A mortgage is a contract through which a debtor leaves an asset, generally immovable, as collateral, to whom he makes a loan (creditor).
This way, If the debtor does not comply with its payment obligations, the creditor will have the right to request the sale of the property so they can collect what they owe you.
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This type of agreement is usually used to obtain financing in the medium or long term and is made up of three main elements: the capital (amount of money to be lent), the interest rate on the debt and the term in which this commitment is expected to be settled.
The resources requested can be used for the purchase, expansion, repair or construction of a home, as well as the acquisition of establishments, offices or commercial premises.
Money can also be used «for general fines»that is, what you prefer to invest in.
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You have to remember that In any case, the debtor will always be asked for an initial fee in order to receive the loan.since no entity makes the disbursement of 100% of the resources.
Before acquiring this financial instrument, either to buy a home or acquire a loan for free investment, it is important to know in advance the types of mortgages offered by banks and what suggestions they have.
In Colombia there are four classes: the closed, the open with an amount limit, the open without an amount limit and the closed mortgage.
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The closed mortgage it is a type of agreement in which the lowest interest rates are offered, but in a term of up to 25 or 30 years. Its main characteristic is that it guarantees only an obligation agreed between both parties.
In the case of the open mortgage with amount limit higher interest rates kick in, but offer 6-12 month payment limits.
Now, unlike the previous two, with the open without limit of amountIt can be extended, not only the value, but also the term determined to pay this obligation.
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Recommendations to pay it faster
First of all, it must be borne in mind that, according to the provisions of articles 2439 and 2440 of the Civil Code, in order to be able to mortgage a house in Colombia it is necessary to be the owner of the property.
In addition, it is important to remember that the Housing Law (Law 546 of 1999) states that when acquiring this financial instrument it cannot exceed 30% of family income.
(Read more: Priority Interest Housing: options that exist to acquire one).
With that clear, These are some recommendations from the experts to comply with payments quickly and avoid headaches:
– Pay all your obligations on time. Falling behind can not only generate an increase in interest on the debt, but also expose you to being informed in risk centers.
– Don’t over borrow. Having a lot of debt can cause your cash flow to decrease, and if you want to pay off a loan faster, you will not have enough resources to do so.
– Make payments to your loan. If you have savings or receive some extra money, you can use this income to pay the principal of your mortgage and reduce the debt.
– If you notice that interest rates have dropped, opt for a portfolio purchase that allows you to lower the interest rate of the loan.