Mortgage Concept

Mortgage concept

When they say “mortgage”, they can mean different terms. From a formal point of view, a mortgage is a form of the real estate pledged to secure monetary obligations to an individual or organization. In common parlance, a mortgage is called the registration of a loan aimed at the purchase of housing and involving the registration of a pledge. It would be more correct to call it mortgage lending, but we will use the concept of “mortgage” in the context of a bank loan.

Let’s analyze the basic conditions of a mortgage loan. Its purpose may be the acquisition of the following real estate:

• Apartment, room, private house, share in a residential facility;
• Housing under construction at any stage;
• Suburban real estate: summer cottage, land plot, including buildings located on it;
• Commercial space and other non-residential premises;
• Garages, parking spaces.

Types of mortgage loans

When choosing a loan, you should start with exactly what kind of property you want to purchase. There are different loan programs depending on the type of real estate:

• For the purchase of a new building. A loan for housing under construction is extremely popular because an apartment from a developer can cost half as much as in a finished house. You just need to wait a couple of years for the construction company to hand over the object. At the same time, this is a rather risky type of mortgage – the developer can go broke or turn out to be a fraud. It is best to buy apartments in new buildings accredited by the bank;
• For finished housing. The secondary real estate market is also in great demand among mortgage borrowers, the choice of objects is practically unlimited. Banks can refuse a loan to buy an apartment in old, dilapidated buildings, in other cases the transaction goes through without problems;
• A mortgage with state support. The state helps certain categories of borrowers to obtain and, if necessary, partially repay a mortgage loan. Bank clients can use maternity capital funds, regional housing certificates, and other programs with state support. At the moment, there is a condition for reducing the interest rate to 6% for families in which the second and subsequent children have appeared;
• Mortgage refinancing. If you are not satisfied with the rate on an already issued loan, you have the right to refinance it. You need to contact another bank with a more favorable interest rate and get approval to close the existing loan. In this case, the object of the pledge, as a rule, remains the same. Only the lender, the amount of the monthly payment, and the amount of interest overpayment change;
• Commercial real estate. Individuals can purchase retail space, buildings, and industrial buildings on credit. Most often, individual entrepreneurs use a loan, but an individual can also apply for a loan;
• Suburban real estate. Mortgage clients purchase land plots, country houses, and other buildings in conjunction with the site. At the same time, not all banks are ready to issue loans for the purchase of the suburban property. The fact is that in case of non-payment of the debt, it will not be easy to realize it;
• For the purchase of a garage, parking spaces – a rare type of mortgage, but it is possible to get it. Due to the small amount of the loan, the bank may not even require the registration of a pledge, limiting itself to a surety or confirmation of the client’s income.

Consider several options for lending from different banks. Compare the interest rate, debt maturity, possible amount, and additional payments. Please note that there are banks that are ready to issue a loan for almost all of the listed real estate objects, but the requirements in them are much more stringent than in small commercial structures.

Mortgage registration procedure

Obtaining a mortgage loan can take 1-2 months, depending on the completeness of the documents and the complexity of the transaction. In general, the procedure for obtaining a loan is as follows:

• Study the offers of different banks, their requirements for borrowers and choose the best one;
• Collect the required package of documents, so far only for the parties to the transaction;
• The bank will consider your loan application and make a decision;
• If the lender’s answer is yes, find a suitable property and collect a package of papers for it. Check of the property will follow this, that you wish to purchase on a mortgage;
• When the bank and the borrower are ready for the transaction, the sale and purchase agreement, they sign the loan agreement and register the transaction. At this point, the client transfers the down payment for the apartment to the seller;
• After registration of ownership, a mortgage loan is issued and the remaining amount is transferred to the seller’s account.
• From this moment, the borrower has an obligation to the bank to repay the loan. He is given a loan agreement, a schedule of payments, and a memo on repayment of the loan. Mortgage loans can be paid annuity (equal payments) or differentiated (in decreasing).

Moreover, if you’re making any credit card transaction then don’t forget to check credit card eligibility and validity with an online credit card checker. A bank ID number (BIN) addresses the initial four to six digits on a Mastercard. The initial four to six digits distinguish the monetary establishment that gave the card. The BIN is a safety effort to secure the two buyers and dealers participating in online exchanges. So, identify the bincodes number with an online bin code checker tool.