Many people dream about their own house or flat. Due to the insufficient amount of savings, a large group of people must decide to rent more apartments postponing the date of fulfillment of their dreams. A good mortgage can, however, significantly bring you closer to fulfilling your own nest plans. What are the pros and cons of home loans? What is the procedure for granting such a loan?
For what purposes can a mortgage be used?
Each bank very precisely sets the goals for which the customer can spend the money received. Although we commonly use the phrase: home loan or housing loan, we can use the cash received with a mortgage for several purposes. Here are the most important of them:
- Purchase of an apartment or a house
- Real estate construction
- Purchase of a construction plot
- Real estate renovation
- Property redevelopment in certain situations
To receive an attractive mortgage in, we must first get acquainted with the offers of several banks and thoroughly read the terms and conditions of the offer. We can also always consult a financial advisor who will determine if we can achieve a specific goal in accordance with the loan regulations at the bank.
Credit priority is the priority
People applying for a loan for an apartment in must be patient. The procedure is quite complicated and time consuming. With very large amounts, the bank analyzes its customers’ creditworthiness very carefully. To this end, it takes into account income, living costs, other obligations repaid by customers, as well as a number of factors that may have a significant impact on financial liquidity, eg employment and industry. The bank also uses the help of BIK (Credit Information Bureau) to check our credit history.
To receive a satisfactory loan for a house, we must obtain a very high credit rating. In this way, the bank makes sure that we can pay back the commitment. Many young couples decide to jointly apply for a housing loan. This is the easiest way to convince the bank to borrow more money. A humorous saying is that a joint mortgage connects harder than wedding rings.
The amount of own contribution that you have accumulated is also important. Most banks require at least 20% of the loan amount. It is also worth analyzing additional options, such as: types of loan installments, early repayment options, or a construction loan in a different currency.
Advantages and disadvantages of a mortgage
Let’s start with the advantages. An attractive mortgage allows you to finally realize your dreams of owning your home. If we were able to adapt the conditions to our individual needs, its repayment will not cause us any major problems. The advantage is also the possibility of using the money for another purpose, eg purchase of a plot or renovation of real estate.
The disadvantage is of course costs. Nominal interest rate is not the only factor that affects the amount of installments. When deciding on a loan for a house in, we should pay attention to the APRC indicator, which also includes: commissions, initial fees, insurance, margins. For many people, a mortgage is a commitment for many years.