As customers, we have many options for choosing types of real estate choosing from: apartment blocks, spacious apartments, detached houses or terraced houses. Each of these properties can come from the primary market, e.g. from a developer or secondary market (buying real estate from its first or subsequent owner). Equally, there are many ways of financing real estate: own funds, funds from the family and the best known – mortgage. If we decide on the latter, what path will await us? What does the mortgage process look like?
Real estate selection – the first step in the mortgage process
Departing for a moment from the financial subject matter, the most important point in the entire action plan is finding the dream accommodation that we want to finance. Taking advantage of the multitude of options, it is worth using the help of professionals, e.g. an experienced real estate agency, which also often provides financial brokerage services to help in obtaining a loan.
Alone or with a professional?
No, I’m not going to go into renovation and construction topics here! Once we find “this” property, we have to make another important decision: will we seek financing on our own or with the help of professionals in the financial industry? When deciding on independent steps, we can use the credit comparison engine or individual websites of banks. However, we should remember that sometimes this content does not contain all the necessary information and, for example, you will need to call the bank to dispel doubts.
The second option is the one in which we use the services of a financial advisor, which we can find, among others in the aforementioned real estate office. Each of us operates in a wide range of friends and colleagues – it is worth asking how those around us who we know bought real estate. What if they know a good and effective adviser? This person will allow us to choose the right bank in terms of financed real estate. It can also pre-assess how much creditworthiness we have. He will also advise you which is better – no commission for granting or a lower margin, as well as which additional products are worth using.
Time for documents
Real estate selected. For our example, let’s assume that a customer wants to buy an apartment from the secondary market. Each Bank, regardless of the type of real estate, will need a legal title to the real estate from us. In the case of the secondary market, this will be a preliminary agreement between the seller and the buyer together with attachments, e.g. a notarial deed, where the seller is confirmed. In the case of purchases from the developer, it will be a whole set of documents confirming the right to implement the investment – possession of the applicable permits, e.g. plot ownership.
Documents regarding real estate is the first group of documents and it is as complex as the financed property will be. Other documents will be needed to finance the purchase of an apartment and others to build a house (permits, plans, floor plans). Each experienced credit counselor or bank employee presents his client with a list of documents to be provided.
Subsequent groups of documents are those concerning the client (copy of ID card, documents regarding marital status, e.g. property separation act) and documents regarding the client’s income, which once again will be more complex the more complex the source of income or several sources.
The mortgage process is one of the longest loan processes. The bank not only has to check whether we can afford a loan, but also to verify the property that we want to buy. At the very end, the loan should be settled, which in the case of a commitment to buy real estate can take up to several months
When we obtain all the documents ourselves or with the help of an adviser, they are forwarded with the loan application to the analyst’s decision. A mandatory element that must be included in the documentation is a report on the valuation / inspection carried out by an independent property appraiser (in the case of construction, this document is an appraisal report). The cost of such a valuation is usually borne by the buyer of the property. When the complete set of documents is sent to a bank analyst, a credit decision is made based on the data about the client, his income sources and current credit history as well as the property that will be financed. We should also remember that the analyst may require us to provide additional documents, e.g. for employees who have submitted a certificate of earnings, current income of remuneration may be required on the account.
Loan granted – what’s next?
Let’s assume an optimistic and at the same time very real path – the loan was granted. If, as in our example, we applied for a loan to buy an apartment, the funds will be transferred to the account of the seller of the property. If we finance the construction with a loan, the funds will most likely be divided into so-called “Tranches”, where the payment is strictly dependent on the deadlines included in the contract and the progress of the current work on the property. Once the funds from the loan have been released, there is one more obligation to fulfill – entering the bank into the so-called mortgage. It is a process that takes place in land and mortgage register departments in district courts. On the basis of a special form and payment of the fee to section IV of the land and mortgage register of our property, the bank which granted us the loan is entered. This section informs us about the burdens imposed on real estate.
In these few steps you can summarize the process of buying a mortgage property. A lot depends on which property you want to finance and whether you decide to help a credit advisor on this topic. And when we go all the way, it remains only to enjoy your dream apartment, remembering of course about timely repayment of installments.