A mortgage loan is a type of loan granted for the purpose of purchasing, repairing, or constructing a home. Individuals seeking this type of loan can also use it for acquiring land, offices, or spaces dedicated to the sale of products or services.

Our partner, Luis R. Domínguez, on the program “Legal Insights in 5 Minutes” on Radio Femenina, explained the importance of distinguishing between a mortgage loan and a consumer loan, as different options are available when obtaining a loan from a financial institution.

“In the case of a mortgage loan, we’re talking about a mercantile loan backed by a mortgage guarantee; in other words, it’s secured by a property that shouldn’t be tied to another financial institution and has its own benefits,” he states.

Regarding its advantages, Domínguez mentions that the main benefit is for individuals who are about to acquire a home, undertake renovations, or consolidate debt.

Our expert also delved into the loan terms. Consumer loans tend to have higher interest rates compared to mortgage loans.

“When we look at personal loans, they usually 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’s necessary to verify,” he adds.

Domínguez assured that the range of mortgage loan offerings is quite extensive, encompassing various types of financial institutions such as commercial banks, financial companies, cooperatives, and insurance companies duly regulated by the Superintendency of the Financial System.

To approve the loan, institutions will request information and data to assess the individual’s creditworthiness and verify their repayment capacity. The final results will determine the loan offered.

“They generally ask for the client’s identification documents, municipal solvency of the property to be mortgaged, the client’s municipal solvency, solvency from the Ministry of Finance, and proof that the client is not encumbered by another entity.”

For any inquiries, you can visit us at our offices on Cuscatlán Street, #4312, Escalón Neighborhood, San Salvador, El Salvador, or reach out through our social media channels.