Example of Traditional Credit

A traditional credit It is a simple credit that meets the characteristics of being simple, and that its amount, payments and interests are fixed.

It is generally used for the acquisition of houses, apartments or rooms and requires a approval, in which a study is carried out on the income and circumstances in which the interested.

This credit is part of long-term financing, as it has a term greater than five years, although it can be categorized in the medium term if it is stipulated that it should last three or four years.

Traditional credit example:

Mr. and Mrs. Méndez are newlyweds, and they intend to acquire a house of their own to live in. For this, they present themselves to the bank of their trust and ask for a traditional loan to acquire said property.

As they do not have enough equity, the bank decides to grant them a loan, and for this they will mortgage the house they hope to buy, lending them enough money for their acquisition, and committing to pay the cost of the property to the bank that granted them the loan.

Once the purchase of the property has been completed, Mr. Méndez must pay the mortgage that has been calculated for twenty years with a fixed percentage of 4% per year.

Over the years, Mr. and Mrs. Méndez, make the payments, coming to advance payments at a given time.

After making the payments corresponding to the twenty years, they finished paying the payments that canceled the debt acquired with the mortgage.

After the cancellation of this debt, the mortgage will be finalized through the corresponding procedures, before the bank and the corresponding notary.