Many people wonder why they have a “high” mortgage credit rate, compare their interest rates with those of friends and family and find no explanation for such a difference. In a nutshell, this is due in the first place to the direct relationship that exists between the interest rate and the risk that the financial institution implies lending money to each person.
Some people are not credit subjects or are not financially attractive because their credit history is negative showing them as delinquent or problematic clients.
In Mexico, 3 out of 10 Mexicans have a “black” record.
The most expedited that a bad credit history is erased is 12 months, amounts above $ 3,000 MX pesos can take between 2 and 3 years.
Mortgage credit rate – risk ratio
When applying for a mortgage loan at a bank, to buy your house or apartment, there are a series of steps and requirements that you must meet to be approved for the loan.
Once approved, the bank will notify about the approved credit amount and at what interest rate it was accepted. However, many times the mortgage credit rate will seem excessive and the person will not be able to assume the commitment.
Basically, when you go to a bank to apply for a loan, what you do is ask the bank to lend you an agreed amount of money, which you agree to repay in a certain amount of time. The money to be returned is the amount borrowed plus an interest. That interest is the profit that the financial institution will have for lending you that money.
Likewise, the bank lending you money today assumes future risks. These risks are contemplated in the mortgage loan payment contract and are reflected in the interest rate , which now not only represents the profit of the financial institution, but also assumes the role of contemplating the risk that the bank must assume for lend money.
By transferring the money in the form of a loan, the bank runs the risk of losing that money. There are different types of risks and that is why the financial institutions grant the payment of different types of interest rates according to the destination that will be given to the money. Consequently, the riskier the fate of the money, the more expensive the credit will be. But in the specific case of mortgage loans, the biggest risk a bank suffers is over those people who, when applying for a loan, are financially unattractive .
What do we mean by financially unattractive people?
Well, at the time of requesting a loan, the bank, to mitigate the risk, will continue to carry out a detailed analysis of the applicant’s ability to pay based on income and borrowing capacity, and based on that the profile of each applicant is determined . When
determines that such persons are not financially attractive, higher mortgage credit rates are approved.
The rate of a mortgage loan then establishes a direct relationship between the risk that the financial entity finds in the loan applicant, and the possible gain from the use of a sum of money in a given situation and time. In the same way, the interest rate can be of a fixed nature, this means that it will not change over time, or of a variable nature that is when the rate is updated monthly adapting to macroeconomic factors that may be affecting the financial situation of the country. For example, the inflation rate, the variation in the exchange rate, among others.
Each bank has its procedures and requirements to request credits, but in general the basic requirements are a minimum individual income, seniority and no adverse information in the Credit Bureau . If you have doubts about how to apply for a mortgage loan or how to improve your mortgage loan, you can always choose to consult with a financial specialist.
However, it can also happen that you have a good credit profile and that you are paying a high rate compared to the market average. This could be due to the fact that you applied for the loan several years ago, and that at that time the mortgage loans were more expensive and had higher rates. Mortgage credit rates have been declining, a few, but they are definitely lower than about 15 years ago.
How to have a lower mortgage credit rate?
If you have been paying your monthly installments on time, you may qualify to request a mortgage debt purchase from another bank that can offer you a better rate. This process is super simple with Cú Chulainn, enter this link and complete the information about the credit you already have, we will help you get the best possible rate with another bank.