The housing issue for many people, especially for young families, remains the most acute. Few people have sufficient funds to purchase their own housing without resorting to the services of a bank. Therefore, for many, in order to improve housing conditions, a mortgage becomes the way out. What percentage you have to pay depends on the type of mortgage lending and the conditions of a particular lending institution.
What you should know before contacting the bank
As a rule, each person first of all looks at the interest rate, and only then chooses a loan that satisfies the terms and amount of the down payment. But a low interest on a mortgage can hide the basic conditions put forward by the bank. These may include commissions and various fees. Considering that in advertising campaigns to attract customers, credit institutions bypass these conditions, before concluding a transaction, you should carefully read the contract.
How to get a low interest mortgage
There are several conditions that can help the borrower get the lowest interest on the mortgage.
- If the borrower has previously applied to a particular lending institution and has established himself as a reliable client, then he can count on more favorable conditions. The bank is ready to provide certain discounts to a person in whose reliability and solvency he is confident. Such cooperation is beneficial to both the client and the bank, since the former can always count on certain discounts, and the latter acquires a regular customer.
- Discounts or benefits can be provided to an employee of a company that is a corporate client of this bank.
- If a client purchases housing from a developer who is a partner of this bank, certain discounts can also be provided on a mortgage loan.
- The client who is ready to make up to 30% of the total value of the property as an initial deposit can expect the lowest interest on the mortgage. This indicates the solvency of the client, and the bank itself risks a lower amount. Therefore, the lender is ready to lower the interest rate. But, of course, the borrower must submit a document confirming its solvency.
Types of Mortgage Programs
Today, there are many mortgage lending programs offered by various banks. Preference is given to those with the lowest mortgage interest. But not all conditions prove to be beneficial as expected. For example, one of the banks is ready to provide a mortgage loan for a period of 30 years, the initial payment of which is 10% of the total cost of the purchased housing. The rate in this case will be approximately 13%. If the loan term is reduced to 10 years and 50% of the value of the property is paid as a down payment, then the rate will already be slightly less than 11%.
For people with little income, but in dire need of housing, there are special social programs. Under such programs, the state is responsible for the down payment. Depending on the conditions, the amount of the down payment may be up to 40% of the cost of housing. Persons belonging to certain groups of the population — young families and military personnel — can expect the same help from the state. They also have special programs.
The types of mortgage lending programs can be found directly at the bank where you plan to take a loan.
What is the best mortgage
To attract as many customers as possible, some banks offer a mortgage without a down payment. At the moment, it is believed that this is the most profitable mortgage. But for its receipt there is a certain number of requirements.
- The borrower must own valuable property that can be left as a pledge when applying for a mortgage loan.
- The average income from the borrower issuing this type of mortgage loan should be higher than when applying for a mortgage with a down payment.
- Property purchased by the borrower must be in the aftermarket.
If all conditions are met, the borrower can count on receiving a mortgage without an initial payment.
But you should also consider some features of this type of lending. In order to insure its risks, the bank may additionally offer to take out insurance of acquired real estate, as well as life and health. Thus, choosing a profitable mortgage without a down payment, you need to be prepared for the tough requirements of a credit institution.
In conclusion, we can say that if a decision is made to take a mortgage, you should carefully and carefully study all the proposed options. Then the chance to find a profitable loan and the lowest interest on the mortgage will be high.