Poles are not afraid of the word ‘mortgage’. The vision of entering the bank as an entity authorized to real estate in the absence of repayment of liabilities is not a block for us on the way to obtain financing for a dream house or apartment. And when we already own real estate, we often reach for mortgage loans, which are used to finance any consumer purpose with real estate mortgage.
Debt from housing loans
As shown in the report for the fourth quarter of 2018 ( available on the website of the Polish Bank Association), the total amount of housing loans is PLN 415.158 billion and increased by 6.78% compared to 2017. Although there can be many growth factors, such as rising prices, shopping in the above-class real estate reality shows that we are more often giving up renting than our western neighbors and prefer to live on our own. Of course, loans for the purchase of real estate for rent still constitute a large part of financing, but here industry representatives are increasingly talking about locations such as Polish sea or mountains, tourist destinations. Foreign real estate is also increasingly financed.
Own property for a mortgage
But back to the domestic yard … To live in your dream apartment or house, of course, we can count on an inheritance from a distant or close family, but wanting to enjoy your own home today we use mortgage loans in most financing cases. These are credit products offered by almost every universal bank operating on the market. The bank, after conducting a credit analysis of us as a person and our sources of income, as well as real estate which is to constitute a security informs us that it grants us the loan amount resulting from this analysis. Currently on the market it is 80% of the property value. The remaining part is financed under the so-called own contribution. For its part, the bank offers us several dozen or several hundred thousand zlotys for the purchase of real estate, and we undertake to repay this amount on time in accordance with the agreed repayment schedule. Depending on our decision, these may be equal installments with a fixed ratio of capital to interest or decreasing installments, where with each subsequent year of repayment the interest part is smaller. What if something happens that does not allow us to pay back our obligations? Of course, it is crucial to inform the bank about this situation and to join an amicable path, e.g. spreading capital over a longer period or grace period for loan repayment. The collection of real estate by the bank is the last resort.
And how do I already own property and need money for another purpose – a mortgage?
About ourselves is the story when we already have our property free from entries in the land and mortgage register in the mortgage department . When we are happy owners of a debt-free real estate and we are looking for sources of financing for our own plans, dreams or loans taken earlier, a mortgage loan is a great solution. It is also a product offered by most banks. To obtain this form of financing, you must submit a mortgage loan application at a bank of your choice with a very general definition of the purpose of further financing – purchase of home furnishings, renovation, consumption purposes or repayment of current liabilities. After conducting a credit analysis, the bank informs us about the funds that we can obtain. Usually we can count on max. 60% of the value of the property being collateralized. In the vast majority of cases, we also do not need to account in detail for the funds used. Loans with mortgage collateral also have lower interest rates than traditional consumer loans, due to the solid collateral that occurs.
The mortgage is a targeted product – for the purchase of real estate, and secured on the same mortgage. A mortgage is a product for any purpose secured on real estate. The bank also makes an entry in the mortgage
Mortgage and loan
To sum up, we can distinguish 3 basic differences between a loan and a mortgage . The first of these is the goal: the loan involves the purchase or construction of real estate, and the loan usually finances objectives not directly related to the purchase of real estate. The amounts we can get under this type of financing also differ. The last significant equation is the price of these financial products. Mortgages are at the lowest interest rate.
Knowing the basic characteristics of these products, all that remains is to answer the questions: “Do I already have property? Will I be financing it yet? “