The Essentials You Must Save to Get a Mortgage

Currently, the dream of owning a home has become a goal for many people. However, a crucial aspect that is often misunderstood is the amount of money that banks are willing to finance when granting a mortgage. Although it is commonly believed that the bank will cover the entire price of the property, the reality demands prior financial preparation from the buyer.

Real estate experts warn that, in general, banks finance between 70% and 80% of the appraised value of the home. This means that, depending on the price of the house, buyers need to have a substantial amount saved to cover the percentage not financed by the institution. For example, if someone wishes to buy a property valued at €200,000, the buyer will need to have saved between €40,000 and €60,000, in addition to the extra costs associated with the purchase.

These funds must also account for other expenses that are often overlooked in the initial calculation. These include transfer taxes, notary fees, registration in the Property Registry, and the appraisal of the home. Estimates suggest that these costs can add up to an additional 10% of the purchase price, presenting a more complex financial picture for those looking to buy their first home.

Another reason why banks require prior savings is to reduce risk. Having saved capital demonstrates to the institution that the buyer is capable of handling expenses and has the necessary financial discipline. This translates into better financing conditions, such as lower interest rates, which can lead to significant savings in the long run.

For potential buyers, it is essential to be informed and adequately prepared before taking the step toward purchasing a home. This includes creating a financial plan that considers not only saving for a down payment but also the ability to handle monthly mortgage payments and any additional expenses that may arise in the future.

Thus, while banks may seem like an endless source of financing, it is crucial to understand that the reality involves a financial commitment from the buyer. Preparing in advance and having a solid financial backing are key factors in the home buying process.