In Mexico, mortgage loans have become important since the beginning of the 2000s due to the stabilization of interest rates and the access to capital and funding brought by international banks, mainly together with government institutions such as Infonavit.
It is commonly said that if a person wants to purchase a home using a mortgage loan, the cost of this loan should be at most 30% of their monthly income. But how can I know the monthly cost of a mortgage? Below we present the main factors that intervene in the monthly cost of a mortgage loan:
The starting point for calculating the amount of a mortgage loan is the value of the property. If the loan comes from a transaction, the value can be adjusted to the price agreed between buyer and seller. If it is a mortgage without a transaction, the value must come from an appraisal carried out by a certified professional.
The down payment will determine the amount of the loan to be requested. For example, if the buyer can make a 60% down payment (6 million pesos) to purchase a house worth 10 million pesos, then the loan amount will be 4 million pesos. The higher the down payment, the better the conditions you can get from a lending institution.
The interest rate is the return that the bank or lending institution will obtain for lending the money. In Mexico, the interest rates for a mortgage have fluctuated between 7% and 11% annually over the last 25 years. The interest rate is linked to the cost at which the lending institution obtains its resources (closely linked to the reference rate in Mexico known as TIIE) and to the credit profile of the person who is requesting it.
The loan term also has an important effect on the monthly cost of a mortgage. In Mexico, the terms normally range between 15 and 30 years. The longer the term, the lower the monthly mortgage payment will be, but the higher the amount of interest you will have to pay to the bank.
Using the initial example where we would be requesting a mortgage loan for 4 million pesos for a house that has a value of 10 million pesos and considering an interest rate of 10% for a term of 30 years, using a mortgage calculator the result gives us a monthly payment of 35,360 pesos. If a better interest rate such as 8.5% were achieved using the same assumptions for the other factors, the monthly payment would be 31,000 pesos.
At Beleta you can use our mortgage calculator that you can find in each of the listings in order to find the perfect property that fits your financial possibilities.
