A mortgage is a very popular form of financing investments related to the purchase of an apartment or other real estate, hence the banking offer regarding this product is very popular. The biggest advantages of the loan are: favorable repayment conditions, long repayment period and the ability to cover a significant part of the costs of the planned investment. In the opinion of financial analysts and customers, a mortgage is cheaper to pay than a loan. Importantly, like a mortgage, a mortgage has a very long repayment period, even 20-30 years. The similarity between these products also applies to the amount that can be obtained – it is close to the value of the property or car that we plan to buy.
Mortgage and loan – what are the differences?
There are also significant differences – the mortgage loan is granted by the bank for any purpose against a given property, and in the case of a loan the applicant must provide a detailed purpose and spending plan. It is worth knowing that when applying for a loan from a bank, it is requested to transfer “live” cash that is traded within the meaning of the Civil Code, and the loan is to finance the investment under banking law.
The biggest disadvantage of a mortgage loan is the time-consuming procedures related to establishing a mortgage, ie a bank security in the event of the borrower defaulting on repayment. It is the “paralyzing” risk of losing property, which you sometimes work for many years, means that many people do not ultimately decide to sign a contract with the bank. It is certainly a step that requires a lot of responsibility, which should be taken after analyzing all other possible options for obtaining cash for a given purpose. Such risk always exists, despite the banks taking complex assessments of the borrower’s ability to determine the maximum value of the loan.
How to apply for a mortgage ?
There are situations that an application rejected by one bank will be accepted by a competing institution. Generally, however, people with a stable financial situation should apply for a mortgage so that they can bear the risk of repayment for several decades. Returning to the advantages of the product, which is a mortgage, it is worth analyzing the degree of annual interest rate in the offers of various banks to pay as little as possible. Interest rates are calculated differently by different banks, taking into account margins and economic realities determined by current economic forecasts. It is known that the mortgage repayment period is usually long, sometimes even 30 years. It is good to be aware that due to this, capital installments are lower, and the borrower ‘
Loans of this type are only granted to natural persons
The average loan period characteristic for this type of loan ranges from 20 to 30 years. Borrowing loans allow for financing up to 90% of the property value. Some loan offers of this type allow the option of allocating a certain percentage of the loan for non-business consumption purposes, eg.: Bank allows the customer to spend 20% of the loan granted for this purpose.
Housing loans can also take the following forms:
- Construction and mortgage loan: the loan period is 40 years, the amount granted covers 80% of the property value;
- Tenant loan – for people who do not have a mortgage, and they need funds for the renovation of a rented apartment;
- A consolidation loan, ie one that not only allows you to obtain the necessary funds for residential purposes, but which allows you to repay existing obligations.
When deciding to take this type of loan, carefully check the offer. An important element of this type of loan is insurance against permanent loss of employment. these are special programs that allow you to suspend loan repayment for a given period of time. Most often it is a period of 1 to three months. Before we sign the contract, let’s find out for ourselves about this option. Sometimes banks do not provide detailed information on repayment or loan conditions.
Before we finally decide to make such a commitment, let’s also find out how high the commission is. The most profitable solution for us is of course the offer in which the commission is not charged. Some banks very often introduce this innovation to make their credit offer more attractive. Thus, interest in it increases.