Ensure you negotiate well your mortgage conditions
When choosing between mortgages, you have to study and negotiate the fees that the different financial institutions establish. Amongst the many different charges they apply, today we will highlight the commission paid on partial or early repayments and the full cancellation fee.
Although at the time we formalize the mortgage we do not take into consideration the option of early repayments, we have to negotiate the commission the bank will apply, since the life of the mortgage is very long and situations may vary.
The repayment commission is usually a percentage of the amount to be repaid, the percentage can range between 1 and 3% in some institutions, others provide a percentage that varies depending on the amount that is to be repaid, which is usually 0% if the amount to be repaid does not exceed 25% of the amount pending repayment on the 31st of December of the previous year. The optimal rate is 0% commission, independently from the amount to be repaid, the negotiation of this commission is very important especially in the later years of the mortgage, because paying off the mortgage when possible (even small amounts) allows us savings in the amount of interest.
As for the total cancellation fee of the mortgage, things change and, with this item, the financial institutions are less open to negotiate as they try to ensure customers do not change bank during the life of the mortgage due to better offers presented by other institutions, or do not cancel the mortgage, because with the loss of the mortgage is often associated with loss of the direct debit for the mortgage, the home insurance, debit card receipts and card contracts and allows the customer to have more mobility between institutions. This commission usually ranges between 1 and 3% of the outstanding capital and is usually greater than the commission for early repayment.