What Is a Mortgage and How Is a First Home Mortgage Different?
A mortgage is a financial tool that allows people to purchase a property by paying in monthly installments over several years, including interest and financing costs.
It’s an agreement between the borrower and the financial institution, which requires the repayment of the principal loan amount plus the agreed interest.
A first home mortgage is a specific type of mortgage designed for individuals buying their first property.
This type of mortgage often offers special conditions and benefits, such as lower interest rates and more favorable repayment terms, to encourage access to homeownership.
Joint First Home Mortgages
It is also possible to apply for a joint first home mortgage. This financial solution involves two or more people applying for a mortgage together to purchase their first home.
This option is particularly popular among married or cohabiting couples, relatives, or friends who want to share both the responsibility and benefits of buying a house.
When applying for a joint first home mortgage, both parties are considered co-borrowers and share the obligation to repay the loan.
This means both individuals are responsible for the entire mortgage amount, and their combined income and financial situation are considered during the credit evaluation process.
One of the main reasons people choose a joint mortgage is to increase the chances of loan approval. By combining the incomes and financial resources of multiple people, the ability to repay the mortgage improves, reducing the risk for the financial institution.
However, it’s important to remember that both co-borrowers are legally responsible for the mortgage payments, and any financial difficulties of one party could affect the other’s ability to meet obligations.
Before deciding on a joint first home mortgage, it’s crucial to carefully weigh the risks and benefits of this option. Consulting a financial advisor or real estate consultant is recommended to valuate your situation and ensure you make the best decision for your personal needs and circumstances.
Advantages and Disadvantages of Taking a First Home Mortgage
Taking out a mortgage for your first home can offer many benefits, but it’s important to also consider the potential drawbacks before making a decision.
Advantages:
• Become a homeowner without paying the full amount upfront: a mortgage allows you to achieve your dream of owning a home more quickly.
• Lower interest rates: first home mortgages may have lower interest rates than other types of loans, making monthly payments more affordable and predictable over time.
• Tax benefits: in some cases, mortgage interest payments may be deductible, reducing your overall tax burden.
Disadvantages:
• Accumulation of debt and interest payments: over time, this can increase the total cost of the home.
• Risk of foreclosure: if you are unable to make mortgage payments, the financial institution may seize the property.
Requirements to Obtain a First Home Mortgage
To secure a first home mortgage, you must meet several requirements that banks and financial institutions carefully evaluate.
Here are the main ones:
1. Minimum Income
A key factor is having sufficient income to cover the monthly mortgage payments. Lenders will assess your total income, including salary, additional income, and other revenue sources. Demonstrating financial stability is essential to ensure you
can repay the loan over the long term.
2. Guarantees
Banks often require guarantees to protect the loan in case of default. Besides the mortgage on the property, guarantees can take other forms, such as salary-backed pledges or having a solid guarantor committed to repaying the debt if the borrower
fails to pay. Understanding the implications of these guarantees is crucial before applying for a mortgage.
3. Applicant Age
Age is another important factor considered by lenders. While the minimum age to apply is usually 18, some banks may have higher age requirements. Age can also influence the loan term and repayment schedule, so it should be considered during the home purchase planning.
4. Employment Status
Banks prefer to grant mortgages to individuals with a stable and secure job. Demonstrating several years of continuous employment can increase the likelihood of approval.
Providing complete and accurate documentation of your employment history is essential.
First Home Mortgage for Under 36: 100% Access with Consap Guarantee
If you are under 36 years old and meet certain requirements, you may access a mortgage up to 100% of the property value through the Consap Guarantee, provided by the First Home Guarantee Fund.
Who Can Benefit?
To qualify, you must meet the following criteria:
• Be under 36 years old at the time of the mortgage application.
• Have an ISEE (income indicator) below €40,000 per year.
• The mortgage must be for the purchase of a first home, excluding luxury properties (cadastral categories A1, A8, A9).
For eligible applicants, until December 31, 2027, the state guarantee will cover up to 80% of the mortgage, and banks may choose to finance up to 100% of the property value, eliminating the need for a large upfront deposit.
This is a valuable opportunity for young buyers who wish to purchase a home but do not have enough savings to cover a traditional down payment.
Note: The First Home Fund has limited availability, and applications are evaluated in the order received. It’s important to apply as early as possible.
First Home Mortgage and the Notary Deed
After obtaining mortgage approval, the next crucial step in buying your first home is the signing of the deed before a notary, the final stage of the property purchase process.
This moment marks the official transfer of ownership from the seller to the buyer and requires the presence of a notary, who acts as a public official.
During the notary deed, the notary:
• Verifies the legal compliance of the transaction
• Ensures that all clauses established in the preliminary contract are respected
• Records all details of the purchase, including mortgage terms, in the official deed
In fact, information regarding mortgage approval is one of
the key documents required for the property transaction.
The notary deed provides official and legal documentation of the home purchase, offering security and legal certainty for both parties involved.
Once the deed is signed and registered with the Land Registry, the buyer officially becomes the new owner of the property.
It’s important to understand that the notary deed is not just a formality—it is a crucial step that protects the interests of both parties and ensures the legal validity of the home purchase.
Obtaining a first home mortgage may seem like a complex process, but with the right guidance, it can become much simpler and more accessible.
At Hasamia, we work with some of the most important national credit mediation firms to help you secure the best mortgage product on the market, tailored to your specific needs.
