Housing loans

If you are dreaming of owning your own home or of moving into a new home but you have not got enough money to buy a flat or house, a housing loan may be a good solution for you.

 

The ABC of applying for a housing loan:

  • a housing loan can be obtained from a bank or a home savings bank;
  • a housing loan is a long-term loan so it may have a maturity period of up to 30 years;
  • the real property you intend to buy or other real property is to be pledged as security for a housing loan;
  • a housing loan can be used for the purchase or construction of real property or land or for the reconstruction of a flat or house;
  • you may withdraw from a housing loan agreement within 14 days of the date of its conclusion;
  • a housing loan requires property or household insurance, which must be accepted by the lender even if it is purchased from an insurer other than the lender;
  • if you are required to arrange insurance for loan repayment, you should check for what cases you will be insured; a housing loan may be repaid before maturity in full or in part, for a fee of up to 1% of the outstanding loan amount;
  • if you repay the loan at the time of interest rate resetting, you will not be charged any fee for early loan repayment.

There are two types of loans available to home buyers:

1.      Mortgage loans or housing loans, which are offered exclusively by banks.

  • If you choose a loan provided for a specific purpose (which is more economical), you will have to document the use of the funds borrowed. If you choose a loan that may be used for any purpose, you will not be required to document the use of the funds borrowed, but the loan must be secured by a security interest in real property.
  • Banks also offer mortgage loans for young people aged up to 35, where the State subsidises the borrower's interest costs. This is tied to the condition that the borrower's monthly income may not be higher than 1.3 times the average monthly salary.
  • Important aspects you should consider when choosing a mortgage loan:

a) see Six steps to consider when choosing a loan;

b) the initial rate fixation period, i.e. how long you will have an unchanged interest rate;

  • Banks offer loans with interest rates fixed for various periods, from one year to the entire maturity period. Decide as you are recommended and according to your willingness to take the risk that the interest rate will fall or rise in the future.

2. Building loans, which are offered by home savings banks.

  • The interest rate charged for a building loan remains unchanged throughout the repayment period.
  • The interest rate on such loans is somewhat higher than the rate charged for a mortgage loan, because it is guaranteed by the home savings bank for the entire period of  loan repayment, which may be as long as 15-20 years.
  • You can obtain a building loan from a home savings bank after having saved with that bank for a certain period.
  • You can also obtain such a loan from a home savings bank without having saved previously, but under less favourable conditions than home savers are entitled to.