Mortgages stand somewhat next to other types of loans. They are “serious” because they usually involve substantial sums of money and are associated with such valuable material assets as real estate. Taking a mortgage also means a certain expense to pay for specialist services.
What mortgages are and why people choose them from others
They relate to the appraisal of the property by an appraiser and preparation of relevant documents. This service can be paid for by both the borrower and the lending institution. Most often, the lender settles with the appraiser, and the invoiced costs are later added to the money borrowed. Thus, the burden of responsibility is shifted to the person collecting the mortgage, so it is worth considering this before signing the contract.
The reason for submitting an application for a mortgage can be any expense objective: business, other real estate, buying a car, covering the cost of a loan taken before, paying for studies or even for running expenses – how many people, so many possibilities. Quenching payday loans, which accumulate in particular unfortunate cases, also often appears on the list of reasons why attention is turned towards a mortgage.
Top Things You Should Know About Mortgages
The maximum loan amount depends only on the property
The valuation of goods sets a certain level at which the takeover of the property in the event of failure to return the loan will pay off to the borrower. The upper threshold may reach up to 90% of market value. This means that some of the money is allocated to the lender and the account, without cash and in the form of a specific discount for the potential purchase of real estate.
The mortgage interest rate is relatively low
Determining the total value of the service is a matter for the lender. Due to high competition on the market, especially in the loan industry, the lender will seek to lower the interest rate regardless of the final amount due for the service. This approach is convenient for both parties: the lender has a better chance of customer behavior and the customer has better conditions for maintaining financial liquidity.
Long loan term with the possibility of negotiation
The average mortgage has a term of 15-20 years. The presence of real estate collateral also allows you to negotiate terms. Usually, banks and non-bank institutions granting mortgage loans agree to extend the loan term to 25-30 years, and in individual cases up to 45 (but this is the exception rather than the rule).
All forms of income are accepted
Another characteristic feature of the mortgage is the slightly simplified procedure regarding verification of the client’s income. This is again due to the fact that in the quality of loan collateral there is something valuable, expensive and absolutely immobile.
The possibility of obtaining a significant amount of additional cash
An undoubted advantage of a mortgage is the option of choosing cash. First of all, its amount can be really large (it depends only on the lender’s decision). Secondly, the borrower has an additional choice: he can include this cash in his mortgage or on a reduced (or simplified) basis take another loan at the institution in which he obtained a positive decision to grant a mortgage.
Treating the customer’s creditworthiness on reduced or simplified terms
Another fact about mortgage loans: the general procedure, especially considering the application in terms of creditworthiness and financial risk, usually goes on a simplified path, bypassing BIK or KRD (although the creditor still has the option to view these registers).
Real estate may not have other mortgage obligations
The requirement to get a mortgage is owning the property. While this part is obvious, the second component of the abovementioned the requirement is the lack of current mortgage obligations related to this facility.
Nevertheless, there is a shortcut that facilitates this case, namely the participation of guarantors who voluntarily provide their own real estate against collateral. With the support of third parties, even a person who does not own real estate can apply for a mortgage.