Mortgage, housing loan for the purchase of real estate, house or own apartment is a commitment even for several dozen years. Let us remember that the decision to take such a loan should be well thought out. It is worth considering a few key issues that borrowers often forget about.
Each bank makes a decision on granting a mortgage based on the verification of our creditworthiness – that is, the ability to repay the loan with interest, on the dates specified in the loan agreement. The bank granting us such a loan may request the submission of various documents as well as information necessary to assess our creditworthiness.
It is important to choose the currency of the loan. Mortgages are taken in foreign currencies often have lower interest rates, but they are associated with so-called foreign exchange risk.
If the franc or the euro gets more expensive (as we have seen recently), the interest on such a loan will automatically be higher. In addition, the outstanding debt will also be higher. In a situation when the currency in which we take a loan will lose value in relation to the zloty, the situation will reverse – that is, the debt will decrease.
The cost of the loan
Let’s check the total cost of the loan. It is best to compare the actual interest rate of several banks (e.g. here). We should also remember that the costs of such a loan depend, among others, on the amount of own contribution, margin, collateral, length of the loan period and type of installments.
Please note whether the bank charges other fees, if so in what amount (e.g. for examining an application for a loan, for granting it). You can add them all and approximately calculate how much the mortgage will actually cost us? It should also be remembered that sending the application via the Internet is completely free and does not oblige you to anything, so you can submit several of them – in different banks.
The possibility of early repayment of the loan is also a very important issue. In the case of a loan in a foreign currency, let’s check whether it is possible and how often, to convert it and whether the bank charges a fee for it.
The mortgage can be secured by a promissory note, surety, ordinary mortgage or a capped mortgage. The promissory note collateral consists of the fact that the bank has a promissory note signed by the borrower in which he agrees to enforce a certain amount of money.
The surety is that when we stop paying the debt, the bank demands repayment from the person who agreed to us to guarantee the debt. The mortgage consists of charging our property. If we don’t repay the loan, the bank may take over the property, then sell it to get your money back.
The bank may terminate the mortgage loan agreement in whole or in part, or request additional security for loan repayment. This situation occurs when we fail to comply with the conditions for granting us a loan or if the debt is repaid on time.