Mortgage loan next to football, politics and law is slowly becoming an issue in which people have become very specialized. It is enough to obtain one loan and the “experienced” borrower wants to advise his family, friends and acquaintances from work. It is known where and which loan is the best, the cheapest and the most suitable. These are of course slightly mocking observations on my part, but unfortunately I occasionally observe such situations.
A mortgage is a rather complicated financial product. Income, personal, legal and real estate issues can vary widely. Banks have a multitude of product offers and solutions. All this means that there are more or less wise tips on the market. Therefore, I would like to warn against blind trust, point to the lack of imagination and reflection, show that some of the tips are illegal or are very dangerous for your financial stability.
Take a mortgage for the longest possible period
The longer the loan period, the more interest you will have to pay to the bank. Taking a mortgage for the maximum period makes no economic sense. The loan period should be correlated with income and expenses. Your mortgage budget should not be over tight with the installment. When choosing the loan period, the possible interest rate increase should also be taken into account.
One should not forget that as of today the interest rate is at the lowest level in its history. In some time, when it certainly increases, your installment may also increase. Therefore, the correlation of income, expenses and the appropriate buffer for interest rate increases is to help reduce interest on the one hand, and normal functioning on the other.
Draw the maximum loan amount based on your creditworthiness
Taking the maximum loan amount based on creditworthiness is quite a risky decision. Maximum creditworthiness means that in the eyes of the bank, the ability to properly pay its liabilities is right in front of the close line. When calculating the ability, the banks estimate the living expenses that you need to have for basic existence. Just lowering your salary, increasing your interest rate or unexpected costs and a big problem arises.
If you have to decide to take a high loan, which unfortunately sometimes results from the situation, try to save your savings. Ideally, they would be those that will allow you to survive 6 months without income. If you don’t have to, try to keep the appropriate buffer from the maximum creditworthiness.
You can take out a cash loan for your own contribution
Since own contribution is required, banks, in accordance with the recommendation, in their loan applications ask applicants about the origin of the funds contributed as their own. Taking a loan and then lying in the application means breaking the law. Own contribution can come from donations, savings, winning the lottery, but not from another loan.