Buying your own apartment is a joyful event in a person’s life. But to buy expensive housing with accumulated funds is far from every family has it. Therefore, more than half of property buyers are forced to apply to banks for a mortgage loan.
Buy an apartment in the mortgage, by and large, profitable. Sooner or later, payments to the bank will cease, and the housing charge will be removed. However, a family that has taken a loan to purchase real estate will be forced to give a significant portion of its budget to the creditor bank every month over the next 10–15 years to repay the debt. Such a load will require serious discipline and severely punish for mistakes. In this article we will try to give advice, which we hope will help you to settle accounts with the bank without major problems.
Really evaluate your capabilities
Making a mortgage loan is available only to those people who have a stable income. Moreover, the size of this income should be higher than the average. Imagine that, starting from next month, you will give the bank from your budget from 20 to 50 thousand rubles. Will you have enough money left for all the necessary expenses – the purchase of food, clothing, utility bills? Are you sure that your position will remain as stable after 5-10 years?
No one of us can look into our future. However, to understand that at this particular moment a person is not ready for the repayment of a large loan is quite real.
You can not save for a down payment for the purchase of an apartment? So, the situation is this: you can not set aside 20,000 rubles from your earnings every month. Even if you manage to issue a mortgage, in the very near future you will have problems with payments on the loan. Change your life first. Find a stable source of income. Make initial savings. And only the field of this, contact the bank for a loan.
To pay a large loan for 5-7 years with a minimum overpayment can only be prepared in advance for this. For a financially unsecured person, a mortgage loan will turn into a disaster . If the borrower does not have enough money to make regular payments on the loan, the bank will close his loan by selling the apartment (after all, she is in his mortgage). The property will be sold at a residual value that is much lower than the market value. A problem borrower will be charged off all legal costs and expenses of bidding. He will lose part of his down payment and the money that he has already managed to repay the loan. As a result, a person who has not calculated his strength will turn out to be even poorer than he was before applying for a mortgage.
At risk of defaulters are people who:
- until they managed to reach a fairly high level of earnings;
- working at unstable enterprises with the risk of falling under reduction;
- have serious health problems.
These categories of citizens to take long-term loans for large sums are not recommended.
Balance the ratio of income and expenses
After you realize that you are ready to take a big loan for a long term, you can proceed to more detailed calculations. According to common practice, the volume of payments on loans should not exceed 50% of the total family income . The best option is when payments for servicing loans do not exceed 30% of household income.
Calculate how much you do not have enough to buy an apartment. Consult with a specialist in the bank and specify what monthly payment you will have if you issue a loan for the missing amount for a certain period. Make sure that the payment will not exceed 50% of your family income (on this page you can find out the most beneficial mortgage offers).
The optimal strategy when making a mortgage is to take a loan with the lowest possible monthly payment for a sufficiently long time. But at the same time every month to pay the bank not the minimum, but the largest possible amount. So it will be faster to reduce the loan debt, decrease its term and, accordingly, overpayment to the bank.
If, for example, to take in the bank 1 500 000 rubles at 10% per annum for 5 years, then the value of the monthly payment will be 31 870 rubles. Overpayment of the loan in this case will amount to 412,000 rubles. If the same amount under the same percentage is taken for 15 years, then the monthly payment will be only 16,120 rubles. However, the overpayment of the loan will increase many times – up to 1 400 000 rubles.
And even if you have the opportunity to pay the bank 32,000 rubles a month, get a mortgage for 15 years with a payment of 16,000. But make monthly payments as you can. If your financial situation does not deteriorate in the near future, you will close the loan for 5 years with a minimum overpayment. But in the event of an unexpected fall in revenues, it will be easier for you to fulfill your obligations. You do not have to look for excessive amounts every month.
Learn to save
Mortgage contributions always make up a significant portion of family spending. After processing the loan for the necessary expenses, you will have a little more than half of your usual income. Begin to postpone the salary to the account and live on the balance for several months before the planned mortgage registration. So you can feel how your life will change after buying an apartment.
Learn to rank your expenses. Write on a sheet of paper all the planned expenses for the month in the format of “expenditure item – the planned amount.” Count the total. If the resulting figure is more than the balance of your salary after deducting the mortgage payment, rank your expenses by importance . Opposite the line with the most important, in your opinion, expenditure item, put the number “1”. Opposite the next most important waste is the number “2”. And so on to the end of the list. In the final version, leave only those expenses for which there is enough money (in order of priority of their importance). From the expenses that occupied the bottom lines in the “charts”, refuse.
Create emergency stock
When closing a mortgage faster than a schedule (or just making regular payments), do not forget to plan such expenses as saving money for a rainy day. You can not foresee all the details for 5-10 years ahead. The economic crisis, job loss, illness, unplanned financial expenses can prevent you from making mortgage payments on time.
To avoid being in debtors with a bank, create your own reserve fund . In case of unforeseen circumstances, you should have a separate account from 3 to 6 monthly mortgage payments. Such a “safety cushion” will allow you to safely pass a difficult period in your life, not to spoil relations with the bank and avoid trouble in the form of penalties, fines and difficult conversations with employees on debt collection.
Sign a contract with a reliable insurance company
When making a mortgage insurance of the apartment as a pledged item is required. Banks are also interested in mortgage borrowers insuring their lives and health. Should insure their lives or not, decides the borrower. However, for those who refuse to apply for insurance, the lending institution often raises the interest on the mortgage.
We advise you to insure and acquired property, and your life, and ability to work . Paying a mortgage extends over years. None of us knows what challenges he is preparing life. Fires, gas explosions, accidents at work or on roads have been canceled. Some citizens who have issued a mortgage, have already faced tragic situations. Payments received from insurance companies mitigated their losses (at least financially).
In the process of concluding a mortgage loan agreement, the bank offers borrowers insurance companies from their own list to choose from. If you consider the terms of another insurer to be more favorable, after a year you can terminate the contract with the old company and conclude with a new one. In this case you will need to notify the lender.
However, completely abandoning life and health insurance in the case of a long-term mortgage loan is not a reasonable financial savings, but disorder (which can be very expensive).