The purchase of the apartment on tick is a much demanded proposal, because not everybody can put an astronomical sum of money for accommodation, particularly for young families. Mortgage loan for an apartment is intended to help in this. There is not more serious credit than mortgage.
Firstly, this is a very substantial sum. Secondly, it is quite a long period of the credit – it is very hard to predict income of family budget for twenty years in advance. If you can purchase a washing machine or a computer on credit without any problems – then you must be well prepared to purchase an apartment on tick. Before taking a long-term credit for housing, you have to calculate the interest on the payments, pros and cons of the mortgage.
Mortgage loan – is funds issued by the bank or other lender to the customer for the long term on collateral of acquired real estate. The borrower pays interest monthly for the use of the loan, and also returns the part of borrowed money. The housing acquired at the expense of the credit will be in the bail (mortgage) of the bank or other lender until the full repayment of a mortgage by mutuary. Any active person who has steady income can obtain a mortgage credit.
If you believe that you will be able to pay the mortgage over the next 10-15 years, you have to convince the bank. Certainly, each bank has its own rules of mortgage credits, but lenders generally follow the principle: payment on the loan should not exceed 40% of the total family income. Some banks take into account not only the official salary, but also “alternative” sources of revenue.
Sources of revenue can be:
- Salary at the main place of work, including overtime earnings, awards and bonuses;
- Income from the work for part-time;
- Revenue from private business activity;
- Earnings from distributed profit.
By the way, if you have the “old” housing, experts recommend not to sell it. It is better to lease it and provide the bank with a written contract with the tenants. This will significantly improve your credit rating and show the ability to have an independent source of earnings; after obtaining the loan no one will prevent you to sell this apartment.
There are two schemes of loan repayment: rate on the balance and annuity.
If you selected the interest on the residue, the credit is divided into equal parts, which are paid gradually, and interests are accrued on the unpaid balance of the mortgage. Thus, the first payment on the loan is the biggest and then declines with each payment. When selecting such system of payments, the most important is to make sure that payments during the initial period will not be too large and will not carry unrealistic load on the recipient of the loan.
In the second scheme of paying off, the entire amount for the loan (either the loan, or rates) will be divided into equal parts according to the number of months of payments. Annuity payments are more convenient because you can find out beforehand the sum to be paid. However, this system has a disadvantage: the amount of payments will be higher than in the first scheme. But its advantage is simplicity. Even if a borrower repays the mortgage faster, it will lead to the reduction in loan term and amount of payments will remain the same.
Many people who took a mortgage some time ago face difficult times today as the world economy hasn’t improved yet. If you one of those and you cannot find a solution, consider referring to a mortgage note buyer. In case you don’t know if there is a mortgage note buyer service somewhere in your region, make use of the Internet – there you can find lots of useful info.