Applicable differential – Mortgage: what is it and how to use it?



At the moment when a mortgage is requested, the bank transfers the money to a certain interest rate. That interest rate to which the capital is lent is calculated by adding the applicable differential and the Euro Rate . What is the differential in a mortgage? To explain it, first of all we must be clear about what the Euro Rate is and how its relationship has changed in recent times after the dismal decline it has suffered.

Before starting, what is the Euro Rate?

Before starting, what is the Euro Rate?

The Euro Rate exists since the Euro was created as a currency, back in 1999. It is nothing else than the interest rate applied to transactions between European banks, that is, the percentage that a bank pays as a rate at the time of the that another bank lends you an amount. In effect, it does not act only as an interest rate, but it is the average to which the different banks in Europe lend capital.

The price of the Euro Rate has dropped a lot due to the measures set by the European Central Bank to favor the granting of urgent loans , encourage investment and, in general, consumption. As inflation was controlled in the Eurozone, all kinds of policies aimed at favoring the economic growth of the countries of the European Union were promoted. Among these measures, the European Central Bank opted to buy massively bonds that would provide liquidity to the financial system of countries whose official currency is the euro.

To know how the Euro Rate is, you will have it very easy: it is published daily and you will be able to consult it when you are interested in knowing what your situation is. This will be very helpful if you are thinking of applying for a loan for a mortgage. However, what you should set in that case is another value, since the monthly average of the Euro Rate is usually used as a reference for a period of one year.

The interest rate to which a mortgage loan is granted can be variable or fixed, although it is usually variable . This is so, otherwise the banks would assume a much greater risk, since the repayment terms of a mortgage loan are usually very broad. That’s when the Euro Rate comes into play. But also the differential that applies, so you should know in advance what is the mortgage differential 2017 before launching to apply for a mortgage loan.

What is the applicable differential based on?

What is the applicable differential based on?

We already know what the Euro Rate is. But, what is the differential in a mortgage? Where does this variable come from so that it changes the price of a mortgage? It is a fixed percentage and is added to the Euro Rate to know the final price of a mortgage. The differential of a mortgage comes to represent the remuneration obtained by the bank from the corresponding interests that are included in a mortgage loan. And is this differential the same in each bank? No. Each entity launches its own offers to the financial market, mortgages that have their own differential and adapted to their mortgage offer.

What should I look for when requesting a mortgage loan?

As we have already said, the large part of the mortgages granted by Spanish banks respond to variable rates. That could have come very well to all those people who have bought a home in mortgage in recent times, since the Euro Rate has fallen to levels never seen before. That is why it is currently better to look at what is the banking differential applied to know how much we will pay for a mortgage . Actually, to know exactly how much a mortgage will come out of us, it is better to go to the nominal interest rate (TIN). This index is the sum of the Euro Rate and the applicable differential of a mortgage.
In practice, this is a problem for banks. When the interest of a mortgage is negative due to the lowering of the Euro Rate and if the applied rate of the Euro Rate exceeds the applicable differential) the debt of the loan should fall, or not? And it could even happen that interests become negative. This is not like this. The banks interpret it in another way, so that in the future (not very distant) we see many cases of these in the courts.

Plan your economy when applying for a mortgage

Plan your economy when applying for a mortgage

We all know how difficult it is to pay a mortgage . Month after month, there are many people who make authentic virguerías to pay and not enter a very dangerous loop. And is that when you stop paying a fee on the mortgage, you can start the problems. It is always better to be up to date with your mortgage loan. What to do then when we are not able to pay our monthly mortgage payment in a certain month?

In the event that one month you see yourself with the noose around your neck (always in economic terms) you have the possibility of requesting a loan from Good family . At the same time you need a small amount of money urgently, you just have to enter Good family and apply for your loan with the amount you need, up to 750 euros maximum. Our entity will be responsible for studying your application and in 15 minutes you will know if your online loan has been accepted.

At Good family we work to help you choose an ideal loan for you . You simply have to choose the amount you need and the return period that suits you best. We will do the rest of the work to find the loan you need. We trust people and that is why we offer all types of online loans with practically no requirements. Just by having a bank account, being of legal age and having a regular income, you will be able to access a loan from Good family. Apply today and solve your financial problems!

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