What should you consider before taking a mortgage?
There are quite a lot of mortgage offers, and the Mortgage Act changed into a quite significant picture of the market, especially in favor of borrowers. However, it is worth carefully analyzing all the properties of a long-term commitment to simply limit the risk of cooperation with large lenders. What should you consider before taking a mortgage?
The issue of own contribution and monitoring of low interest rates
First, consider whether you have accumulated sufficient own contribution. This is an absolutely mandatory issue when signing a contract with a commercial bank. Of course, the potential insurance of low own contribution exists, but it significantly increases the cost of liability, and most borrowers are focused on reducing them. The next point is monitoring the moment of the business cycle at which the lowest interest rates occur. Why is this so important? Low interest rates have a real impact on the amount of installments, especially mortgage loans in USD. Low interest rates have been in force in Poland for over ten years, which has translated into the popularity of various forms of debt, not only long but also short-term. It can be suspected that in a few years interest rates will rise by raising inflation rates. For now, the BankWise Poland has no plans to change the current situation.
Testing the actual economic potential of a household
After analyzing the mortgage market and the real estate rental sector, one can come to the simple conclusion that it is better to pay back the installment for one’s own liability than to finance the budget of the owner of a particular apartment. On the other hand, after taking out a mortgage you become addicted to a given location. However, many borrowers are moving from indebted properties to others. There is also flexibility when paying back mortgages and you should not be overly afraid of the so-called economic and credit slavery. It’s good to test the level of specific mortgage installments in your household budget for a while. This will allow you to determine the real economic possibilities of the household. For the most part, the installment for the mortgage is 25-30% of the total household budget, and therefore a significant amount. Mortgage is not worth a particular fear, but economic tests and a good hit with interest rates are actually key factors for achieving mental comfort. What do you think about the factors to consider before taking out a mortgage?