A mortgage is a loan granted for a long period of time, and it can be used to buy an apartment, house or plot. A mortgage is a decision that is made often for life, so when choosing a loan, it is necessary to compare the offers available with each other. What should we pay the most attention to?
The total cost of the loan
The total cost of credit is one of the most important issues regarding long-term liabilities. Of course, the loan amount we apply for will remain unchanged, but the total cost of the loan will definitely vary slightly depending on the bank.
This amount is influenced by various factors related to the current market situation, such as margin, interest rate, commission for the bank and additional loan insurance.
When applying for a housing loan, it is worth checking how much commission the bank collects. This fee is one-off, but it may vary depending on the bank. The margin is one of the factors that significantly affects the total cost of credit. It is a variable value, which means that to a large extent the loan installment depends on it.
The interest rate depending on the offer may be fixed or variable. In the case of permanent, the matter is simple, because it can be assumed in advance how high the monthly installments will be. The variable interest rate depends on the size of interest rates.
The best way to estimate the total cost of credit is to calculate the APRC indicator , which will determine the actual cost to you.
Fixed or variable installments?
The consumer has the right to choose between fixed or decreasing installments. How does it look in practice? Well fixed installments are equal installments throughout the duration of the contract. The amount includes interest and principal repayment. A simple solution, and installments are usually not very high.
Decreasing installments is a better solution for people who are sure that their budget will bear this burden. Initially, the installments are high, and they decrease over time. In the initial installments, more interest is charged, and in the final installments mainly the majority of the debt is paid.
Repayment period, own contribution, currency
The loan repayment period is equally important. This commitment is always long-term, but it is up to the consumer how long it will last. If it has good credit standing, then higher installments and shorter repayment period will be better. The credit spread is increased by the maximum number of installments.
Own contribution is an option for foreign currency loans and negotiations with the bank.
Insurance, currency conversion and repayment grace are mandatory terms that must be read when applying for a mortgage.