24 października 2021

Borrower's mistakes - how to avoid them by taking a loan

Borrower's mistakes - how to avoid them by taking a loan

 

What mistakes should not be made when taking out a mortgage. The list can be long and the consequences are costly. It is worth not to commit them because a loan is a commitment for many years.

 

Variable interest rate and the amount of the loan installment

 

Mortgage loans are liabilities for up to 35 years. When calculating the future loan installment, we must not forget that its amount calculated as of today will most likely change in the future, all due to the interest rates influenced by WIBOR - Warsaw Interbank Offer Rate - the interest rate at which some banks grant loans to others banks. This rate is variable and depending on the bank it may change every 3 or 6 months. There are sometimes banks that temporarily offer a fixed interest rate - usually for a period of 5 years. Of course, it is difficult to predict the level of interest rates in 10, 15 or 20 years, but it is worth being aware of the impact of their increase on the installment. For rational planning of the household budget, one should be able to answer the question what would be the amount of the monthly installment with the WIBOR increase by 1, 2 or 5 percentage points. Such knowledge can save us from unpleasant financial surprises in the future. An expert with knowledge and experience, who knows the realities of financial markets, will certainly help here.

 


Credit offer of "your" bank

 

It is a mistake to assume in advance that your bank will give you the best credit. Convenience, habit or sometimes reluctance to change means that we do not check the offers of competing banks. Clients very often strongly believe that thanks to the fact that they are long-term clients of "their bank", they will receive the best possible financing conditions for the purchase of real estate. The banks where we have accounts do not always have the best loan offer and do not always reward loyalty. It may happen, however, that having our full history, they can find weak points in it that may affect the offer and the final credit decision. Even if you are fully convinced that our bank's offer is the best, it is necessary to analyze the offers of other banks. Preferably with the help of a specialist who will pay attention to all the terms of the offer and costs.

 

Submitting a loan application to only one bank

 

A mistake often made among customers with a very good financial situation and the apparent lack of problems with obtaining a mortgage is submitting a loan application to only one bank. You should be aware that during the credit analysis carried out by the bank, there may be circumstances that we have not realized the spray, and which may be the reason for a negative decision or extension of the analysis time or the entire loan process (credit history, non-acceptance of real estate, reduction in value valuations, an unpaid bill or other forgotten event). If we submit applications to two or three banks at the same time, we will significantly increase the chance of getting a loan in the event of an unsatisfactory decision at the bank of first choice. Working with the help of an independent specialist, we will submit your loan applications optimally, saving yourself time and nerves.


 

Additional banking products for the loan

 

A frequent practice of banks when taking out a mortgage is to offer additional products, such as a bank account or a credit card. Thanks to this, the borrower can count on better loan conditions, e.g. a lower margin. However, additional products involve an additional cost that should be taken into account when estimating loan costs and comparing offers from individual banks. It should also be remembered that these products should be actively used, i.e., for example, top up your account with a specific amount every month or make purchases with a credit card. Failure to comply with this obligation will probably result in additional penalties from the bank in the form of increasing the loan margin.

 

In accordance with the Act of March 23, 2017 on mortgage loans and supervision over mortgage brokers and agents, the rules for granting loans have been regulated, including the limits on which banks can set the terms of early repayment and overpayments. The costs of additional products often depend on the loan term and various other factors. Helping you make a decision with an experienced and unbiased financial expert can be invaluable. Such impartiality will allow you to rationally evaluate and select only those additional products that are absolutely necessary or beneficial, and not to choose those that give little benefit, but will only be an additional and unnecessary cost.

 


Life insurance for a mortgage loan

 

Life policies are still recognized by customers as an additional and unnecessary cost. Meanwhile, policies should be an indispensable addition to any loan. It does not necessarily have to be a policy offered by a bank, especially since the insurance products linked to the loan are of average quality. Most often, they are group insurance with many exclusions, not preceded by a medical questionnaire about the state of health and an individual analysis. In the event of the borrower's death, apart from the personal loss of a loved one, such an event almost always has a significant financial dimension. It may happen that the financial situation of the person who will be repaid in the entire loan installment will be insufficient to service the loan.

 

Another unforeseen circumstance may be the right of succession, as a result of which, without the consent of the guardianship court, the sale of real estate, the co-owner of which is a minor after the division of the estate is divided (Article 101 § 3 of the Family and Guardianship Code). Policies offered by banks usually do not protect borrowers from the consequences of diseases, treatment costs or income limitation. This approach to securing a loan should trigger the borrower's need to have a policy that not only meets the bank's needs, but above all helps to solve these unpredictable situations to which borrowers and their relatives are exposed. All policies should be consulted with an insurance specialist who will analyze them and possibly present full coverage insurance offers.

 

There are many more traps, each of them can have a significant impact on the amount of the mortgage taken and the amount of the monthly installment of this loan. Each borrower is an individual case, having a different situation that requires a separate approach. Only an experienced financial expert can provide maximum comfort and convenience as well as the certainty of choosing the best loan offer.

 

 

Remember that if you have any doubts, I am happy to offer you advice and assistance. Let's meet, you will find that my help in choosing the best mortgage can be invaluable.

 

Feel free to comment. Is the topic of credit analysis interesting for you? Let me know in the comment. Will be happy to help clarify all issues. It is important to me that every topic regarding the mortgage is absolutely explained.

CONTACT ME >

Mortgage broker

Michal Kaplon

os.Stefana Batorego 80

60-687 Poznan

Strona www stworzona w kreatorze WebWave.