The decisive financial decision of our life is the choice of a home loan. Commitment for many years, which can be very rewarding, but can also make our lives a hell of a bad design choice. Let’s look at how a home loan differs from other loans.
Why so much, what are the dangers, the risks, the amount on which it depends, how much repayment we can take, whether we can ease our burdens on the go?
What’s different about home loans? What is it really?
The concept of a home loan: the type of loan we can use for a home purpose, be it a new, used property we buy, possibly build, or just renovate our existing home. Most of us adults, throughout our lives, come across the concept or opportunity of owning a home.
The first difference with a real estate loan is whether you have only your income as collateral for the loan or whether there is a real estate collateral behind the loan. In the latter case, this home loan is a mortgage. The real estate collateral is in case you are unable to repay your loan due to something or your payment is stuck. The bank can then turn the property into cash, thus reducing the risk of repayment of the loan.
This is also an advantage, as you have the easiest and most favorable way to get a mortgage! Loans without real estate collateral can obviously be taken at significantly higher interest rates, thus securing the bank.
Unsecured loans are also disadvantageous in terms of maturity, because a home loan can be secured by a real estate collateral for a term of 25 years, while a “naked” loan is for a much shorter period.
State benefits may be more in addition to secured loans than housing savings and Family Home Support.
Will we be able to repay for many years to come?
The most important thing for everyone is to know the details of our own income and expenses, how much we could do without spending on a household for a permanent payment of one year. How much does the family bear this amount of money for so long?
Whoever lives month after month has no savings for years, we certainly do not recommend that you make your situation worse. You should not think about taking out a loan!
How much can we get?
It is calculated by all banks with the same degree of caution, with up to 80% of the hedged property being taken up, meaning that only a maximum of 16 million of the current market value of a $ 20 million home loan can be borrowed.
Many also depend on the condition, location, structure, position, and load of the property offered as collateral, for which there are strict regulations per bank.
The person applying for the loan shall also be screened as follows:
- income is the first criterion
- current outstanding loans and ongoing expenditures
According to regulations, up to 50% of net income up to HUF 400,000 / month can be used for loan repayment, while for net income above HUF 400,000 it is 60%.
Let’s look at this with specific numbers
If your net monthly income is $ 200,000, you can spend $ 40,000 a month on a loan of 40,000. Considering today ‘s most favorable home loan, for a term of 20 years, it will allow 14, possibly HUF 15 million.
And you have to pay!
- When an annuity is a repayment, that is, you have to pay the same amount of installment over the interest period, although the rate of interest and principal repayments is constantly changing.
- In the first period, you will usually have to pay more interest, so the debt will only decrease significantly later! This is to ensure that the installment payment remains constant throughout the term.
- The choice of maturity also has a significant effect on the interest rate on the repayment term. The longer the maturity, the less the repayer, but in return the interest rate is much higher. Here comes the disadvantage of a loan with a maturity of over 20 years.
The risk can be very high!
The biggest risk is that increasing interest
It is during the term of the loan will also increase the repayment installment. With variable interest rates, this is legal. As interest rates have fallen below historic levels, they should increase over time.
The opposite is the fixed rate loans, which are used to pay the mortgage evenly each month until the end of the home loan. Interest can be fixed, which is higher than its floating rate counterpart but is more predictable and safer.
Everyone chooses their credit options, but it can come as a surprise to someone who does not make up a reserve, which can help you through a 3-6 month outage. Considering the changed working conditions, illness, and starting a family, it is worth considering an insurance that will pay off the repayment installments in difficult times.
We can also offer credit hedge insurance as well as life insurance, which can be a redemption for the family if the breadwinner fails or lives.
If you would like to take out a home loan, are interested in CSOK, consumer friendly qualified loans, or just inquire, fill out our form and our credit brokerage specialists will tailor your offer for you personally! Our insurance experts will help you keep your credit safe! We call you back!