Mortgages are the most popular option for getting money for your own home. However, when deciding to build it or buy one that has already been built, you cannot forget about many very important aspects.
Home mortgage – step by step
Do you decide on a mortgage? It is worth that you follow the proven scheme. This will make it much easier for you to get to your dream home, and at the same time will save many unexpected and often unpleasant situations.
1. Check your credit standing
Check your credit standing. It will allow you to estimate what house you can afford. Remember that you need to accumulate the right amount to ensure a minimum own contribution. Each bank will assess your creditworthiness very individually. In this assessment, banks take into account how much you earn, what are your monthly obligations. Important information for the bank will also be how you have repaid your loans so far – i.e. your credit history.
2. Think about the amount you want to borrow
Once you know your credit standing, you can decide how much money to spend on your home. Remember that if you decide to take out a home loan, you must own the land on which you will build it.
3. Compare loan offers
Once you’ve found your dream home, you can focus on choosing the best financing option. People who decide to buy their own home usually decide on a mortgage that will cover its cost. Remember to compare mortgage offers carefully. Check mortgage rates, commission for granting them, and whether you need to take advantage of additional products such as: real estate and credit insurance.
4. Prepare documents for the bank
When deciding on a home loan, you should prepare the necessary documents that the bank will ask you for. If you prepare early, the loan application procedure should take less time.
Documents useful when applying for a mortgage and a house construction loan
- a document confirming your identity,
- income documents e.g.
Contract of employment:
- Employment certificate, bill history.
- PIT for the previous year, KPiR for the previous year with the stamp and signature of the accountant,
- KPiR for the current year – cumulatively, with the accountant’s stamp and signature,
- KPiR in detail the last 3 months settled with the accountant’s stamp and signature,
- Account statement for 3 or 6 months (depending on the bank).
Contract of mandate:
- PIT for the previous year – with confirmation of submission or UPO,
- current commission contract,
- income statements filled out by the employer,
- account statement for 3 or 6 months (depending on the bank),
- construction documents: construction design, construction logbook, building permit, building development and development decision, building permit, construction logbook, construction design.
- construction plot documents.
5. Submit an application
If you have already chosen the offer best suited to your needs, it’s time to submit your application to the bank. At this stage, you can still decide if you need a loan to renovate or finish your home.
6. Wait for the application to be considered and the bank’s decision
After submitting the application and submitting the relevant documents to the bank, you must wait for your application to be considered and the bank’s final decision. After the bank makes a positive credit decision, you will be able to sign the contract. Before you do this, carefully read the document templates, all conditions and fees.
Read: Who will not get a mortgage?
7. Payment of money
After you sign the contract, the bank will launch your loan and the funds will be transferred in tranches or once, which depends on the stages of the investment. If the loan is intended for the construction of a house, the bank has the right to check at what stage the construction is and whether everything goes according to plan.
A home mortgage differs from a home construction loan in that, when you apply for the first one, you do not have to own the land.
Remember to take care of all mortgage formalities. Not only when you apply for it, but also when it is launched and paid back.
Check: How can you make your mortgage cheaper?
To sum up, the most important conditions you must pay attention to when applying for a mortgage are:
- Your credit standing,
- property price,
- condition of the house and stage of construction,
- loan parameters: mortgage interest rate, commission, insurance, additional fees,
- mortgage lending in a given bank.