The most important of these is the bank’s commission for granting a loan, which ranges between 0 and 5 percent. the value of the entire borrowed amount.
At first glance, it can be quite a large sum, so I encourage you to make reliable comparisons of at least a few offers of different banks at this stage, choosing the one that will be the most advantageous.
Negotiate terms with the bank
Let us also remember that a housing loan is in fact an agreement between two parties – the bank and the client – so it can be negotiable. The more it is worth to study its content carefully, make the appropriate calculations and sit down with the bank representative with such knowledge to negotiate the best possible terms for your future loan.
What else is worth paying attention to when choosing a housing loan? For all kinds of insurance. Among them is, among others insurance of the purchased property, insurance against job loss and life insurance. – Usually, the bank suggests its solutions here and suggests choosing an insurer, although of course, this is not the rule.
The amount of premiums for such insurance depends on the offer of the insurance company that undertakes such protection. Here again, it is worth comparing all policy offers available on the market before and choose one that will guarantee us security, but at the same time, it will not be too expensive.
Let’s add at once that for each attempt to negotiate the terms of the mortgage agreement, the bank will certainly respond with a cross-selling offer. What is this? Cross-sell is a type of exchange, sale of additional services in exchange for a lower loan margin or a lower bank commission.
Low contribution insurance
It is also worth remembering the costs of insuring a low own contribution, i.e. the fee that the bank charges for the increased risk it incurs in connection with granting a loan with a low own contribution. – The matter applies to those borrowers who contribute to the housing loan the minimum amount required by the bank under the so-called compulsory own contribution.
It is in the case of such clients that the bank will require additional money to secure its property, which is the loan. The payment for such insurance can be made in advance, it can also be added to the loan installments.
Early repayment is another cost
The list of loan-related costs also includes a commission for early repayment. – This type of fee is usually charged by the bank in the first five years of the loan duration. It is a kind of compensation for the loss that arises for this institution in the event of early repayment. Put simply, the bank compensates for the loss of profit from the margin, because early repayment means that it will only receive a return on capital, so it will not be able to earn interest anymore.
One should also not forget about the costs of notary fees associated with the transfer of ownership of the premises (entry in the land and mortgage register) and the cost of the valuation of the purchased property, which is carried out by an inspector delegated by the bank. – All of this also includes borrowing costs. If you add them to the ones mentioned earlier, a really large amount may appear on the invoice.
With the help of a cash loan
So how do you finance all these costs, since for several years banks have no longer granted loans for amounts higher than the purchase value of the property itself? The solution can be a cash loan, which – contrary to appearances – does not have to be more expensive than a mortgage. – There are many low-interest cash loans available on the market, with repayment terms of up to 10 years. Of course, this type of liability can be repaid much faster.
To find this type of loan, it’s best to ask a financial advisor for help – they have a whole set of financial tools at their disposal, including all current loan calculators. It is with their help that a credit counselor is able to calculate and give all the costs of such an obligation very precisely.
Let us also add that the experience of a financial advisor cannot be overestimated when it comes to negotiations with the bank. – Then we stand on the client’s side and bargain with the bank for the most favorable conditions regarding the amount and subsequent repayment of each such loan.