Everyone who is at least a bit familiar with real estate prices, is well aware that their prices are unusually high for the average Kowalski. Therefore, it is extremely difficult for us to put down enough funds to buy or build such a property. Only a few can afford it, most often after many years of saving. The vast majority of us, to buy an apartment or build a house, must use an external source of financing, which is usually a loan. Banks have a special product for mortgage customers looking for money for real estate. It is thanks to him that we can get money that will allow us to finalize the transaction.
What is the characteristic of a mortgage? The easiest way to say is that it is a long-term loan, intended for the purchase or construction of real estate, which is secured by an entry in the mortgage. This is very important because it is thanks to such an entry that banks have very good collateral for their loan. Mortgages are contracted for up to 30 years and the sum we can borrow depends on the value of the property and our creditworthiness. Such loans can be obtained in practically every bank, although each of them has its own rules for granting mortgage loans.
Benefits of a mortgage
Undoubtedly, the biggest advantage of mortgage loans is their low cost. Apart from the loan with various types of subsidies and subsidies, it is the cheapest loan on the market. And all because the banks secure a loan on a loaned (or other) property, so the credit risk is small in this case. Therefore, banks can lower their margins or commissions. Another advantage of the mortgage is that it can be spread over a very long period of time. Thanks to this, our installments which every month we have to give to the bank, are not very high and we can afford such a loan. Mortgage loan, we can also treat as a long-term investment. Because real estate prices in the long run always increase, so despite the need to repay interest, we can earn on real estate. For the advantages of mortgage loans, we must also include the fact that thanks to it we can quickly get funds for the purchase of real estate, while in the case of independent “cheat” money, this period would be very prolonged.
In addition to the advantages, the mortgage also has its drawbacks. At the beginning, we can say about quite complicated procedures that banks create. However, we must understand that very large amounts are involved, so the bank must check everything thoroughly. By borrowing such a loan, we depend on the bank for a very long time, although in theory we can repay the loan earlier. Some of the disadvantages may also include the need for own contribution, although some people do not think that it is a disadvantage.
It is very difficult to buy your own property without a mortgage. That is why their number in our country is systematically growing. When we think about whether to take out a mortgage, let’s analyze its advantages and disadvantages and decide whether it is worth using this banking product.