It is practically impossible to buy an apartment in Warsaw with your own money, without a mortgage. Hardly anyone can afford to spend such a huge amount. That is why each bank offers different variants of mortgage loans. It is worth learning as much as possible about them. Probably, each of us, sooner or later, will face the dilemma of choosing the right mortgage if he wants to finally have his four walls.
What to look for when choosing a mortgage?
At the very beginning we must determine our creditworthiness. Only when we are aware of what we can afford, we can start looking for the best loan offer. Don’t be in a hurry. A mortgage is a serious decision that will affect you for many years, which is why it must be well thought out.
We can use the help of a specialist in choosing the best loan offer. It is true that hiring an expert is associated with additional costs, but in the long run, this is a better option, because a good expert will find all the tricks in the contracts, which will allow us to avoid unpleasant situations and hidden costs. Another option is to find a program that compares different types of loan offers. In these types of programs, the customer can enter their credit preferences, and the program will choose the best options. Some of the programs offer the possibility to immediately send a request to a selected bank asking for contact. A bank employee will call back a potential customer, invite you to an interview or provide additional information. This is a convenient way that will allow you to find the best deals for us without leaving home.
It is worth recalling here that mortgage offers can always be negotiated. You should not be afraid to put your hard conditions. Even a small concession from the bank can save thousands of zlotys in the long run. There are a lot of mortgage offers, that’s why banks are often forced to fight for clients.
Sometimes banks also offer a significant reduction in interest rate if the customer agrees to take advantage of some additional offer, e.g. setting up a second account or additional insurance. These are cross-sell offers. It is worth considering them. Some of them may be beneficial for the client.
Interest is not everything
Most people pay attention to the loan interest rate first. This is an important element when making a decision about choosing a particular mortgage, but we should not limit ourselves to this point, nor should it be a decisive point. There are many other key elements in credit agreements that we need to look at.
The APRC (Actual Annual Interest Rate) should be borne in mind. It should be as low as possible for the loan to be beneficial for us as customers. The amount of the preparation fee, commission and margin is also important. Often, banks increase these additional fees to lower others to create the appearance that their offer is the most advantageous. Next, find out whether the bank imposes an obligation on the customer to take advantage of additional services, such as low own contribution insurance, bridge insurance or purchase of a ROR account and credit card, which, in order to be beneficial to the customer, must be charged a high amount regularly, and not every customer can afford it.
One of the most important points on which every person taking a mortgage should think about is the cost of early repayment. This applies to loans with a variable interest rate, which impose an additional commission on the borrower for early repayment of the loan (the maximum fee may be 3% of the value of the repaid amount, but may not exceed the amount of interest accrued on repayment during the year from the actual repayment). Mortgage is not a loan that is easy to pay back ahead of schedule, but it is worth considering this option and choose an offer that does not provide for early repayment or has a very low one.
Mortgage – a repayment system
The loan repayment system is divided into decreasing and permanent. A permanent loan repayment system means that each installment is roughly the same. In the case of a decreasing system, installments in the first years of loan repayment will be higher. Of these two options, the permanent system is the most popular. This is not surprising, because this type of loan repayment system does not require high creditworthiness. In contrast, descending councils require higher creditworthiness. However, the choice of a decreasing system limits the amount of interest, which ultimately saves money. Unfortunately, a decreasing system reduces our creditworthiness more than a permanent system. For some people this can be a big problem.