Introduction
As May 10th, Mother’s Day in our country, approaches, many are preparing special meals or gifts to make their mothers feel cherished. A common aspiration among children is to provide a home for their aging mothers, free from the worries of rent and post-nesting life.
Why Consider a Hipoteca?
Building a property can be challenging due to limited availability of suitable land in major cities. Thus, purchasing an existing property is often the better option. Securing a mortgage to fulfill this dream for your mother is advisable, provided you meticulously plan for long-term debt and prepare necessary documents.
Pre-Hipoteca Preparations
Jared Basurto, General Director of SOC Advance Solutions, a mortgage advisory firm, suggests prioritizing a property that offers comfortable living for your mother, considering she might be in her senior years. He recommends selecting a property with amenities close by, such as swimming pools, walking paths, or fitness centers.
Basurto also emphasizes the importance of a solid credit history, including favorable records in auto loans, credit cards, and other bank loans. This will facilitate access to advantageous and swift mortgage credit.
Building a Strong Credit Profile
Fernando Soto-Hay, Director of Tu Hipoteca Fácil, advises accumulating at least 20% as a down payment, though the minimum is 10%. A robust credit profile is crucial for securing favorable mortgage terms.
Optimal Hipoteca Conditions
Given that homeownership is a long-term investment, it’s essential to seek mortgage conditions allowing for the most solvent payments possible. Prioritize avoiding financial stress and over-indebtedness.
Soto-Hay recommends a mortgage term of 15 years or fewer, in local currency with a fixed interest rate to avoid fluctuations. Current interest rates range from 9% to 12%, so aiming around 10% is advisable.
A joint mortgage with siblings, relatives, or spouses can enhance credit capacity and reduce individual financial burden by leveraging combined income and collaborative long-term commitment.
Additional Costs to Consider
Besides the down payment, mortgage costs, and property capital payments, consider other associated expenses. Notarial fees vary by region but typically range from 4% to 9% of the purchase value, covering transfer taxes, registry inscriptions, and notary fees.
Legal addenda to the mortgage, such as property and life insurance, should also be considered. These ensure debt settlement in case of the mortgage holder’s demise and safeguard the property’s physical integrity.
Lastly, contemplate the property’s future once your mother is no longer alive. Financially, it may not make sense for her to be the sole owner, as her children will eventually inherit it. In such cases, they would incur additional escrituración costs upon inheritance.
Key Questions and Answers
- What should I prioritize when choosing a property? Select a property that offers comfortable living for your mother, with nearby amenities and solid construction to minimize future renovation costs.
- How can I improve my chances of securing a favorable mortgage? Maintain a strong credit history, accumulating at least 20% for the down payment, and consider a joint mortgage with family members to enhance credit capacity.
- What mortgage terms should I aim for? Opt for a 15-year term or shorter, in local currency with a fixed interest rate to avoid market fluctuations.
- What additional costs should I account for? Be aware of notarial fees, ranging from 4% to 9% of the purchase value, and consider legal addenda like property and life insurance for debt settlement in case of the mortgage holder’s demise.
