A mortgage is a way often chosen by Poles to buy a flat or a house. You can even drown in numerous bank offers, so let’s try to determine the points that are worth paying attention to when comparing offers. They will help you choose the best mortgage that suits your needs.
What is a mortgage?
Let’s start by explaining what a mortgage is. How is it different from other loans offered by banks and loan companies?
First of all: a mortgage is a long-term loan granted by a bank which collects a mortgage (right to real estate) as collateral. The borrower (and thus us) guarantees with his property (property) a loan taken for the purchase of an apartment or house. If (in a simplified way) we miss our leg and we are in arrears with repayments, the bank claims the right to take the property back from us.
How do you find the best mortgage?
The matter is therefore serious. So how do you find the best mortgage: one that will be safe and repayable to us on time, regardless of our possible financial failures in the future?
Before you take out a loan, especially a mortgage, you must always answer some questions. The answers will lead us in the right direction!
What is our own contribution?
The amount of own contribution is of great importance for the amount of the loan and its installments. The principle is not particularly complicated and without going into details and banking gibberish, it can be presented as follows: the more we have, the less we have to borrow. Simple? Simple! Taking a loan of 400,000 dollars for 30 years with a minimum own contribution will be for us generally a more expensive solution than, for example, a loan on the same terms, but for the amount of $ 350,000 for 30 years. After all, we have 50,000 dollars more at our disposal – the cost of credit will decrease significantly and the money saved will be in our pocket.
Therefore, when comparing mortgage loan offers, let’s calculate the price of such a loan assuming the minimum own contribution and the largest possible own contribution (realistically for us). Remember that banks no longer grant mortgages without it!
What can be your own contribution?
We remind you: own contribution is not only cash accumulated on the account! As a own contribution, the bank may also include a construction plot or other property we already want to sell. Housing books (a relic from the times of the Polish People’s Republic) are still recognized, as well as funds accumulated on IKE (Individual Retirement Account) or IKZE (Individual Retirement Security Account) accounts.
Does the bank reduce the margin for reliable customers?
If our history at BIK is impeccable, we can try to negotiate the amount of the margin with banks. After all, we are a reliable customer who has never been a late debtor and can be trusted! So let’s look for such loans with which we have any room for maneuver in determining its conditions.
By the way – it is worth paying attention to whether the bank reserves the right to make changes in the amount of the margin during repayment of the loan. If this is the case, let’s try to negotiate a change to this entry. If there is nothing about it, bargain for a record in which the bank undertakes to maintain the margin at the same level throughout the repayment period.
In what currency to take a loan?
We all know what happened to the loans taken out in francs, right? Consumers who now have to deal with huge repayments are unfortunately not easy. That is why it is so important to make informed decisions about the currency in which you will take out the mortgage.
Iron rule number 1: we take credit in the currency in which we earn. We avoid the risk of incurring costs associated with currency conversion and exchange rate fluctuations. When comparing banks’ offers, let’s determine if we want to take out a loan in dollars, euros or in another currency, and then let’s put together the proposals.
What will the real cost of the loan be?
And the most important thing: what will be the real cost of a mortgage if we take it at bank X, and what will it be after taking it at bank Y? Be sure to calculate what amount we will actually pay back after all these years. It may turn out that the option we have considered so far will make us pay much, much more than in another bank. Savings can range from several dozen to even several hundred thousand dollars!
How do you compare mortgages?
When comparing mortgages, make sure you have the current bank offer in front of you. There is no excuse for us if we did not do everything ourselves to check the actual conditions of the loan! Let’s talk with financial advisors and bank employees. Don’t be shy to ask them questions! After all, it’s about our money and our future. Let’s ask for specific calculations that will reflect our financial situation and only based on all the collected data, let’s make a decision. Only then can we say that we took the best mortgage.