A mortgage loan is a loan granted for the purchase, repair, or construction of a home. Individuals applying for the loan can also use it for the purchase of land, offices, or premises dedicated to the sale of products or services.
Our partner, Luis R. Domínguez, on the program "Los 5 minutos legales" on Radio Femenina, explained the importance of determining the difference between a mortgage loan and a consumer loan when acquiring a loan from a financial institution, as there are different options.
"In the case of a mortgage loan, we are talking about a commercial loan secured by a mortgage; that is, on a property that should not be encumbered with another financial entity and has its own benefits," he stated.
Regarding its benefits, Domínguez mentioned that the main advantage is for people who are about to acquire a home or undertake a renovation and debt consolidation.
Our expert also discussed loan terms. Consumer loans have higher interest rates compared to mortgage loans.
"When we look at personal loans, they range from 2 to 5 years with interest rates between 20% and 30%. One of the benefits of a mortgage loan is that it hovers around 8%. Most institutions have similar interest rates, but it is necessary to verify," he added.
Domínguez assured that the offer of mortgage loans is quite extensive, encompassing various types of financial institutions such as commercial banks, financial companies, cooperatives, and insurance companies duly regulated by the Superintendence of the Financial System.
To approve the loan, institutions will request information and data to assess the creditworthiness and verify the repayment capacity of the individuals. The final results will determine the loan offered.
"They generally request the client's identification documents, municipal solvency of the property to be mortgaged, municipal solvency of the client, solvency from the Ministry of Finance, and proof that the client is not encumbered with another entity."
For any inquiries, you can visit our offices at Calle Cuscatlán, #4312, Colonia Escalón, San Salvador, El Salvador, or reach out to us through our social media channels.
-Written by Torres Legal Team.