A borrower seeking a home mortgage loan will always have certain benefits and loyalty offers available only to him. This priority is related to property rights not only to the building itself, but also to the land plot adjacent to the house, which often increases the value of the pledged property even twice.
Advantages of Home Loan Credit
Indeed, home mortgage loans differ from other bank products by their elitist nature, which is why a borrower who owns a home has the opportunity to get credit cheaper, easier and faster.
What are the benefits of applying for a home mortgage loan:
- Some banks do not require you to produce an income statement or a copy of your workbook when issuing a home mortgage loan.
- The borrower may use financial products not only with the bank that secured the mortgage, but also with other creditors. Private pledge does not prohibit crediting with other organizations.
- When borrowing against a home mortgage, the bank often overlooks the lesser ideal credit history of the borrower.
- At the customer’s request, the amount of loans against home collateral several times exceeds the amount of consumer loans and even mortgages. Home mortgage credit is considered to be the most extensive cash assistance among other banking products.
- The burden placed on the home in the process of obtaining a loan differs from the same condition in mortgage lending: the relationship with the bank does not change the form of ownership to the borrower.
- The likelihood of a loan application being secured against a home mortgage is much greater than if the borrower applied for other products.
Why exactly does such a credit differ with such a range of benefits? The answer is simple: Of all the collateral that the bank calls “guarantees” (real estate, income level, guarantee), collateral property in the form of a private home is the bank’s most attractive and most liquid. The value of such real estate rarely decreases, most often its price can only increase, which ideally satisfies any creditor.
Restrictions on credit against home collateral
Banks are anxious to allow a borrower to obtain a home mortgage loan, because if the customer defaults, the creditor will be able to quickly dispose of the real estate by lawfully selling it and paying all of his expenses for the money he has received. But even in the following cases, even with the loyalty of the bank, the basic lending principles for a home mortgage loan must be followed :
- Home mortgage loan allows the borrower to receive up to 80% of the market value of the object. This condition helps the creditor to secure in case the borrower defaults: the bank will have to “convert” the house into cash as soon as possible, but in the event of an urgent sale, will have to reduce the price of the property. In this way, the creditor will also secure against unexpected falling prices in the real estate market.
- The land on which the mortgaged house stands shall not be an agricultural zone.
- The total area of the house and land must be greater than 200 m2, otherwise the pledge will not be considered a private house but a plot of land, which will reduce the loan amount.
Home documentation for credit
When applying for a home mortgage loan, the bank will definitely require the potential borrower to submit the technical and legal documentation for the property. What is meant by “technical” documentation:
- Home technical and cadastral passport.
- A plan of the building showing the square of each room, including the square of the bathroom, hallway, kitchen and other auxiliary rooms.
- Confirmation that the land on which the house is built refers to land for building land.
Legal Documentation means any document that proves full ownership of a home. Such a document may be a purchase, gift agreement or a will. It does not matter which of these documents the borrower has, the key is that any one of them proves the title to the real estate.
The legal documentation shows that everything is legally safe with the pledge, so in this case the banks respond in the affirmative to the borrower’s application. However, other circumstances are also considered: the condition of the house, the distance from the city center, the communication, the debt of utility bills, etc.