Before we sign the mortgage contract, we discuss any, even the slightest doubt with an advisor who helps us to complete all formalities related to it. We also do not make hasty decisions, it is better to read the content of the agreement calmly, nor do we follow super promotions, which usually last very shortly, just to put pressure on us.
If you think about it more deeply, it turned out that we often discuss various financial products, but we talk too little about mortgage loans for people who want to “go their own” and buy a flat or a house. Therefore, we will devote this article to this.
Let’s start from the very beginning. What is a mortgage?
It is such a tool on the financial market that quite easily allows us to realize our dreams about our own “M”. very often it is the only way to realize this dream. Of course, for the first dozen or several dozen years this is our dream apartment or house, they will not be our property.
The bank that gave us the loan will have priority in the potential “takeover” of this property. In addition, in the land and mortgage registers of real estate, until the loan is repaid in full, a note will be placed on mortgage entering the premises. Generally speaking – a mortgage on real estate is collateral for the bank in the event of non-repayment of the loan.
This loan is taken for many years. Before we decide on such a step, we need to think about a lot of things. This cannot be a hasty decision. Quite an important element will be our own funds, the so-called own contribution – in this case the appropriate note will be placed in the mortgage.
What other costs will we incur when taking a mortgage?
Usually, couples wishing to take out a mortgage will first get acquainted with the offers, learn their creditworthiness, and only when they have information about what amounts will they have at their disposal, do they look for a flat or a house.
Credit costs also include interest, which depends on the margin, spread, i.e. currency conversion by the bank, as well as costs related to credit, i.e. those that are directly related to credit activities, such as obtaining permits or arranging certificates.
When we are not fully convinced whether we choose well or if we understand everything correctly – let’s use the services of a good banking adviser, get the language on the Internet, read the opinions, look at the comparison site, check the forums and statistics. This is very important. After all, it’s about our future.
What to look for, where to look for hooks?
It is known that no one will give us such amounts and will not want to earn on it. That is why we have to read the contract well and several times. Because what may seem a relief to us at first, after some time it may come out sideways. These are almost unnoticeable at the beginning of the trap that banks use.
What can this look like? The bank presents us with a great offer – 0% margin in the first half of the year, and after half a year the margin is as high as in any other bank. And the sum of the summary in the perspective of a dozen or so or several dozen years, these six months without a profit margin? Definitely not!
Another way banks attachment to the letter of its services is to offer a lower interest rate on a mortgage in return for using the occasion of the other products offered by the bank happen, for example, a personal account. Unfortunately, the benefits for us of this fact are usually questionable.
We have a relationship with a bank for a dozen or so or several dozen years, and the bank will be credited with monthly inflows to the account in the amount of approximately $ 4,000.
If this amount does not affect our account, because, for example, we lose our job, or change and the income is lower, then the loan interest rate automatically increases.
Another way to get additional money from us, based on our inattention or distraction, is to reduce the mortgage in exchange for using the card and spending several hundred zlotys with it. Failure to meet this obligation will result in an increase in the interest rate on the loan.
Before buying an apartment on credit, let’s check the land and mortgage register
Once we have chosen our “M” on the secondary market, and we want to make a purchase without intermediaries, let’s check if the premises have a land and mortgage register. This book contains structured information about the premises in question, registered by the court. Checking it we get acquainted with the real legal status of real estate.
This document consists of four sections. Each of these sections contains titled fields in which entries regarding a given place are placed. Access to the books is public. Books are also available in electronic form.
How to read a book so that it has no secrets from us?
Section I – entitled ‘Designation of real estate’. In this section you will find information on how many rooms fit into our premises and what other premises, if any, belong to it, e.g. basement, and whether the premises constitute a separate property. What does it mean? Separate ownership is full ownership, along with ownership of the associated land and joint ownership of the common parts of the building.
Common parts of the building may be the attic staircase, drying room or trolley in some buildings. If the property is not a separate property, it can be a standard loan security only if it is the subject of cooperative ownership of the property.
However, if the premises are separate property, we read in the next section – land and mortgage register number in which the owner will participate. It is quite important to check the land and mortgage register of this land, whether it is covered by the right of ownership or perpetual usufruct.
What does this mean for us? As the land is covered by the ownership right, we will have to pay property tax every year, which in 2015 is a maximum of $ 1 per square meter.
When the land is covered by perpetual usufruct, we will have to pay perpetual usufruct fees annually, which is a maximum of 1% of the property value. Also, often the perpetual usufruct fee is more expensive than the property tax. But that’s after buying the property. And what else before?
Certainly, we will have to bear the costs associated with the notary public who will be present when conducting the transaction.
In section II of the land and mortgage register, the data of the owner of the property – first and last name, parents’ names and PESEL number are entered. And here let’s be careful and compare the data from the land and mortgage register with the data contained in the identity card of the person with whom we are transacting.
If there are several property owners, then each of them will have to sign the notary deed of selling the property in person. Similarly with the preliminary contract, which we sign to be able to start the loan application process.
If the current owner is a marriage, let’s talk with both owners, or ask for a notarized power of attorney of one of the spouses. We should not take our word for it, often despite walking we can get involved in the quarrels of divorced spouses, and as a consequence we can buy a beautiful apartment, at best – with a tenant.
Section III contains information regarding any restrictions on the use of real estate. For example, easement of the road will not be an obstacle for the property to be a collateral for the loan, but a lifetime residence entered in the book will be such an obstacle for sure.
When we find in this section what age information that will raise our doubts, we immediately inform the bank about it and ask about the property as collateral for the loan. Annotations in this section may affect the interest rate, and this is because the property with any restrictions on ownership is more difficult to cash in case the loan is not repaid.
Section IV of the land and mortgage register is very important for the bank. It is in this section that entries are made regarding any mortgages that the flat is charged with. If the apartment is already a collateral for another loan, the bank will indeed accept it as collateral for the loan only if, at the time of purchasing the property, the previous liability has been repaid.
Thanks to the correct reading of the land and mortgage register, we can avoid the trouble that, for example, the bank will not accept this property as collateral and will not grant us a loan.