It is one of the most desired products along with 100% mortgages when applying for financing for a home. Mortgage loans with longer repayment terms are popular because of how small their monthly installments tend to be. However, all that glitters is not gold and having more time to return the borrowed money to the bank also means paying more interest for it.
Who can apply for a mortgage with a term of 40 years?
"In general, profiles under the age of 35 are the ideal candidates to opt for this type of financing," explains the director of Mortgages at iAhorro,Simone Colombelli.
The age limit at the end of paying these mortgages is usually 75 years old, so the age you have when applying for the loan is a great condition. In this sense, mortgages for young people usually include among their characteristics longer repayment terms. On the other hand, having good economic conditions and job stability also add points. Specifically, officials are others who enjoy this advantage when they go to ask for a mortgage from the bank.
Anyone can negotiate with the entity longer terms,lower interests, fewer links ... everything will depend on the eyes with which the bank sees its economic profile. If you consider that you will be able to cope with the fees without problem during this period of time, you will surely agree to it.
Variable mortgages, another way of access to longer terms
Loans with a variable interest rate usually have longer terms. Due to the exposure they are to the oscillations of the Euribor, the bank has more chances that in that period of time the mortgage index will rise increasing the interest on mortgages. However, it is less common to see 40-year terms in fixed-rate loans,where from the first day the client agrees with the entity what he will pay in exchange for the financing he needs for his home.
The difference between taking out a 20-year mortgage and a 40-year mortgage means reducing the monthly payment by almost half, but also paying double the interest. However, it can allow to improve the family economy for a while and amortize at any time partially or totally the mortgage, so it is advisable to agree that there are no commissions for early repayment when signing the loan. It is important to choose this product when the Euribor is low and the forecasts indicate that the trend will remain so for a while.
An option only for first home
It is very rare to find 40-year mortgages on second homes. In fact, they do not usually exceed 20-25 years and the financing granted revolves around 60-70%.
"If the financing is intended for the purchase of a first home there will be more possibilities of achieving better conditions at a general level, since rarely are granted such long terms for mortgage loans for the copra of a second residence due to the risk that the operation may imply," says Colombelli.
Mortgages for second properties enjoy fewer advantages, since in a situation of economic instability it is more likely to stop paying a second home than the usual address, being rated with greater risk by banks.