Real estate is not only a place to live, but also a tool that can be profitable. As you know, it can be rented out, it is profitable to resell, but also the available real estate can serve as a means for acquiring other benefits, whether it is another apartment or expensive houston credit repair.
When is it profitable?
All existing loans are divided into targeted, when the funds are planned to be spent on a specific purpose, and mortgage. In most cases, we associate with a mortgage a loan secured by an acquired apartment, however, according to experts, a loan secured by existing housing is also such. A mortgage loan is always secured by real estate, which is why banks are more likely to issue it at a lower interest rate than with a consumer loan.
Also, the advantage of a loan secured by existing property lies in the quick deadlines for making a decision on it and in the absence of the need to confirm its intended use. If there is ownership in the pledge, there may be fewer requirements for confirming the borrower’s income, although the absence of official confirmation inevitably leads to an increase in the interest rate.
This becomes especially beneficial if you need a large amount for the long term at a minimum percentage. For example, you want to buy an apartment in a new building at the initial stage of construction, but do not have the funds to purchase it immediately. If at the same time the new building has not yet been accredited by the bank, then you cannot take a mortgage loan against the security of the purchased apartment. In any case, a loan for an apartment under construction will be several points more expensive than if you put a burden on the finished apartment.
It can also be beneficial if necessary to make expensive repairs or open a business when it comes to the amount of 1 million rubles. Firstly, the rate will be significantly lower than on a consumer loan, secondly, the chance to get the right amount is higher, thirdly, you can choose a longer period to get a comfortable monthly payment.
What should I look for?
When choosing a loan, you need to pay attention to all additional conditions. It is also worthwhile to clarify all bank commissions, insurance costs and real estate appraisal in order to correctly assess their capabilities and only then decide on a loan.
What are the requirements for mortgaged property?
As a rule, the same requirements apply to real estate taken as collateral, which apply to the purchased apartment: they will not be accepted as collateral for apartments in disrepair, in old low-rise buildings. It will not be easy to find a bank that will issue a loan secured by a room or apartment in a house with wooden floors.
General principles remain: housing must be liquid and maintain this liquidity over the entire loan term. In addition, the apartment should not be burdened. It is advisable that the owner of the apartment was only the borrower, in the situation, if one of the relatives is the co-owner of the housing, then he should act as a co-owner. The apartment must be evaluated by an independent appraisal company, and also insured by the time the loan is received.
What documents are needed to get a loan?
Many banks provide loans secured by real estate, requiring a package of documents for the apartment and the lender. The list of required documents depends on the bank’s internal rules and, as a rule, affects the interest rate.
On the collateral object:
- Photocopies of documents of title with the obligatory provision of originals for review:
- Certificate of state registration of property rights;
- Documents-grounds for the emergence of a property right (contract of sale, transfer of ownership of the apartment in privatization or other);
- Documents confirming the transfer and payment of the apartment (acceptance certificate, receipt of receipt of funds and / or other).
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