You have decided to address the housing issue. You have been informed on our blog what is new in the home loan market in 2018 and you have found a flat or house in the perfect location, you are satisfied with the size and layout of the premises, and you are comfortable with the price of the property.
Often, the amount of cash available or the ability to raise a loan is often a limiting factor when selecting and buying the property you want.
If you decide to buy a property with a home loan, now is the right time. The choice of home loans has never been greater and real estate prices are relatively affordable.
Short on home loan
A home loan is a type of special purpose loan which the bank makes available to the borrower for the purpose of buying, building, upgrading, reconstructing or renovating a residential property.
Typically, home loans are granted with the registration of a mortgage, ie a bank lien, on real estate. A mortgaged property is usually an apartment or house whose purchase is financed by a home loan, but may be some other replacement property of appropriate value.
Given that a home loan is a form of a special purpose loan, and the funds of the approved loan are transferred to the account of the seller of the property, the most common costs of processing and securing the loan are paid by the buyer, or the beneficiary of the loan, with funds out of his own pocket.
A home loan is usually a long-term loan that can be contracted for up to 30 years. Today, home loans for a shorter repayment period can be contracted at a fixed interest rate. In the longer term, interest rates on banks’ housing loans are most variable.
Housing loan in HRK or with foreign currency clause? With a fixed or variable interest rate? Choosing repayments in monthly annuities or installments? Loan financing partly from your own contribution? Home savings bank loan or bank loan? Shorter or longer repayment period?
The initial step in realizing a home loan is choosing a lending model. The choice of a commercial bank, and thus of a home loan model, is largely determined by the creditworthiness of the future borrower.
First, credit criteria must be met
The buyer of the property has fulfilled the criteria of creditworthiness, if he receives regular monthly income in the amount of annuity and unburdened income to cover minimum living needs.
net salary – social minimum = annuity
net salary = annuity + social minimum
The amount of unburdened income required to meet the living needs or colloquially the social minimum depends on the business policy of each bank. The social minimum is generally between HRK 2,100.00 and HRK 4,000.00.
If the sufficient amount of income satisfies the potential of the borrower, the bank will evaluate your credit rating in more detail. This includes the control of the regularity of the fulfillment of the existing obligations towards credit institutions, the solvency of the company in which you are employed, the status of employment, length of service, etc.
Also, at the final maturity date, loan beneficiaries must not be older than 70 or less than 75 years old.
Real Estate Check
In addition to the object of purchase, real estate in a home loan is a loan security instrument. Given that real estate prices have changed over time, banks are looking for an estimated market value real estate is a certain percentage higher than the amount of loan requested.
The value of the property usually has to be 10% or 25% higher than the amount of the loan requested, which implies a ratio of 1: 1.10, or a ratio of 1: 1.25.
Typically, banks’ websites provide information on home loan approval in a 1: 1 ratio. This is certainly possible, but with increased security instruments such as own participation or co-debtor.
In addition to adequate value, the property must also meet the eligibility criteria for the bank’s pledge entry in the land registry statement.
Therefore, depending on the year of construction, the real estate must have a building or occupancy permit, or a certificate that it is not needed. A similar property is listed or at least entered in the contract book and has an energy certificate.