Mortgage with Increasing Payment?by Admin | September 8, 2021
A mortgage loan with increasing payment corresponds to a loan where in the first years a low monthly payment is paid and as the term progresses, it will increase. The increase in the monthly payments will be established according to the payment schedule agreed upon with the financial institution.
A mortgage loan with increasing payment is not related to a variable interest rate, but rather is more similar to a fixed rate, since the percentage of interest granted is the same, but the difference is that this scheme starts with lower payments.
Such credit is more suitable for younger people that had just been starting their career, since they can access the credit with a lower starting payment (fees and down-payment), i.e., it requires less previous savings.
Mortgage loan with increasing payment: the requirements?
The requirements to apply for a mortgage loan with increasing payment may vary depending on the bank you choose, but here are some general requirements:
To have the minimum age requested by the entity.
To have a good credit score.
At least 6 months of work experience for salaried employees. Non-salaried employees must have 2 years of verifiable activity.
Support of demonstrable income.
Valid official identification.
Current proof of address.
Mortgage loan with increasing payment: Advantages
The advantages of a mortgage loan with increasing payment are the following:
The initial payment is lower compared to the fixed payment type.
Payments are not subject to inflation, i.e., year after year the monthly payment will increase by a fixed percentage that should not be greater than inflation.
Prepayments can be made without penalty.
It is possible to access a larger loan.
Terms are up to 20 years.
Mortgage credit with increasing payments: Disadvantages
The disadvantages of a mortgage loan with increasing payment may be the following:
At the beginning the amortization to capital is much lower than that of increasing payments.
The financial cost can be much higher than that of fixed monthly payments.
If the income does not rise in the same proportion as the payment, solvency problems may arise.
Be sure to find out how your payments will grow in order to plan for the future.
A mortgage loan with increasing payment represents a way to start your credit history, if you are starting out in the labor market and hope to increase your income in the future.
However, there are other criteria to take into account when choosing a mortgage loan, such as the term, TAC, commissions, etc., which is why it should be noted that there are several offers currently on the market and we advise you to inform yourself and evaluate the one that best suits your profile.