23 maja 2021

21 common reasons for a bank refusing a mortgage loan Part III

11. Surety of loans to another person

 

Guaranteeing loans to other people to get financing for their needs is not a good option if you are planning a mortgage. Some banks will count the guarantee as your liability, which may significantly reduce your creditworthiness. Some banks will not be so restrictive, but will require that the current history of repayment of the guaranteed liability does not indicate any delays. In case of problems, the solution is to "unsubscribe" from the problem loan. Alternatively, applying for a loan from a bank that does not refuse a mortgage on this account.

 
 

12. Too many bank inquiries

 

I meet borrowers who take the best mortgage terms extremely seriously. The record holder in my work as an advisor has personally submitted perhaps 10 loan applications in a period of less than 4 months. My opinion on this was not relevant to him. The man himself knew everything best. He thought he had found a way to cheat the system ... His first attempts were successful. Unfortunately, later someone confused his head and suggested that he should treat it as a bargaining chip in negotiations with other banks. The problem appeared after the 6th application, when the first decisions expired, and the next ones were negative ones. First of all, BIK's scoring has significantly decreased. Unofficially, it is said that each query reduces the scoring by about 20 points. Second, the analyst, seeing the documents of a person who submits an abnormal number of applications, may think that he is dealing with an attempt to extort several loans for one transaction. Third, he may think that a person is walking looking for a positive decision, and he does not see any disqualifying parameters in the documentation. For this reason, for his own safety, he may refuse to grant a mortgage.

 

 

13. Life imprisonment or personal easement secured in the land and mortgage register

 

Definitely no bank likes it. Life imprisonment, i.e. the possibility of living in real estate until death. Banks accept only transmission and pedestrian easements related to communication or, for example, gas / heating / water installations. If there is a record in the land and mortgage register that someone has the right to live for life, no bank will grant a loan. Such housing is an asset with limited liquidity. Consequently, banks are reluctant to recognize such property as collateral.

 

14. Value and technical condition of real estate

 

The real estate must meet a range of conditions to be used as security for the loan. First, the technical condition of the property must be satisfactory. The point is not that banks require "golden handles", but the standard adopted nowadays. It happens that clients want to buy real estate without central heating, kitchen or bathroom in the staircase. This form of security will not be of interest to anyone, as the liquidity of the potential sale is reduced. The value of the property is a separate issue. Each property is subject to a valuation. The valuation is to indicate whether the transaction value agreed with the seller is a realistic value. If not, it may turn out that, apart from the declared own contribution, you are forced to top up funds to the required level. The solution to the problem may be security on another property.

 

 

15. Too low amount to build a house with an economic system

 

Each of the advisers once met a client who, with a twinkle in his eye, claimed that he would build a single-family house with an area of, say, 150 m2 for PLN 180,000. This gives PLN 1,200 / 1 m2. In such a situation, you have practically no chance of getting a loan to build a house. Most banks either have their construction limits of 1 m2 (between PLN 2,000 and PLN 2,500), or estimate each investment individually depending on the type and nature of the house. It is for nothing to explain that you have contacts in the construction warehouse. It is useless to know that your father is a bricklayer, tiler, electrician, but he knows who else. Nobody is interested in the fact that you professionally deal with plastering, lifting roofs, etc. The composition may close, your father may get sick, you may break your leg. The bank must be sure that you have sufficient financing to complete construction on market terms in the event of problems. Otherwise, it may refuse to grant a mortgage.

 


Thank you for reading. Part IV coming very soon!!

 

CONTACT ME >

Mortgage broker

Michal Kaplon

os.Stefana Batorego 80

60-687 Poznan

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