Most people who want to buy or build a property must use a mortgage. Simply, the costs associated with buying a flat or building a house are so high that we can not physically put down enough cash to finance such an investment without the help of a bank. We are also well aware that the mortgage is quite high, despite the fact that the interest rate on these loans is among the lowest on the market. However, we must remember that we pay off such debts for a very long time, so the bank charges interest to us for a long period of time. We also can not forget that by taking out a mortgage, we also have to bear other costs connected with it. Below, we’ll show you what costs we can meet by contracting a mortgage so that everyone who wonders about such a loan knows what he must be prepared for.
Interest rate – the interest rate on the loan is simply a “charge” for the bank, for lending us money. This is by far the highest cost associated with a mortgage. This is due to the fact that we repay the loan even for 30 years so the bank calculates interest for a very long period of time. We can not forget about the fact that very high amounts are involved and interest is charged on this amount. We must remember that mortgage rates are variable and may change over time in debt repayment.
Commissions – these are fees that the bank charges for various types of activities related to the loan. In practice, we meet a commission for processing the application, a commission for granting a loan, a commission for early repayment of debt, a commission for the preparation of an annex to the contract, etc. Not every bank applies all commissions, you can also negotiate their amount.
Property valuation – a mortgage belongs to one of the cheapest mines on the market because its security is an entry to the mortgage. However, before making such an entry, the bank will want to know how much the property is worth, which will be a security for the mortgage. Sometimes banks offer us their own appraisers, sometimes we can look for people who can make a valuation themselves. However, we must remember that such a valuation costs and should be treated as a cost associated with a loan.
Notary fee – contract related to the purchase of real estate, must be confirmed by a notary public. This means that it must be signed in the presence of a notary public. Of course, the notary will not confirm the contract without obtaining income, so we have to take this cost into account when planning to buy real estate for a loan.
The costs of establishing a mortgage – to activate a loan, the bank will require us to make an appropriate entry in the land and mortgage register of the real estate, which is the collateral for the debt. Therefore, we have to prepare for the fee for such an entry.
Real estate insurance – one of the mortgage collateral is the assignment of an insurance policy. Therefore, we have to pay a policy for a given property throughout the repayment period. Sometimes the banks themselves show us the insurance company in which we will insure the property, and sometimes we can make a choice ourselves.
As you can see, not when looking for the cheapest loan, we should pay attention not only to its interest, but also to other fees related to mortgages. There are a lot of these costs, so we have to prepare for a lot of expenses related to it.