A mortgage decision is one of those you usually take once in your life. It would be comfortable to make your dreams come true and achieve your goals, which can be building a house or buying an apartment. So, how to prepare for formalities related to the mortgage and how to calculate its installment? You will read below.
Table of Contents What are the types of loans? What is a mortgage? Where to look for a good mortgage? Who can take a mortgage and how to do it? How to calculate the mortgage installment and what are its costs?
What are the types of loans?
There are various loan classifications. Among the basic divisions we can indicate commodity and money. We will focus mainly on cash, among which we can mention loans:
- retail – used by individual customers
- working capital and investment – for entrepreneurs
And among the retail customers most often used are:
- personal account loan
- of consumer
Below we will discuss the mortgage, which is today the most popular financial product that customers use to buy real estate.
What is a mortgage?
A mortgage is a bank loan that is taken for a very long time. It will be secured by a mortgage which is established in favor of the bank that grants the loan. The security is established on the perpetual usufruct right or on the property ownership right. It is important that the property is . Usually, he is contracted to implement an investment, such as building a house, buying an apartment, etc. The borrower will vouch for his assets and income – both present and future.
Where to look for a good mortgage?
At present, there is a very large selection of banks, after meeting the appropriate conditions, are able to grant such a loan. This is a commitment that we make for many years, so you should carefully consider the offers of various banks to choose a solution tailored to our capabilities. The amount of own contribution, the amount of the installment and the number of years for which we will repay the commitment are the basic data that should be taken into account, but not all – we will talk about them below. However, they are so important that they should be a serious indicator when choosing a specific offer. Before we decide in which bank we will apply for a mortgage, it is also worth considering the opinions of family and friends who have already used this product. The hint can be so valuable that it will be easier for us to decide in which direction to go.
Who can take a mortgage and how to do it?
The terms of granting a mortgage usually constitute a comprehensive chapter in the regulations of a given bank. The basic conditions include creditworthiness and the amount of solid income we generate every month. In order for our credibility to be higher, it is worth ensuring a clean credit history, giving up, among others, ideas for setting up credit cards and thus consumption on credit, i.e. one that you can not afford. Own contribution is also an important element. When applying for a mortgage at the moment, you should take into account that the bank will demand from us about 20% of the value of the property that you want to buy. This is to substantiate the fact that it is highly likely that we will be able to repay the commitment. And the greater our own contribution, the less we will have to pay back the loan (interest on the loan and capital installments). We also remember that before the mortgage is established, you can temporarily secure the loan, including surety by a third party (who has creditworthiness), insurance, a promissory note or blocking of funds on the account.
How to calculate the mortgage installment and what are its costs?
There are many algorithms for calculating the mortgage, and this is related to the bank’s regulations in which we decide to take the loan after we know its costs.
And what costs it can be:
- first of all, the bank’s commission
- notary public costs according to notary tax
- establishing a land and mortgage register on the property
- insurance (life and accident)
- the cost of establishing a mortgage
- total cost of credit
- any contractual penalties
- additional fees
And how do we calculate the mortgage installment? First you need to collect basic data, i.e. the amount of the loan, annual interest rate, number of installments to be repaid, the total amount to be repaid. If we collect basic data so as not to make mistakes in counting, you can start by using the available online calculators, which will be exactly able to indicate how much the mortgage installment will be.
If we want to calculate for ourselves what the monthly cost will be, we warn you in advance that it will be quite complicated. Because it is necessary to count separately the part related to capital and the part related to interest. But we encourage you to take advantage of the available financial products on the website, where in a simple and transparent way, in a few moments we will get access to personalized offers of financial products. And all online, without leaving home and unnecessary formalities.