Mortgage loan: what you need to know

Sometimes, when deciding to take out a loan or cash loan, the bank rejects our application due to low creditworthiness. Does this mean that we have no chance to borrow money? No. In this case, consider the mortgage option. What do you need to know about her?

The growth and stabilization of society is also, in economic terms, a period of its enrichment and consumption. This is the most natural process, and one of the most noticeable elements is buying. The acquisition of material goods is a sign of an increase in prosperity, so one should be glad that this is the state we are observing today, because by buying we contribute to building the economic strength of the economy. So we buy apartments, houses, cars, televisions and holidays in exotic places, which we have only heard of until recently. We often take out loans or credits for these purchases.

Creditworthiness

Creditworthiness

Just as the economy is assessed through the prism of economic parameters, so we, realizing our dreams related to the purchase of dream things, are assessed in the context of the ability to buy them. Our credit standing is one such area. Most of us have already met this term as part of our efforts to secure short or long-term financing. Regardless of whether we apply for a car loan, an apartment or a new fridge, the financial institutions with which we will implement our Lotharioan determine our creditworthiness. The analyzes used in this process are intended to answer the question whether a customer applying for a fixed loan amount will be able to repay it within a specified time. It is worth knowing that if as a result of the analysis we receive a negative answer in bank “A”, there is a high probability that it will happen similarly in bank “B”.

Loan and mortgage: how do they differ?

Loan and mortgage: how do they differ?

A negative decision by a financial institution does not mean that you have to change Lotharioans. In a situation where we look differently at the financing formula, it may turn out that the money will be within our reach. For this purpose, we can use one of the more popular options, i.e. a mortgage or loan. Let’s start with a brief explanation of what a mortgage is. Well, a mortgage, using legal terms, is a limited property right used to secure claims. Thanks to this, the creditor (person or institution against whom someone has a debt) can satisfy their claims. In the absence of repayments within mortgage installments, the bank may collect its receivables from the property on which it holds a mortgage.

Thus, when the collateral for a loan or real estate is real estate, the creditor establishes a mortgage on it. An appropriate entry regarding the mortgage established on the property is made in section III of the land and mortgage register. We are then talking about a loan or mortgage.

When deciding on a mortgage or loan, you should consider which option in our case will be the right one. In everyday life, the terms credit and loan are used interchangeably and are often understood to be the same. However, when we try to choose the optimal one from the banking product portfolio, the question arises, how do they differ? Well, the question is relatively simple. A mortgage loan can only be used for real estate purposes: purchase, construction of a house, renovation, modernization, reconstruction, superstructure, etc. Mortgage loans can be used for any purpose. Therefore, in the case of a loan, you do not need to inform the granting institution about the purpose for which you want to allocate the funds obtained. There will be no obligation, as is the case with the loan, to settle its use.

Mortgage costs: what to look for?

Mortgage costs: what to look for?

When deciding what to choose the form of financing the purchase of real estate, let’s try to dedicate some time to verification and counting the costs associated with it. It is important that we also screen the contents of the contract. A large selection of offers from banks and loan companies prompts you to analyze and compare products, but we must know what to look for to get a full picture of potential costs. Paying attention to the interest rate on the loan (which we usually start with) we also verify the amount of additional costs that will be associated with it, i.e. the commission and the bank’s margin. Competition among credit products means that offers are enriched with additional options such as credit holidays, attractive term deposits, credit cards or personal accounts.

In most cases, we don’t really need any of the additional products offered for the loan or mortgage. Their selection may, as a consequence, increase the installment of the liability.