Requirements to Mortgage a Home: Process, Documents and MORE

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Know the Requirements to Mortgage a House It is the first step that anyone must take when starting this process. In addition to that, it is also important to know what the necessary documents are, how you can do it and where, and what types of guarantees and mortgages exist.

A Mortgage It is a guarantee that, as the holder of it, you will be fulfilling some obligation established between the lender and you. That is, in exchange for a loan you can mortgage your house to give the bank assurance that you will pay your debt, including interest; otherwise they can keep the house.

Be that as it may, we invite you to learn much more about the subject, don’t go!

How to Mortgage a House in Chile?

The process that comes with mortgaging a house is not easy, but nothing is when it comes to requesting a loan. We will try to explain it to you in the best possible way, so that you do not have doubts and know more or less what you are doing if you want to mortgage your house.

Let’s see:

  • Research. Obviously you are already doing it, if you came here, but it is important to know what types of guarantees exist and what other things you should take into account when mortgaging, a point in which we will delve further later. The Requirements to Mortgage a House They are very important.
  • Go to the bank or financial institutions that seemed to you that they can help you to mortgage your house in the best possible conditions.
  • Deliver the required documents, so that the entity can make a correct evaluation of your case
  • Then the lender will announce the loan amount to you depending on the value of your house in the market, how much risk you mean for him in terms of investment, and so on. Usually this will finance 80% of the value of the house.
  • Choose a mortgage that you can afford and not the one that brings you the most money. Banks when granting a loan do so based on what you can pay regardless of any inconvenience that may arise in your day-to-day life, so carry out your own portfolio analysis, to see that you can effectively comply with the bank and with others. adversities. Don’t turn a mortgage into a noose around your neck!
  • Don’t forget to include other payments What you will have to do along with the mortgage, as is the case with taxes on the house, since these will also be subtracted from your monthly income.
  • Once you have analyzed whether or not you can carry the mortgage and everything that comes with it, such as the interest rate, the payment term, etc. You just have to accept or reject it.

As we said, you must investigate what, exactly, you must keep in mind when mortgaging a house, and we will tell you.

  • The loan amount, undoubtedly.
  • That type of interest They are offering you: is it fixed or variable? which is more convenient?
  • The interest rate and all associated points.
  • The Annual Effective Rate, which is nothing more than the annual interest rate. The higher it is, the more expensive the loan will be because they are asking you for high interest.
  • The time limit you have to pay off the debt.
  • Loan conditions, as is the case of prepayment penalties and other risk-related characteristics.
  • Know what you can request a loan subrogation in the event that another bank offers better conditions.

And that’s all! Now you are one step ahead of being able to prepare to request your mortgage. Let’s move on to the documents you will need.

Documents Needed to Mortgage a House in Chile

There are a number of necessary documents to be able to request your mortgage and today we will tell you what they are. It is important to note that these are the basic ones that any financial institution would ask for, but each of them can ask for some additional ones if it finds it necessary. That is why it is important to investigate the mortgage conditions of each bank before approaching one in particular.

  • Identity card that attests that you are of legal age.
  • Proof of total paid (or the paid part) of the house.
  • Property (current) documents, as would be the case of:
    • Domain certificates, of at least the last ten years, also attaching the registration copy of the current domain.
    • Vouchers for liens, bans and other mortgages.
    • In order for the bank to check that you are up to date with your tax payments, you must present the Treasury Certificate and the receipt of contributions.
    • Evidence that the home is not at risk of being expropriated; This declaration can be processed at the Serviu, at the Municipality where the house is located or at the Ministry of Public Works.
  • Deed of the real estate.
  • Evaluation Certificate
  • Certification of income.
  • If necessary, Account Statements.
  • Sometimes it is requested that there be a Home Insurance.
  • Other documents that the Bank or the Financial Institution finds pertinent to reach a conclusion.

Remember that all these must be recent, current and duly completed, as having them in one of the Requirements to Mortgage a House.

Where is the Mortgage requested?

The You can request a mortgage at any bank in Chile, just by introducing yourself and letting them know what you want to do. They will instruct you about it, so you know what to do. You can also enter the web pages of the banks that interest you or where you are already affiliated and see what are the conditions that they impose on mortgages

Some of these banks are:

  • Chile bank, which offers mortgage loans that you can consult by clicking here.
  • State Bank, where can you learn more here.
  • Scotiabank, ask more about it here, and use the simulator that they created especially for you.
  • Banco Santander Chile.
  • Banco CrediChile.

And others that seem like better options

It is important know that in 2015 a regulation was decreed, the Law 20855, which states that once you have paid all of your debt with the Bank, you will no longer have the obligation to incur additional costs or procedures for the latter to lift the mortgage.

It is also important to know that it may be a better option to sell the house if the interest rate is too high. As we said repeatedly before, analyze all the alternatives that you have at your disposal, so that you will not regret it later.

Guarantees to Mortgage a House in Chile

Now let’s talk about mortgage guarantees, starting with: what are they? A mortgage guarantee is the right that the bank acquires over the real estate, in this case the house, to be able to make use of it as you see fit in case of breach of obligations.

exist two types of guarantees:

  • General Warranty: This is in the case that you have a debt already established with the bank and you give the house as proof that you are going to cancel that obligation in the established time. This occurs mostly with credit cards and loans.
  • Specific Warranty: This allows you to transfer the value of the mortgage to someone else when you sell your house. You basically not only sell the house, but you transfer the mortgage as well.

For the former, it is much more difficult to sell the house, so we recommend that you investigate further if you think you might want to do so in the future.

Types of Mortgages

There is no single type of mortgage, Rather, these are classified according to the interest rate, the type of installment, the client or what type of property is being mortgaged. On this occasion we explain what the first three are about.

According to the interest rate

  • With interest rate permanent: It is when the interest rate does not change throughout the stipulated term, but the fees remain the same for the entire term. The advantage is expressed in the same definition, but it must be taken into account that this is generally much higher than the variable, they have less duration and that it depends on the predictions about the stability of the market.
  • Variable interest rate: each time a review is made, the interest changes according to the mortgage reference. This remains stable during the period between one revision to another. These have a longer repayment period, are usually cheaper and have fewer commissions. However, the installments are unstable, the extension of the terms increases the interest, and so on.
  • Mixed: there is a part that is fixed, but another that depends on the market.

According to the quota

  • Constant: it is maintained until there is a new review, which is done semi-annually or annually.
  • Armored: They are variable rate but remain constant throughout the entire mortgage, changing the time limit. If the interest rate drops, the agreed term also drops.
  • Final: an agreed percentage is canceled in the last installment. This is the least praised because in the end they end up paying much more interest because interest is applied on this last installment.
  • Growing: the amount to be paid increases a fixed percentage each year (which could be from 1% to 2%), in addition to taking into account the variation of the conditions in each revision.

According to the client

  • Youths: if they are less than 30 years old, they are offered more advantageous contracts.
  • Non-residents: they are more expensive because the person is not in the country and contains strict conditions.
  • Collectives: for public officials, aviation personnel, etc.

What is it?

Mortgage a House it is a very difficult decision to make. As we said at the beginning of this article, mortgaging your house is a guarantee that, as the owner of it, you will be fulfilling an obligation established between you and the lender.

As in any long-term business agreement, it can be beneficial or disastrous. However, this depends on market conditions, the level of risk you have and the interest rate they offer you; in addition to the term, of course.

We strongly recommend you analyze if you really need to mortgage and now that you know what the Requirements to Mortgage a House, in addition to all the information we offered you, you can be more sure of what to do.

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