When looking for financing to buy your home, knowing how to calculate the interest rate of a mortgage loan can be a great advantage, since you will be able to choose your mortgage better.
Although mortgage loans in Mexico are one of the best ways to buy real estate, for some this option is not always the most convenient. This happens, mainly, due to the high prices that are paid in interest rates to financial institutions during the monthly payments.
It is for this reason that, if you are thinking of applying for a mortgage loan to buy your house or are evaluating all the options that exist to acquire it, we invite you to discover what it is and how to calculate the interest rate of a mortgage loan. Thus, you will determine if this type of loan is convenient for you in the acquisition of your home and you will discover what your best options are.
What is the interest rate of a mortgage loan?
The interest rate is a percentage that is equivalent to what the debtor will pay for using the borrowed money in a certain time. In other words, this percentage represents what you will be paying to financial institutions for receiving a loan.
In real estate, and speaking of this figure represented by percentage points, there are three types of rates: fixed, variable or mixed, depending on the financial institution that grants it. The fixed interest rate is the one that does not change during the duration of the credit contract and the variable interest rate is the one that will depend on the changes that occur in the Mexican market.
Although this percentage is established by the bank and is included in your monthly payment, in the Total Annual Cost (CAT), there are some factors that intervene in the process of how to calculate the interest rate of a mortgage loan. These are terms, interest rate and low loan conditions.
How to calculate the interest rate of a mortgage loan and obtain the lowest?
- Choose the best term to pay
- Consider the economic situation of the country
- Know the interest rate of the mortgage
- Consider the value of the loan
- Choose the best term to pay
One of the main factors that intervene in the process of how to calculate the interest rate of a mortgage loan is the term in which the mortgage will be paid or the validity of the financing. If you process a loan that you will pay in the long term, even if you pay a low monthly amount and the annual interest rate is low, the final amount of interest on the mortgage will be high.
On the other hand, if your credit is short-term, you will pay interest for less time. However, when you apply for a short-term mortgage you get a high interest rate. For this reason, choosing a convenient term for your financial situation is the best way to get a better rate.
Consider the economic situation of the country
Although this is an external factor when calculating the interest rate, it is closely related to this percentage. All interest rates are modified by the economic situation of their environment. If we have a low percentage in interest rates, the demand for products increases and there is a great economic growth due to the fact that there is greater consumption.
However, as there is greater demand for goods and services, there may also be a shortage and, with it, an uncontrolled increase in prices. It is for this reason that interest rates are sometimes raised to avoid inflation.
Therefore, before looking for a mortgage with a low interest rate, it is necessary that you take into account that the economic situation of the country may mean that you only find high interest rates on mortgage loans and that this can also directly affect the type of interest rate you have.
Know the interest rate of the mortgage
If you have asked yourself “how to know the interest rate of my mortgage loan?”. It will not be enough to know if you have a fixed or variable interest rate, it will also be necessary to know if you will have to pay for it monthly or annually. This information is usually agreed upon in the mortgage contract.
It is also important that you check if you do not have a mixed interest rate, since with it the banking institutions offer you a fixed rate at the beginning of your credit. This usually happens during the first years of the mortgage loan, but after this time it becomes a variable rate.
Consider the value of the loan
It is also important that during the process of how to calculate the mortgage interest rate, which you would obtain when applying for this financing, you consider that the value or the total amount that will be lent to you will be an important factor in the interest rate.
