Purchase of land – construction plot for a mortgage

If you dream about your own home, you should start by buying a plot. If we do not have our own funds for it, we can try to finance it with a mortgage. How to do it?

Loan for a construction plot

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Loans for a construction plot do not differ much from a housing loan. A person applying for such a loan will have to meet similar conditions and requirements as in the case of a standard loan. Having a high credit rating, you can immediately take out a loan that will cover the costs of buying a plot and building a house, of course with the necessary 20% own contribution. The bank’s requirement will be to provide some collateral for loan repayment, which is why the loan for a plot will take the form of a mortgage.

A mortgage is a right limited by property law, which is due to the mortgage creditor – in other words to the bank. That is why it is a good security for the bank, because if the debtor does not pay the loan, the bank can enforce liabilities from the property.

Own contribution

The current recommendation of the Polish Financial Supervision Authority indicates that persons applying for a mortgage for the purchase of a construction plot are required to pay at least 20% of their own contribution. You can apply for a lower amount (10%), but in this case the remaining 10% must be secured by special insurance for missing own contributions. The higher the customer’s own deposit, the more favorable the loan is to the bank and can offer attractive loan terms.

Necessary documents for the loan application

Necessary documents for the loan application

  • Plot status, which determines whether it is a construction, agricultural, recreational plot, etc.
  • decision on building and land development conditions or a certificate of intended use in the current spatial development plan
  • an excerpt and an excerpt from the land register, which can be obtained at the City or Commune Office
  • notarial deed confirming the seller’s property right
  • excerpt from the land and mortgage register
  • if the plot has been separated from another, a subdivision decision should be provided
  • preliminary purchase agreement and a copy of the cadastral map
  • a document confirming own contribution

Other important personal and financial documents that the bank requires 

Other important personal and financial documents that the bank requires 

  • complete application for a mortgage with all attachments
  • ID card and second document confirming the identity of the applicant or applicants
  • shortened copy of the marriage certificate (in the case when a marriage is applying for a loan with a statutory property community)
  • employment and income certificate
  • full bank statement on which your salary influences
  • tax return for the previous year

If you run your own business or receive a pension, the bank will ask you for additional documents regarding your income, legal status or not being in arrears with fees and contributions. After completing all formalities, you should wait for the funds to be released, but usually this process does not take more than a month.

When will I receive the full loan amount? Company overview

We have already got used to the fact that most loan companies grant free payday loans and if we have not used the services of a specific company yet, we can count on all costs being written off. Although very beneficial, however, such loans are subject to certain restrictions, especially when it comes to the amount of the loan granted, and a new customer can rarely count on a full amount loan. Interestingly, the policy of gradually increasing the loan applies not only to payday loans, but also installment loans. The assumption is that in order to borrow really high amounts, you should focus on longer cooperation with one non-bank institution.

Why don’t I get the full amount in my first loan?

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A new customer is unknown to the loan company. It has not yet been tested in practice, and the lending institution cannot carry out a full projection of debt repayment and risk analysis – it simply does not have enough data. Not wanting to get rid of potential customers, but at the same time wanting to reduce potential losses, he decides to grant a lower, “test” amount. In return, it offers a free payday loan, the main purpose of which is to familiarize the client with loans, get him to return and take another paid loan. On the other hand, compensation for the costs incurred will be the option of borrowing a larger amount.

However, company policy varies. Some institutions will borrow the full amount the first time, others the second time, and some of them – only the fifth or sixth time!

Where can I borrow the full amount already in the first loan?

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The full amount of the loan with a payday loan is extremely rare, actually the only payday loan company that shows full confidence in its customers is Fast Cash, where you can borrow up to 6,000 USD and give back within 60 days. The reward for regular customers is not a higher loan amount but a longer repayment period of 65 days.

Much more often the full amount in the first loan relates to installment loans, which, unfortunately, are always paid (possibly, some companies may write off costs on the first installment). It should be remembered, however, that such high loan amounts are not granted simply because they are available. The applicant’s creditworthiness is of utmost importance and the final loan amount depends on it.

Non-payment of the loan cancels the chance for another one

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This obviously applies to a situation in which the borrower would like to take another loan in the same company. It is not forbidden to apply to another non-bank institution and there is a probability that the loan will be granted there. Loans without BIK or loans for indebted people have been operating on the market for a long time, which you can count on those in arrears with repayment in other companies. It may not be a reasonable solution, but often borrowers see it as the only way out of the situation.

Most loan companies, however, assume that one unpaid loan causes problems with paying off another. Failure to grant another loan therefore protects against the debt spiral and supports the borrower’s responsible attitude. On the other hand, non-bank institutions limit the risk of losing more cash.

Be unfaithful to your bank and take advantage of it

The range of banks and other financial players is constantly increasing and for those who need a certain service, it is no longer just the big commercial banks that are the alternatives.

In fact, it is possible to opt out of the major banks altogether, and there are great advantages in widening the perspective somewhat.

There are no exact figures on how many exposures

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Salary accounts, mortgages or savings accounts, which the average customer has spread to different banks, but recent data from the Swedish Quality Index indicates that about half of the private customers in Sweden have the involvement of at least two financial players. Thus, at least 50% of Swedes are unfaithful to the concept of putting all commitments in a bank.

Why spread the engagement?

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Not all banks can be the best at everything, and why settle for a less good service? One bank may offer the most favorable mortgage rates for your finances and housing situation, while another may offer the highest savings rates. One player can offer you the best credit card for you, while another provides the lowest share brokerage prices. By putting together your own bouquet of services from different players, you can save both interest and fees, get more return on your savings and investments and get a more tailor-made payment solution on credit.

But, is it not a little more complicated to keep order on many different counterparties instead of having the entire economy pooled with one player? It may be so, but what you can probably save by weight is the extra trouble.

A new bank for each service?

A new bank for each service?

The arguments above are in principle universally valid. The majority can, by spreading loans and credits, savings and investments between various banks and other financial players, get a significantly cheaper and also more tailored collection of financial services. However, this may not mean that you must / should choose a new entrant for each service. However, for some of the most common commitments, you should carefully consider whether or not to opt out of major banks. It is about savings in savings account, investments in shares and funds as well as bank loans.

  • You probably know that the big banks have long since offered no interest whatsoever on accounts with free withdrawals. However, many niche banks offer interest rates of up to 1%. Thus, there is no reason to have savings at the major banks.
  • When it comes to investments in securities such as equities and mutual funds, the big banks leave much to be desired and it is wise to choose a more specialized online broker. Fees are lower and the range of investment opportunities is greater.
  • If you need to take out a private loan, the big bank can be the natural choice, although only if you need to borrow more than SEK 20,000 and you have a relatively good economy. If you need to borrow less than that and / or have a slightly worse economy, you can not at all apply for a loan from the bank.