One of the most common methods for raising funds to purchase a property is the mortgage credit. While making efforts to make a choice among all bank offers, the buyer is flooded with huge loads of information, advices from acquaintances, brokers and mass media and the result is confusion rather than clarity.
Since we are experts in the field of property sales and financing, we shall clarify below what are the main stages and what is the meaning of the key terms in mortgage crediting.
To put it simply, the mortgage is securing the obligation to the creditor bank with real estate property of the borrower. There are two types of mortgages – legal and contractual.
The legal mortgage is the most common variant in the purchase of a new home. The buyer deposits his downpayment, and the seller conveyances the property to the buyer. It is specified in the notary deed that the remaining amount due will be paid by the creditor bank, and a request is submitted to the registrar judge for registration of a legal mortgage.
The contractual mortgage is usually applied when the purchase of a home is financed through mortgaging of another property. In this case the contractual mortgage is witnessed by a notary before finalizing the purchase deal.
The bank approval process can be generally divided into two parts:
- Preliminary approval of the borrower as a person capable of paying his obligations on a future credit – the approval is based on income documents and takes several days; it is advisable to obtain this approval before you choose a specific property.
- Finalapproval – documents of the property, purpose of the loan and market value of the property are necessary (see the list of necessary documents here).
The banks also require insurance in their favor on the mortgaged property and a life insurance of the borrower.
After you have clarified the basic terms and procedures in getting a mortgage loan, do get acquainted with the specific offers of the banks. Inquire carefully what is offered and which is the variant most convenient for you depending on your individual abilities.