A housing loan, also known as a mortgage, is one of the most popular forms of financial support provided by banks in connection with the purchase of an apartment or house. The advantages of this form are generally well known: the possibility of financing up to 90 percent of the property value, a very long repayment period, even up to 35 years, and flexible repayment options, including the choice of equal installments.
A housing loan is mistakenly mistaken for a mortgage loan. The latter form of financing does not allow for financing the entire cost of buying a home and at the same time does not allow for various maneuvers, such as switching to another bank, if the current conditions no longer suit us.
Home loan, mortgage or something else?
The difference between a home loan and a loan relates to the legal basis for the functioning of these products on the financial services market – the loan is marketed within the meaning of the Civil Code, and the housing loan is granted under banking law. The similarity applies to the pledge made by the borrower, ie the property rights to the premises. In the event of loss of financial liquidity, which may be caused by job loss or a random accident, the bank becomes the owner of the pledged property.
Due to the enormous financial responsibility that accompanies the signing of the loan agreement, anyone interested must familiarize themselves with the fundamental term, which is creditworthiness. Creditworthiness is an estimated analysis carried out by banks to determine the amount that can be awarded to a person applying for a home loan. These estimates depend on such factors as: the loan period, the currency of the housing loan, the level of fixed monthly income, the method of obtaining income, the cost of maintaining the flat purchased, the number of dependent families and the state of other financial liabilities.
Which home loan should you choose?
In the era of competition on the market of banking products, it is not difficult to observe the pursuit of maximum flexibility in the approach to attract the largest number of customers. Since the borrower in reality is a bank associate for over 30 years, rigid banking requirements are replaced by a negotiating attitude, necessary to minimize the bank’s risk. Banks even tolerate other forms of obtaining income than an employment contract and clients with bad credit history.
Before going to the bank, you can easily assess your credit standing yourself. If someone earns USD 2,000, they can count on a maximum installment of USD 1,000, of course, with very good forecasts and no other obligations. It is worth knowing that a good time to apply for a housing loan is the moment after signing the first preliminary agreements with the developer.
What are the formalities for a home loan?
Credit formalities last from 1 to 3 weeks, so you should carry them out at several banks at the same time. When looking at banking offers, you can count on nice surprises, but you need to be very vigilant. Ask your credit counselor what are the components of interest repaid each month and calculate how much you lose when choosing the option of equal installments throughout the loan period (the option of decreasing installments is always better, because the capital is paid off faster, but not always real). It is worth hunting for promotions such as cancellation of commission on granting a housing loan, because you will save up to 2 percent of the loan value.
Home loan summary
In general, the rule is this – because banks charge interest differently, assessing the financial condition of a candidate differently, the best loans are selected individually, after determining which aspect of the loan is best to emphasize. Some will enjoy a low interest rate, for others a very long loan period will be more important. A bank adviser can help you choose a good mortgage. It is a person who has all the competences and qualifications to answer all doubts related to this. The online application is available on our website.