Virtually every person’s dream is to own their own place, not land, flat or house. However, due to the economic conditions in our country, there will rarely be people who can afford to buy an apartment for cash. Then the only way to your own four walls is through a mortgage. However, it is not that easy to obtain.
Loan for housing – conditions
The basic condition is positive creditworthiness. How is it calculated and what does it actually mean? Let’s start with the fact that the bank decides whether to grant you a loan. Therefore, having creditworthiness in one bank does not automatically mean that you will also receive a loan in another bank. Your credit rating determines your ability to pay off your loan installments regularly. It is quite natural that the bank wants to make sure that you will be able to repay the mortgage installments freely and at the same time you will be able to continue living normally.
There are four factors that are taken into account when assessing creditworthiness. The first is credit history. Of course, it’s best if you don’t have any debts. It is also important how the earlier obligations were repaid, for example whether the installments were paid on time.
The second thing is monthly income, it directly depends on what amount you can get a loan. The third aspect is the cost of living. They depend on your current civil and housing situation. Do you have any dependents, such as children or a non-working partner? Are you lonely or married? The cost of living is divided into adults in the household.
The last factor is the type of employment contract and its length of service. The simplest situation is for people who have a permanent employment contract. They can document their income without hindrance. Of course, contract work does not exclude the chances of receiving a mortgage, only a longer seniority is required in this case.
The conditions that must be met when applying for a loan for an apartment depend on the type of apartment you intend to buy. The greater the value of an apartment, the more stringent the conditions are. So let’s approach the matter wisely and look for an apartment that is within our credit range.
Own contribution is another condition for mortgages. Depending on the offer proposed by the bank, it may be 5%, 10% or even 20% of the property value. If you would like to buy an apartment for PLN 200,000, it would mean that you have to spend 10,000, 20,000 or even 40,000 to start. It should be remembered here that taking the loan with the maximum own contribution is the most profitable. We reduce the amount of monthly installments or the loan repayment period.
But what if we can’t afford our own contribution? Does this limit our chances of getting a mortgage? In no case! There are other ways to finance your own down payment, for example by taking an additional cash loan for this purpose.
Another condition sometimes appears is the borrower’s age. This is quite logical in the case of loans for 30 years, because an older person taking such a loan may simply not live to the end of the repayment period. However, banks usually open a gate here and if we are too advanced, we need to insure the loan so that the loan repayment can be taken over by the insurer if necessary.
Home loan – where to start
So if we already have a chosen property, we must start thinking about choosing a lender. Online mortgage calculators can be helpful in this regard. However, this is only a preliminary calculation that will allow us to quickly assess the offer of the bank which we are more interested in. The next necessary step is a visit to selected banks.
Here a word of caution, in different branches of the same bank may have different procedures and, for example, require different documents. Do not be discouraged if you fail to get something done the first time. It’s always worth trying somewhere else.
Let us also be straight away that we will not receive a loan immediately. The loan granting process may take several months and require us to provide many different documents. If we can find out in advance what a bank requires, we can speed up the process a little. When we buy a new apartment from a developer, he usually offers us to use a specific bank with which he has a contract. Then we can count on help during the whole process and a faster decision.
Taking a mortgage is usually a life decision that needs to be thought through really well.