When deciding to issue a mortgage, a person takes a serious step, since he takes on a lot of debt obligations, which he will fulfill for more than one year. Therefore, in order not to face unpleasant surprises after signing a contract with a bank, you need to understand in advance what a mortgage loan is, and what are the nuances of its repayment.
Pre-payment is an important part of mortgage registration
Since a home loan is a very responsible loan, you do not need to hurry when making it. To begin with, decide on the real estate of what price category you can afford because even splitting the debt for many years ahead does not always make housing more affordable since you will also have to pay interest when repaying the loan. An online credit calculator can help you find the right loan. Although this tool will not give an absolutely accurate picture of the repayment, it will help you make an approximate calculation. Remember, you can get a loan from the bank, the repayment of which in a month will take you no more than a third of your income. Having decided on the approximate amount of the loan, you need to choose the bank itself.
As it may seem strange, when choosing a financial institution for a mortgage, it is very important to take into account the distance of the bank from your usual route. If the bank is inconveniently located, you may find it difficult to make monthly payments, because each time you will have to make a special time to go to a credit institution located on the other side of the city. You could choose a simpler option and pay through the cash register of the nearest “foreign” bank, or even through a terminal, but all these methods involve paying an additional commission, which will significantly increase your final overpayment over the years of mortgage repayment.
How to choose the right housing loan?
Now there are a lot of mortgages offers on the market from different lenders, which at first glance are very similar. Therefore, you need to look closely at the details. First, immediately ask the bank about any commissions. Often such hidden payments take place if the nominal rate is declared lower than usual (on average, the mortgage rate is 10-12% per year). Second, find out what the repayment system is provided in this bank. If it is an annuity, then your monthly premiums will be equal throughout the repayment period, but the final overpayment will be greater. If you are offered to repay using a differential scheme, the payments will not be the same, and during the first year their value will be quite significant. However, you will reduce the overpayment by about a third. Third, find out what the lower limit of the initial payment is in this bank.
Lenders do not set the upper limit for prepayment, and the lower limit can range from 10 to 25%. At the same time, the more money the borrower deposits, the more loyal the loan conditions will be. However, in this matter, the main thing is not to overdo it, because if you put all your savings as a prepayment, you will not have any money left for additional expenses, and there will be a lot of them.
Additional expenses when applying for a mortgage
Since the mortgage is a collateral loan, the apartment you buy will be encumbered until the entire debt to the bank is repaid. However, to do this, the property must first undergo an assessment procedure that will determine its value and subsequent insurance. Both actions are paid for by the borrower. moreover, in some banks, in addition to mandatory property insurance against accidents and natural disasters, title insurance and personal insurance of the borrower are provided.
The cost of these policies is not lower than the mandatory one. Do not forget about the services of a notary, because they are also not cheap.