Permanent employment and regular income - this is all you need to get a mortgage loan from any bank. Over the past 2019, mortgage interest rates are at record lows, lending requirements are at an all-time low, and investing in a property is easier than ever. Take advantage of the easy-to-meet terms, but stay alert at every step of the sale. To make it easier for you, we have selected a few important points to draw your attention to. We believe that with them you will be able to turn the deal entirely in your favor.
1. Leave a deposit after the bank’s approval
Although the bank is likely to give you the loan you want, don’t rush to count your chickens before the eggs have hatched. It’s possible for the bank to rate your property less than the seller requires.
Don’t sign any preliminary contracts and don’t rush to pay without your bank’s written approval. In many cases banks are willing to give you the loan, but not in the amount you originally hoped for. We advise that you ask for written offers to ensure that the terms and conditions remain the same as the oral arrangements.
2. Ask the right questions
Do you know that credit inspectors meet the norm for credits that they enter? This means that in some cases the priority of the credit inspector is not focused on the client, but compliance with the standard. However, as long as you are prepared, this will in no way affect you.
To be sure that the offered service will be useful to you, as a client, you have a task – be careful what you sign and not to worry to ask questions about everything that’s not clear to you. Keep a close eye on any clauses in your contract that are not in your interest and arrange for their termination.
3. Low interest or high fees?
“Low interest” sounds like a fairytale in which everyone lives happily, but unfortunately this is a rash conclusion. If an ad catches your eye with a promise of low interest rates, you should take it as a signal to check the other paragraphs on the loan. Often, low interest is offset by any of the other fees, such as insurance. Check if that is the case with you.
4. Fixed or floating interest rates?
The good thing about a fixed interest rate is that its amount remains the same, regardless of the period of agreement. This way you can plan your payments in advance and not let market fluctuations affect your credit. The disadvantage is that if the interest rates fall, you will not be able to take advantage of your credit relief and you will continue to pay the agreed amount.
The floating interest rate is much more difficult to be calculated and to predict its development, but at the same time it often seems more profitable at first. When you are in doubt which method to choose, consider that with floating interest rates, the banks transfer the market risk to the customer.
5. Do you know the real value of the property?
Most people don’t know that a property has more than one price. One is the market value at which you buy it, and the other one is its liquidation value, which can be much lower – between 10 and 30%. The liquidation value represents the lowest price at which a property can be sold and is usually fixed by the bank as a pledge if you fail to pay your credit installment on a regular basis. In other words, this is the price at which the bank will sell the property in case you fail to repay it. The market price depends directly on the liquidation. Knowing the second one will give you a solid advantage in negotiating the market price you will have to pay. Use it!
