They are much higher in the first period than equal installments. If you can afford to pay and you have the ability to take this type of repayment, I recommend decreasing installments. They are also an obvious choice if you plan to pay back the loan earlier.
Sometimes customers know that for example in a few years they will sell land or another real estate. Knowing this beforehand, they will choose decreasing installments. During these few years, much more capital is paying off with decreasing installments than with fixed installments.
If, on the other hand, your current capacity is “in contact”, or you plan to spend all surpluses on, for example, finishing the purchased property, then simply opt for fixed installments. You can always change your repayments into decreasing ones after a few years. It will require an annex to the loan agreement, but it will cost between USD 150-300 and sometimes it is worth it.
Loan period – how long to take a loan?
Currently, the maximum period for which a mortgage can be taken is 35 years. Of course, whether you can take that long depends on how old you are at present. Banks set the maximum age of the client that they can have when they repay the loan they apply for. Currently, banks with no derogations will not lend you money for more than 35 years and no longer than the difference between 80 and your current age.
Assuming that 56-year-old applies for a loan, he will receive a maximum loan of 80-56 = 24 years.
You must be aware that the longer the loan period, the more interest and other costs you pay. Simply put, a longer-term loan will be more expensive than a shorter loan on the same terms.
It is also obvious that the shorter the loan period, the higher the monthly installment.
Now you should only collate this information and choose the shortest possible loan period, taking into account the need to pay the repayment installment.
Mortgage loan step by step
Most of us, unfortunately, are not able to buy their dream apartment for cash and wanting to not want to use a mortgage.
In this part of the article, I will try to show you what the whole process should look like from the time you decide to buy an apartment until you live in it.
In my opinion, the whole process is not complicated, but for most of you, it is certainly a big problem and a reason for concern.
So resolved. You are buying a flat.
This is the most important decision, but very often before the final purchase decision you ask yourself the most important question from the buyer’s point of view:
What flat can I afford?
and this leads to two further questions:
What is my maximum credit standing, so what is the maximum loan I can get?
What will the loan installment look like for a given amount?
You should answer these questions before signing any pre-booking or contract.
You will get answers to both questions in three ways:
- You can search for several calculators on the internet and calculate the installment and maximum capacity based on them,
- visit several banks where advisers will also help you answer these questions,
- or get help from an independent credit advisor.
Here I will be biased and say that in my opinion, it is best to choose the third option. There are several arguments for it, but first of all, it seems the possibility to receive full information in one place, but also the opportunity to receive advice on the selection of one or several offers. Another important argument is saving time and blaming most formalities on a specialist.
In the first part of the article I already wrote about it, but I will repeat it to boredom.
Trust advisors, but check them.
It’s about huge sums of money and your assets.
One more important note.
Most often, people testing their ability to visit 2-3 banks and on this basis estimate their maximum creditworthiness. I have already written that we have over 20 financial institutions where you can get a mortgage, and the capacity in each of them is calculated differently.
Looking for an apartment
Most people looking for an apartment start doing so by browsing the ads posted on the Internet.
You can also use the services of a real estate agency – the broker will help us find this dream property and also help in completing all formalities. The exact property selection is described here.
You have already found your dream apartment and it is very beautiful.
Great, now is the time to sign the preliminary contract. This agreement sets out a few things:
- describes in detail the subject of the contract, i.e. the apartment (area, number of rooms, land and mortgage register number),
- determines how much you agree to buy a flat and whether you have paid a down payment/advance payment,
- defines the date by which the sale is to take place, i.e. the date of conclusion of the notarial deed of purchase from the notary public.
I would not be myself if I did not draw your attention to two very important provisions in the preliminary agreement here.
First, the difference between a down payment and an advance. Sellers write down the funds you have deposited differently and you rarely realize how big the difference is in these two similar-sounding words, and the matter is about your money and your safety.
Both the down payment and the advance is the amount that, when signing the purchase contract with a notary public, will be a contribution towards the purchase of the apartment. By concluding the act of purchasing the property by this amount you will have to reduce the amount due to the seller.
The difference between a down payment and an advance arises when there is no transaction. If the seller withdraws from the contract for any reason and has the right to do so. Then…. attention …… the advance will be refunded by him and that’s it.
However, the deposit will have to be returned in a double amount. So it is in the interest of the seller that the amount paid as an advance payment and yours as a buyer down payment. The down payment protects both sides, but if you care about buying a flat, give a big down payment, and you will almost be sure that the seller will not back down. However, if this happens, you will have extra cash to wipe away your tears.
The second thing you should pay attention to is the date of the contract. Remember that the credit procedure takes a while, and if the deadline expires, the seller will be able to legally keep the deposit. I suggest to my clients that the term of the final contract should be a minimum of two months. Depending on the bank, the whole procedure takes one week to a month, but the “hill” is absolutely necessary and allows you to sleep peacefully without worrying about your invested funds.
Choosing a bank and submitting the application
If you expect me to list the banks to which it is best to apply, then you will be disappointed.
It is impossible to provide one or several universal banks in which you can finance yourself.
It all depends on the individual financial, legal and personal situation.
As the old financial advisors say, how many clients there are so many situations.
Therefore, again, it is best to have a good, proven advisor who will guide you through the meanders of banking and legal regulations.
If the bank has already been selected, it remains to complete the documentation and submit the application. The documents needed to submit an application are fairly standard, but of course, they depend on your situation.
Generally, they are divided into:
- personal documents ( copies of identity documents, all kinds of licenses, diplomas, etc., invoice histories and a few others depending on your situation)
- financial documents ( income statement, but if you run a business, the amount of financial documents swells )
- documents regarding the purchased property ( all acts of ownership, depending on the type of property, are different )
You will receive the exact list of necessary documents from an adviser in a bank or office.