More than just a loan, a mortgage can be a useful tool to achieve your goals without crippling your finances. Here are 5 essential steps to follow if you've decided to purchase your own home or make a real estate investment through a mortgage loan.
Why Opt for a Mortgage Loan?
Let's assume you want to purchase a property. However, you don't have the entire required sum, and you can't wait until you save it up. Or, on the contrary, you have the funds but don't want to tie up all your money in a single purchase.
In both situations, a well-managed mortgage loan can be a good strategy. With this type of financing, you can acquire your own home in the present without putting other plans or investments on hold.
How to Access a Mortgage Loan?
Accessing a mortgage loan involves going through steps that, when done in the correct order, can significantly increase your chances of loan approval under the best terms. Here are 5 essential steps to access a mortgage loan that suits you:
1. Check Eligibility Conditions
To obtain a mortgage loan, you will need to meet several eligibility conditions. Generally, criteria take into account your age, monthly income, job tenure, current employment status, the payment of a minimum down payment, and existing debts.
These conditions may vary depending on the financial institution offering the loan, with a few exceptions: to access a mortgage loan, you must be at least 18 years old, have a stable monthly income, and be able to pay a minimum down payment.
The good news is that the credit market is full of offers. This means you have real chances of finding a bank willing to grant you credit based on your situation.
2. Save Money for a Down Payment
Ensure you set aside the necessary amount for a minimum down payment in advance. The down payment typically starts at 15% of the property value for loans in the local currency and 25% for loans in euros. For certain loans through the "New House" program, the down payment can be as low as 5%.
If your situation allows, it is recommended to pay a larger down payment upfront. This way, you'll borrow a smaller amount and pay less interest in total.
3. Conduct an Accurate Assessment of Your Financial Situation
Consider all your monthly income and expenses. Do this honestly and do not exclude possible unfortunate situations, such as job loss or illness. Add it all up and calculate the monthly installment you can afford for a mortgage loan.
Regardless of the loan amount, the monthly installment cannot exceed 40% of your net income. The lower your debt-to-income ratio, the more protected you will be against inflation increases. If you don't qualify, one solution is to have a co-borrower on the loan – a trusted family member or life partner. This way, your combined incomes will be considered.
4. Simulate a Mortgage Loan
Tools like the eligible sum calculator and mortgage loan simulator can help you get a clearer idea of the amount you can borrow. In addition to income, this calculation takes into account other factors such as the down payment amount, your age, and the loan's interest rate.
However, be cautious. The simulation result will only be an estimate of the maximum loan amount. If you want to know exactly how much you can borrow from a bank, a credit broker can help you get pre-approval for free and improve your credit score before applying for financing.
5. Obtain the Right Loan for Your Needs
The conditions you check, your budget, and your goals are important criteria in choosing the right mortgage loan for you.
In Europe, most offers are obtained through a credit broker. Their mission is to present you with personalized offers and assist you throughout the loan process. A credit broker selects the best offers based on your situation, prepares the loan application, and negotiates directly with the bank on your behalf.
Collaborating with such a specialist is an essential step that can bring you numerous benefits. These include shortening the loan approval time and choosing the most advantageous financing offer.
By following these steps in order, you will be better equipped to find a mortgage loan that suits your needs. If you want guidance, you can get free assistance from a credit broker through Imobiliare.ro Finance.
You have instant access to personalized offers from over 30 banks and financial institutions with the best interest rates currently available. Learn more here.
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