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August 11, 2023
A mortgage is one of the alternatives offered by the market to facilitate the purchase of an apartment for sale in Medellín or anywhere else in the country. This type of mortgage loan is most commonly used to make investments or purchase a second property. It also represents one of the most important decisions at both the family and personal level, due to the commitment and effort involved in this long-term process. Below, we explain what a mortgage is and how it works.
A mortgage is a loan intended for the purchase of a home. The buyer receives a sum of money from the bank, committing to repay the money plus interest through monthly payments. In this type of loan, the property itself serves as collateral.
In our country, mortgages are backed by Article 2432 of the Colombian Civil Code, which states that “a mortgage is a pledged right constituted on real estate that remains in the possession of the debtor.”
It is important to note that the bank only lends you a percentage of the total value of the property, usually 70%. No loan is disbursed for 100% of the value of the property. The remaining value must be assumed by the buyer. You should also bear in mind the additional costs of deeds and legal processes, which may vary depending on the price of the property.
When purchasing a house or apartment for sale in Medellín, financial institutions offer different mortgage options, some of which are:
Open mortgage: This is a financial product in which the bank makes the product available to the customer for a period of between 6 and 12 months. This option allows the customer to pay off the entire loan without incurring penalties. However, this option has a higher interest rate.
Closed mortgage: This offers a lower interest rate and a longer term, which can be 25 to 30 years. However, if the customer decides to make a payment greater than the agreed amount, they may be penalized.
Open mortgage with no limit on the amount: With this mortgage option, the amount can be increased, as can the term agreed with the lender for repayment. This is also known as a mortgage extension.
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Reducing the principal on any debt is always the best option, as you will pay less interest in the long term and have sufficient resources to increase your savings capacity.
The strategy for paying off the loan faster consists of making a higher payment on each of the installments initially agreed upon, so you can gradually reduce the interest payments. You can also use your severance pay to pay off loans for the purchase of an apartment for sale in El Poblado or anywhere else in the country.
It is important to take into account the agreements set out in the contract you signed with the lender so as not to incur possible penalties.
As always, we recommend consulting with a mortgage expert so that you can have peace of mind when making this important real estate transaction. If you are looking for an apartment for sale in Pereira or Medellín, we have a wide portfolio of properties so that you can find the option that best suits your needs.
Get advice and fulfill your dream of owning your own home!
Written by: Valeria Ospina – Marketing Analyst.
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