What is a mortgage?
There is a stage in human life that he decides to build a house or buy a larger apartment. In the vast majority, external financing in the form of credit is useful for this purpose. What will be the best for this purpose? Of course, mortgage. Where to find favorable conditions, what requirements must be met and how long will we wait for access to funds? The answer can be found below.
What is a mortgage?
To understand the construction of a financial product, which is a mortgage, one should turn towards its definition. It is a long-term bank loan that the bank collects with a mortgage on real estate. Such security is made through an entry in the Land and Mortgage Register, based on the right of perpetual usufruct or ownership. Only banks can grant mortgage applicants. The procedures that lead to the submission of the application, followed by its verification and processing take time. However, if we care about good conditions and a well-matched product, it is worth spending some time gathering all documents so as not to waste precious moments later to fill the gaps.
For what purposes can I get a mortgage?
Every financial product – a loan we want to take – will be used for some purpose. In the case of a mortgage, this goal will be clearly defined by the bank in which we want to obtain financing and it will not be possible to go beyond the indicated purpose of this financing. Therefore, in order to be able to apply for a loan, we must clearly specify that we want to finance with it:
- Buying a home
- House or apartment remodeling
- Purchase of a recreational plot
- Purchase of a construction plot for the construction of a house
Individual financing objectives will also be reflected in the name. For example, a mortgage regarding the purchase of an apartment will be called a housing loan. And another, related to building a house – in the name will have the phrase – a loan for construction purposes.
Conditions for obtaining a mortgage
Let us consider that not everyone will be able to apply for a mortgage because it is subject to conditions that not everyone can meet. The first issue that the bank will check is creditworthiness. If we are wasteful, we often use credit cards – for sure the bank will not miss it. Let’s take care of timely repayment of liabilities to strengthen our status in the eyes of the bank in terms of future credit. To take out a mortgage, the bank will require us to own some property on which it can establish collateral in the form of a mortgage. The bank may also appoint a specialist who will value our property and based on this valuation it may turn out that we will receive a lower mortgage. Therefore, let us try to clearly present the facts of our property in conversations with the adviser, so as not to pile up problems and understatements, because in the course of verification by the bank, our property situation will be carefully scrutinized.
Types of costs for mortgage loans
When applying for a mortgage, we should be aware that this will involve a number of costs that are centered around that loan. The first and basic cost will be interest. The bank provides them annually to help us calculate. The interest rate composition will include a margin and interest rate. It is worth asking your adviser when calculating the mortgage installment. Another element that makes up the cost of the loan is the installment, which consists of two parts, namely interest and capital. When choosing installments – decreasing or equal, this is of great importance. Loan costs also depend on the time for which we make the commitment. And you should also take into account additional costs, such as insurance, which is a mandatory element, as well as the commission charged by the bank that provides us with financing. Sometimes we can meet the preparation fees as well as the grace period in repayment. As you can see, there is a lot of it. Therefore, it is a good idea to meet with a reliable advisor beforehand, who will help us choose the type of financing and the bank that is right for us.
Where to find the best loan offer?
Before we decide on a mortgage, it is worth doing a thorough research to get to know the banks’ offers. Perhaps we think that the solutions are the same everywhere, but let’s not be fooled. Each bank conducts its pricing policy and fights for customers to sell them a loan. Differences in credit costs can also be analyzed by looking for a loan online from websites offering financial products. Therefore, before making a decision on a loan, it is worth taking a look e.g. at the website and after filling out a simple form (completely online) we can get acquainted with financing proposals that will be tailored to our needs and repayment options. It’s a great solution for everyone who doesn’t have time to collect piles of documents and wait in queues for a bank decision.