Banks are increasingly offering loans with long repayment periods, higher loan amounts and maximum collateral. Namely, if we want to take more money, repay it for 10 years without anyone asking us what we will do with it, banks as collateral are looking for funds that minimize the risk of lending – a mortgage.
Although we are accustomed to tying a mortgage on home loans, lately it also appears in other categories of loans. It is quite logical to give a mortgage for a home loan because the collateral for a loan that we will repay for an average of 20 years must be of sufficient quality that even after 10 or 15 years of loan repayment, they can service the repayment if there is a problem in repayment.
What is a mortgage?
It is a real estate lien that authorizes the creditor to collect its claim by selling the real estate, in the event that the borrower fails to pay the debt. When buying an apartment on loan, a mortgage is a guarantee to the bank if the buyer of the apartment is unable to repay the loan, because in that case, the bank will be able to sell the real estate and thus settle its claim. The property on which the mortgage is established remains the property of the buyer, so he may dispose of that property. So when you buy a property and set up a mortgage on it, you can live in, rent, and even sell it.
The mortgagee is not entitled to retain the mortgaged property but the right to sell it to settle his debt. If a situation arises that the borrower is unable to settle the loan obligations (and at the time of the conclusion of the contract he has mortgaged), the bank acquires the right to sell the debtor’s mortgaged property.
By selling real estate, the creditor is obliged that if there is a surplus of funds, ie. return the difference between the sale price and the debt to the borrower.
What can be pledged?
The following assets:
- residential and commercial buildings;
- family homes;
- business facilities;
- other buildings and structures for which the client has clearly defined ownership;
It is characterized by the fact that before the loan is approved, the property is appraised and the loan is approved in the amount of 30-50% of the value of the property. For the loan user, a mortgage may be a benefit because it can use the mortgaged property as long as it regularly settles its obligations to the bank.
Mortgages may be based on all or part of the property (eg half or third of a home, building or apartment). It is entered in the competent real estate register, which is usually either the land register or the real estate cadastre.
As this is a very complicated process, requiring a lot of paperwork, with an uncertain outcome, it is often the best solution to hire a professional in this field to help you.
The role of the advisor
The functions of advisers are equally successfully performed by individuals and legal entities. As a rule, such companies engage in business activities of a consulting nature in order to assist clients in obtaining and subsequently repaying loans under the most favorable conditions.
The cost is well worth it, because with the help of a qualified professional, the borrower manages to deliver on really favorable terms, which is extremely difficult to achieve directly. The competence of a credit intermediary is, among other things, to monitor the legal purity of the transaction, to assist in the collection and processing of documents, to select the best insurance products and to resolve any disputes arising from the bank. If you need a mortgage calculator before you start looking for an advisor click here.
We will present to you 7 things when a counselor will greatly assist you.
What can an advisor do for you?
Although it is necessary to pay for services (usually 1-5% of the loan contract), working with a specialist has many advantages:
A consultant will help you choose the best conditions for your particular case. The specialist takes into account not only your financial capabilities and interest rates but also the ability to repay the loan in advance, the number of fines in case of late payment, the amount of compulsory insurance, additional fees and other important points.
Collaborating with advisors, your request is more likely to succeed. When applying to a bank yourself there is a high risk of rejection. The advisor acts as an intermediary between the financial institution and the client, which often has a positive effect on the result, as banks prefer to work with professionals and some of them even contract with intermediary agencies.
- You can count on discounts and bonuses, as some experts work directly with banks.
- Advisor will save a lot of time because you don’t have to go to the bank. Appearing at a financial institution will only be necessary to sign a loan agreement.
- Not only does the consultant provide detailed information on the terms of the loan, but it will also help you understand the characteristics and specifics of the whole process, which is very incomprehensible to people who are not economists.
- You can count on legal support when signing a contract with a bank. In addition, the broker will help deal with controversial issues and situations, if any.
- Not only does the advisor tell you what documents you need to collect to apply for a loan, but it also assists with filling forms, which saves you time and energy.
What if it is still under construction?
If you are buying an apartment under construction you cannot follow the same procedure because such an apartment is not registered in the real estate cadastre. A special mortgage registration procedure applies here, by registering it on the land on which the building is being built. After the construction is completed, the apartment is entered in the real estate cadastre and then the usual process is performed.
After reading this text, you certainly know more about the whole procedure than before. And then you understand why hiring an advisor is a smart move that will greatly facilitate this stressful process.