A mortgage is the biggest loan in life, just taking one is the biggest decision in life. However, few people can buy their own apartment only with their savings, and often need a loan for it. However, buying your own home is an important step in life and one often hears saying that I’d rather buy my own home with debt than pay my rent for many years. However, each installment will reduce the debt of your home and at some point the mortgage will be paid off in full. Buying your own home is also an investment in your well being. Before you take out a mortgage, it is a good idea to get to know your mortgage in many ways. Also, be sure to compete for a mortgage to find out where the best loan can be found.
Home Buyer Checklist
Are you buying your own home? This is a big step in life and mortgage loan terms can be tricky if you have not previously dealt with the financial vocabulary. However, don’t let awkward reference rates be an obstacle to buying your own home, because with small tips you can get off to a good start and you will find it hard to get a mortgage at all.
- Calculate the appropriate loan amount
Before you take out a mortgage, it is important to find out how much you need for a loan? The answer to this can be found by looking at different housing options. There are significant differences in housing prices and it is good to think about different types of housing.
- Apply for a loan offer before your home screen
Find out how to finance your home before you go on a home tour. Affordable homes in prime location are for sale quickly, so its good that your own financing is already in place before you bid. Applying for a mortgage offer does not bind you to any loan agreement yet, but you have already done a preliminary study of where and how much you can get for a loan.
Note Remember that if you make a written offer for a home, be sure to include in the offer an additional condition that allows you to reject your offer if you do not receive a home loan for a reason or another.
- Compare loan offers and different homes
It is a good idea to ask for a loan offer from several loan services or banks to find out where the cheapest offer can be found. At the same time, you can go and see more housing to find out what kind of apartment you like.
- Take a close look at the loan terms and housing documentation
Look at your mortgage loan margin, withdrawal fee or possible billing supplements for your mortgage. Some offers may be the cheapest at prices, while others may be better suited for you. When you are on time, you have time to think and compare loans.
It is good to ask for the following documents about the apartment:
Landlord certificate, housing plan, articles of association, long term plan of the housing association, energy certificate and final financial statements of the housing association.
Tendering for a mortgage
Buying your own home is one of the biggest decisions in life. The costs and interest of a larger mortgage will rise to tens of thousands of euros during the loan period. There may be a difference of thousands of euros between the most expensive and the cheapest mortgage. For this reason, it is appropriate to compete for a mortgage loan between several lenders before purchasing your own home.
Mortgage or rent?
Buying a home from your own may seem like a big decision, because financially, however, there is a large loan amount. However, the monthly mortgage repayment is comparable to the rent, but the difference is that the installments on your home will reduce the mortgage portion and at some point the entire mortgage will be paid off. Conversely, there is a rent payment, where only the landlord benefits. Of course, the good thing about renting is that you are not tied so tightly to a particular place and you don’t have to take a bigger loan to pay off.
If you are a first time home buyer, you have the benefit of deciding to sell your home. Any gains on the sale of a home are tax-free if you have been living in your home for at least two consecutive years prior to the sale. Interest on the purchase of a first home is also partially deductible for tax purposes.
Mortgage interest and repayment
The mortgage interest rate consists partly of the reference rate, for example:
Prime – Banks offer mortgage rates on Prime, which is an individual bank reference rate that is determined by each bank.
Euribor – You can choose between 1 and 12 Euribor rates for Euribor rates. The interest rate is therefore set for the next period and will be adjusted again at the end of the period.
Fixed rate – You can choose a fixed rate for your mortgage for 3, 5, 10 or 15 years. This fixed rate depends on the current interest rate.
Margin – The total mortgage interest rate consists of the interest margin negotiated with the bank and the reference rate. The margin is always customer specific.
In addition to the interest rate on the mortgage, the customer’s margin is added to the loan. Depending on the loan service, the mortgage also has a different policy on opening and service fees. Each bank sets its own price list and you should check these when borrowing.
The mortgage is always repaid in accordance with a loan repayment program with a bank and financial institution. The monthly loan repayment is usually monthly, with an average repayment period of 10 to 25 years. It is also possible to get a loan for a longer loan period, but this should always be negotiated with the lender. Also check if the loan is eligible for a grace or repayment free month.
There are two common ways to repay a loan; either an equal installment or an annuity.
Equal loan: In this repayment method, changes in the interest rate affect the loan term. However, the installment will remain the same throughout the payment period.
Annuity loan: In this repayment method, the maturity of the loan will not change even if the interest rate changes. Changes in interest rates either decrease the monthly installment or increase it.
Borrow at a low interest rate
Who among us wouldn’t want to get the necessary loan at a low interest rate. This will ensure that you get the loan right away at the lowest possible cost.
The apartment serves as collateral for the loan
The home serves as collateral for the loan, but the collateral value of the home is lower than the sale price. This means that a personal guarantee is required for the remaining portion.
A joint and several guarantor is a person who agrees to be liable for repayment of a loan if the main debtor is unable to do so for one reason or another.
Unsecured loans are separate, but rarely apply for a home loan.