How does a home mortgage work?

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The mortgages of a house in Colombia consist of receiving a certain amount of money under the condition of a loan from a bank, for the acquisition or reform of a real estate. But the truth is that mortgage policies are a bit more complex. That is why we will break down the subject into several steps that will make you understand how a home mortgage works.

How does a home mortgage work?

The mortgage of a house can be requested for different purposes such as:

  • Acquisition of a new property, in use and even in pre-sale.
  • Acquire a tract of land (must be private property).
  • Construction of a property.
  • Expand or reform a property that you own.
  • Loan with free destination of funds, that is, only to obtain liquidity.

The best banks in Colombia where you can apply for a mortgage are:

  • Bank of Bogota
  • Bancolombia
  • BBVA
  • Western Bank

How much money can you get?

The first thing you should know is that a mortgage works only with a guarantee . Banking entities in Colombia condition this type of negotiation on the offer of the same property as a guarantee of compliance with the agreed payment.

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Starting from there, I will give you an idea of ​​the amount of money you can get to get your accounts. With a mortgage you can request financing of up to 80% of the property’s value. To know this value of said property it is necessary to carry out an appraisal.

What is an appraisal

An  Appraisal is the most accurate estimate of the commercial value of the goods, reflected in monetary figures and carried out through an impartial technical process. In an appraisal, the physical characteristics of the goods, the use, the urban conditions are analyzed; all this is calculated based on a market study.

That is, if the property has a value of $ 100,000, you can get $ 80,000, and you must contribute the remaining amount.

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Interest on a mortgage

Surely you have wondered what benefit banks obtain. Interest is the economic benefit they obtain after financing you and there are several types:

  • Fixed interest: as its name says, this is a type of credit where the interest rate does not change and is established from the moment the application is made.
  • Variable interest: The rate can vary each year depending on the economic situation.
  • Mixed interest: In this type of credit, fixed and variable interest are combined, then an amount is established depending on the interests of the applicant.

How long do you have to pay a mortgage?

Most financial institutions offer periods between 10 and 30 years to pay.  This period is calculated according to the customer’s ability to pay. For example, the maximum period is granted to those clients who have declared a minimum payment capacity, so the institution lengthens the time to adjust the monthly installments plus interest to this capacity.

But of course, the longer the term to pay, the higher the interest you will have to pay.

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The entire process of a mortgage works in practically the same way in almost all banking institutions in Colombia. If you need financial assistance through a mortgage, choose the most renowned banks to be able to carry out your project.

Best Regards,

Live Home Network Club Team.

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