Whether it’s a house or an apartment, the property gives a great sense of security and comfort. It makes us feel confident and quickly begin to feel real joy in life. Unfortunately, fulfilling the dream of own property is not so simple. This usually involves a lot of expenses and sacrifices, as well as the need to borrow money to build a house or buy an apartment, and then to furnish it. If you do not have enough savings, there is no other way than to get housing loans.
It is a banking product, available to private individuals as well as companies thinking about safe financing of a housing investment. Housing loans come in many varieties, but the basic rules for granting and using them are the same. What should you do to get a low-interest housing loan? Does everyone have a chance to receive such help from the bank? How long does the entire procedure related to the processing of housing loan applications take and what documents should be provided to be able to enjoy a positive credit decision? Our article provides answers to these and many other questions.
What are housing loans for?
Before we get to the most important information on home loans, we will first explain why they were created. As the name suggests, they are used to buy an apartment or build a house. A home loan cannot be used for anything other than buying a car. An exception to this rule is financing with a home loan the purchase of home furnishings or an apartment. However, this is always subject to verification by a bank employee who assesses the degree of implementation of the previous stages of the investment and only then allows the payment of the next tranche of money. Home loans can be paid out to clients in two ways. The first of these is the payment of the entire amount – this occurs when we buy a ready apartment that already exists.
This applies to new flats, built and sold by developers, as well as flats from the secondary market. It should be noted that the loan amount is not transferred directly to the borrower in the form of cash transferred to his bank account. This is done in such a way that after signing the purchase contract for the sale of an apartment, which is a notary contract, the bank transfers the money to the seller’s bank account number within the time specified in the contract. This type of transaction is secure because the contract includes paragraphs that precisely specify when the buyer receives full right to the property. One of these conditions is the bank’s payment to the seller’s account. Usually, this takes place within 7 to 14 days of signing the notary’s contract. The bank uses this time to make necessary entries in the land and mortgage register. Only when they appear, the loan is disbursed and the borrower acquires the right to use the property.
However, it will look different when our goal is to build a house. What can we do to get a loan for this purpose? In addition to the standard procedure, consisting in completing all necessary applications, there will also be a schedule for construction works. The bank will then decide what amount of credit can be paid to us. The loan will then be paid out gradually, in stages. Each subsequent installment will be able to be paid only if the previous stage of works is completed and the works on this section are received. This should then be confirmed by an appropriate entry in the construction log, which is an official document.
We complete documents needed for a home loan
Let’s start with the most important thing, i.e. filling out the housing loan application. Such applications are usually not available for download from the bank’s website, but they should be reported directly to the branch and arranged to meet with a consultant. He will print and give us all the documents that must be completed and delivered with the remaining attachments. What information will be included in the housing loan application? This is the applicant’s address and personal data, information on earnings and sources and receipts, information on expenses and dependent family members, as well as information on the property itself. Here you will need to specify the type of property – whether it is a flat or a house. Give his area, location and information about the developer if the apartment or house is bought in this way.
It will also be necessary to provide information about the plot of land on which the investment is being built. All this is aimed at accurately checking the investment in formal terms. The bank must ensure that when paying out the loan, the investment is actually legal under the law. Therefore, it is necessary to provide other documents, such as valid building permits here, along with other annexes and attachments, if changes were introduced. The payment of a housing loan will also not be possible without providing a real estate project and its description. This, in turn, is necessary for the bank to be able to make its own valuation. Once all the documents related to the technical side of the property have been completed, you will be able to start preparing the next part of the documentation. This time it will concern the earnings of the future borrower.
Housing loans are paid in amounts calculated in hundreds of thousands of zlotys. This is a very large sum, which can take even decades to pay back. Therefore, the bank must be sure that by borrowing such large amounts, the borrower will be able to pay monthly installments, the amount of which may reach at least PLN 1,000 per month. It is therefore necessary to have a stable source of income that ensures a high enough monthly income that will cover all family expenses, including loan installments and current living costs.
In the case of persons employed under an employment contract, it will be necessary to provide a salary certificate, usually not older than 1 month. It may also be necessary to provide a statement of account – here usually for 6 months back. As for persons conducting business activity, in their case the bank will require the provision of a revenue and expense ledger, and sometimes also a bank account history statement. Each of this information is very important to assess your creditworthiness.
When will the loan be granted?
How long does it take to get a housing loan decision? This time depends on the selected bank. However, due to the very large amount of information to be analyzed, you have to reckon with a waiting time of a minimum of 2 weeks, and sometimes even longer. A longer time needed to issue a credit decision will take place if there are interesting promotions for housing loans or additional payments to them, which may encourage more people to contact the bank. How will the bank inform its client that a housing loan has been granted?
There are no rules or explicit guidelines applicable in all banks. Most often, such information is provided orally, by an adviser with whom credit matters were dealt with. Telephone contact is sufficient to provide any information on the granting of a loan or the need to provide some other documents. Of course, you should also be aware of the fact that for some reasons a loan cannot be granted. For what reasons does the bank most often refuse to pay a housing loan? The first reason is the lack of sufficient creditworthiness.
If it turns out that the income obtained is insufficient for the borrower to be able to afford monthly payments, the bank may propose the payment of a lower loan or withdraw from cooperation altogether, until the creditworthiness improves, thus enabling the granting of a housing loan in such a way height, so that it satisfies the borrower and allows him to complete the investment. Once we know what conditions must be met to obtain a housing loan, we should now discuss those things that have a direct impact on the attractiveness of the offer.
Advantageous loan for an apartment – how to get it?
Good housing loans – what should they characterize and be the easiest to recognize? Each of us wants to pay as little as possible for the money borrowed. This is obviously natural and no one should be surprised. So what has a direct impact on the attractiveness of a given offer and what makes it worth to take a mortgage in this bank? There are two main factors – the first is the bank’s commission and the second is the margin. The commission is a one-time fee charged by the bank for the fact that the loan has been granted. It is collected at the very beginning of the contract and should be paid in cash or it is possible to credit it. Then the monthly installment will be increased by a commission fee.
The second parameter is more serious because it determines the interest rate that will last for the entire loan repayment period. There are two factors that contribute to the interest rate on housing loans. The first of these is the interest rate, which depends on the interest rates adopted. The second part of the interest is the so-called bank margin, which is what the bank will earn on the money lent to us. The lower the margin, the better for us because the cost of credit will be lower. Therefore, everything should be done to ensure that our housing loan offers have the lowest possible margin. This will help you get favorable credit terms, the repayment of which will be less severe for your household budget. Credit advisers as well as online credit rankings help you find such offers.