Banks offer immensely many loan products. Thanks to this, their clients can choose the one that best suits their needs. Individual loans differ in interest rates, formalities or the amount we can borrow. But the most important difference between them is the goal for which we can spend the money. From what we spend money on, usually all other parameters are assigned, assigned to individual loans. This also depends on the formalities related to obtaining a loan, as well as the manner of its security.
One of the most popular loans offered by banks are mortgage loans. Because there are always large amounts of money here, banks before they give us credit, they will thoroughly analyze our finances and check how much money they can borrow and under what conditions. Of course, each bank has its own guidelines in this respect, as you can see from the tool : a mortgage calculator , which can be found on many loan websites.
Certainly, a mortgage is one of the cheapest on the market. This is primarily due to its security. It is a mortgage on real estate, and for the bank it is one of the best safeguards. Therefore, banks can afford to lower their margin, because the credit risk is low. However, in order to get such a cheap loan, we have to spend the money on specific goals.
Let’s see what we can use for a mortgage.
Buying a flat or a house – one of the most popular goals for which we allocate money from a mortgage. By means of funds obtained from the bank, we buy a ready apartment or house. In this case, the money is transferred by the bank in its entirety after the loan security has been established. We are talking about the purchase of real estate on both the primary and secondary market.
Building a house – a mortgage for the construction or completion of the construction of the house is granted to all those who want to build a new property alone (in the economic system) or with the help of a construction company. Usually, this is a loan paid in tranches, and before obtaining another one, we must settle (eg in the form of bills) earlier payments.
Purchase of a building plot – if in the future we think about building a house, and we do not have a building plot yet, we can purchase it with a mortgage loan. Money is paid out here once, once appropriate security is established.
Property renovation – every owner of a house or apartment knows that from time to time we need to carry out a larger or smaller renovation. If we do not have adequate resources, we can use a mortgage. Money can be paid out in tranches or once, after the collateral is established.
Other real estate goals – less often mortgages are allocated to
– purchase of a flat from a housing association,
– purchase of a share in real estate (eg in a tenement house),
– transforming the tenant cooperative tenancy into a flat into a cooperative ownership right to the flat,
– purchase of a company or municipal flat,
– transformation of a non-residential real estate into a residential one (adaptation of a basement or attic).
As you can see, mortgages are very widely used and we can use them for many purposes. However, they are always associated with the fact that their collateral is a mortgage, usually on the property of which our investment relates.