Before we obtain a positive decision on granting a mortgage, we must ensure that we meet all the conditions set for us. One of them is having the right own contribution.
Only a few years ago, borrowers could easily get a mortgage, even when they had no savings. In 2014, the Polish Financial Supervision Authority decided, however, that it was time to change the current rules.
Mortgage only with own contribution
The days when anyone with good creditworthiness could apply for a mortgage have already passed. The financial sector, torn apart by crises, tries to avoid further stumbles by introducing newer and newer conditions for granting mortgage loans. One of such collateral is the obligation to have a down payment imposed on potential borrowers. In practice, this means that no bank will grant us such a loan without having the aforementioned own contribution.
How much money do we need to have to meet the banks’ requirements? As per the recommendation of the Polish Financial Supervision Authority, the borrower should have resources of up to 20 percent of the value of the property he intends to buy. Some banks, however, allow their clients to reduce their own down payment to 10 percent, provided they purchase additional low own deposit insurance. It is calculated until the customer repays the missing 10 percent of the value of the property acquired for the loan. It can therefore be a solution that will help many people become owners of a flat or house faster.
Different forms of own contribution
It is also worth mentioning that own contribution does not always have to come from our savings. Depending on the offer of a particular bank, it may take different forms, which increases the chances of customers dealing with this commitment.
A very interesting solution is to use for this purpose the funds accumulated for our future retirement. A lot of people decide to save money on IKE and IKZE accounts. However, they may be useful to us much earlier, because the bank can secure them against the own contribution up to the amount required. Funds for this purpose may also come from a donation given to us by a family, but banks often also consider their properties as their own contribution. This is even more beneficial because it does not have to belong to the borrower himself. One of his relatives may agree to charge his property against such own contribution. However, it should be remembered that in this case it is necessary to take such a person along with the borrower.
Own contribution loan
A large number of bank customers who intend to apply for a mortgage are also considering another way to deal with having to own a down payment. And it is a cash loan, which is after all granted for any purpose. However, the question arises whether such action is accepted by banks and can it pay off for us?
Due to the fact that, as already mentioned, loans of this type are granted to us for any purpose of our choice, the bank does not obtain information as to whether the funds obtained by us are to be used as own contribution. The problem is, however, that such debt is registered in the Credit Information Bureau database. And it is from here that the bank obtains very important information for it about our financial situation, in the context of the commitments we have made and the timeliness of our repayment of previous debts. Therefore, when we decide to take out a cash loan, our creditworthiness will be additionally charged.
It is also worth taking into account the fact that cash loans usually have quite high interest rates. So before we sign the contract, it is worth carefully analyzing the conditions offered to us and calculate the total cost of such a loan. Therefore, we will carefully calculate the interest rate, all commissions and any additional fees. You should also think about whether this financial commitment will not be too heavy for the budget.
What to consider when choosing a loan offer for own contribution?
When deciding to take out a cash loan for own contribution, we must carefully examine all available offers. We should not act hastily when choosing the first best offer of a bank or non-bank company. Therefore, it is good to use the currently available online tools such as search engines, comparison engines and loan calculators, e.g. SMART Bankier.pl. Thanks to them, we will quickly learn about the advantages of individual offers.
When, however, one of them particularly catches our attention, you should ensure that you receive a full range of information about its conditions. We carefully read all the documents, in particular the contract we plan to sign. If any provisions are not understandable to us, we should ask them to explain to the bank employee or non-bank company in which we intend to take out such a loan.