It is no secret that when applying for a loan for a costly purpose, the applicants and their spouses are in a better position. This is especially true for a mortgage, for which the bank has quite restrictive requirements. What does it look like for applicants alone? We present the most important information you should know before applying for a single loan.
One of the most important goals, assumptions and dreams of many people after entering adulthood is buying their own "four angles". Some prefer to live in a single-family home, while others prefer to live in an apartment. Regardless of the type of property, buying your own living space is not cheap. On the contrary, it is one of the more expensive, if not the most expensive expenses. No wonder then that before you make this purchase, people live first in the family home or decide to rent.
However, when it is time to start looking for your own corner, it is worth answering a few questions - first, do we have sufficient savings for the purchase? If not, then the loan for young people may be the optimal choice. The latter solution is very popular. It allows you to purchase without the need to lay out the savings, which take years to accumulate. What is worth knowing about him before we decide to submit an application to the bank?
Single mortgage requirements to keep in mind
The housing loan sets specific requirements for the interested parties. The financing of such an expensive purchase is very risky for the bank. Therefore, it has specific tools to verify each applicant to determine the size of the so-called credit risk. Banking Law 1 speaks of this, which obliges banks to thoroughly check and verify clients in every process of granting any type of loan.
Unlike loan companies that follow a more or less restrictive approach, the bank always has to go through specific stages of consumer verification. Only after successful examination of the applicant has the right to grant him a loan on attractive and satisfactory terms. Apart from such obviousness as being an adult, there are systematized points to which every lender pays attention.
Singles' creditworthiness and mortgage
- Checking credit history at BIK - the basis for assessing credit risk is checking the history of repayment of existing liabilities, which can be considered e.g. some non-bank loans, as well as all financial products granted by banks ( cash, car, mortgage, consolidation loans, credit cards or revolving lines ). For this purpose, the bank downloads a report from the Credit Information Bureau. In it, he can check whether the liabilities have been repaid on time, without delays or debts.
- Verification of the amount and source of income and the type of employment contract - a consumer who takes out a mortgage for years must have some employment guaranteeing a smooth repayment of the liability. Therefore, another important step is to check the amount of your monthly income and to verify their source. It's no secret that the bank only accepts legal income, i.e. from an agreement between the employer and employee. In a privileged position they are employed on an indefinite employment contract. In a slightly worse situation, they are employed on a fixed-term contract, for specific work or for a mandate contract.
- Verification of the amount of monthly expenses and other regular financial obligations - the bank must know how much earnings the consumer spends on broadly understood needs. It is necessary to provide approximate monthly costs of living. It is also necessary to add expenses to bills, rent and possibly other liabilities. Those who earn enough and spend too little have a chance for the best loan conditions so that there is a sufficient "gap" in their earnings for repayment of the loan installment.
Single loan - is it possible? Facts and myths
There is no doubt that the requirements for a home loan are quite restrictive. People who want to start a family and are usually already married decide to buy their own "four corners". This puts them in a preferential position due to the fact that the bank takes into account their joint credit standing. That is why the phenomenon of taking out a mortgage by married couples is so common that singles may wonder whether a single loan is right. The answer is: By all means!
The loan for singles has a higher risk. Well, in the event of complications with repayment, there is no other person who could continue paying the next installments. In the marriage. both partners have two sources of income, thanks to which one secures the other. Consequently, in the case of singles, the bank may increase additional liability costs or suggest that you take out unemployment insurance. This is of course only security in the event of unforeseen repayment problems. Therefore, the opinion that singles have no chance for credit - is a myth!
Opinions saying that a single borrower is a problem for a bank are not entirely true either. The single's advantage is mainly flexibility. It is important especially at the beginning of the career, because the earnings of singles can systematically increase. They might as well be promoted, find a better form of employment, or change their employer to pay more generous pay. Moreover, it is not excluded that over time a lone applicant will enter into a permanent relationship with the other person and the expenses will be spread between them. And this will provide him with even more exemplary financial liquidity.
DTI - everything you need to know about it
The above-mentioned relationship between income and non-credit liabilities has its official name used by the Polish Financial Supervision Authority 2. This is called DTI indicator. Its name comes from the abbreviation of English words "debt to income". In this way, the cited authority wants to oblige banks not to grant loans to persons with too little difference between income and how much of it is spent on regular obligations. It is currently recommended that monthly commitments not constitute 40% of the consumer's income.
What is worth remembering when applying for a loan for an apartment?
The customer's creditworthiness is affected not only by the credit history of the applicant in BIK or the amount of income achieved. There are two other important aspects.
- Having a selected apartment - if you want to get financing from a bank for a mortgage, it is necessary to keep an eye on a specific offer. Later, the bank will make its own assessment of the apartment with the help of an appraiser and will base its findings on the loan parameters. Therefore, it is worth making a thorough examination of the offers before submitting the application. Importantly, you need to contact your real estate seller to make sure it is current, completed / to be completed / under construction, etc.
- Own contribution - the bank will not grant a mortgage without the consumer making his own contribution. It is a payment of a certain percentage of the value of the property on which we obtain financing. Usually the range of own contribution ranges between 10% and 30%. The rules related to this procedure depend on the specific bank where the consumer applies for credit.
Loan for singles - how big can you count on?
The amount of the mortgage is of course directly dependent on the result of the consumer verification. It is therefore impossible to define a uniform framework and "range" that you can count on when applying for cash. The amount of monthly earnings and current expenses and obligations is not everything. The aforementioned value of the flat after the appraisal by a bank appraiser also has significance for the loan amount. Therefore, the correlation between creditworthiness (with an emphasis on earnings and expenses) and the value of the apartment is important.
What's more, the loan amount alone is not everything. The single should pay attention to the amount of the monthly installment proposed by the bank. In this case, it is always worth negotiating the amount of the stake, and choose the most suitable installment amount. They can be either fixed or decreasing. The latter solution is briefly the repayment of the interest part (additional costs on which the bank earns). Then - the capital part (we return the next part of the amount we borrowed). The amount and form of repayment of installments has a direct impact on the applicant's finances during the following months and years of loan repayment. That is why it is such an important and important issue.
To sum up - credit for singles is a solution that is most within reach of many people living alone. However, you should remember that you should start applying only if you already have a well-established professional position.