flexibility into account.