We have prepared an article about mortgage and its application procedure, learn more below.
Most people want to have their own house, as having one is a lifetime investment. It also became an important life goal for us. A big dream for having a place to raise your own family.
However, the price for buying a house is not a small sum of money. Usually, the down payment for it will take a lot of time to save up. And, not to mention the installments that will come afterwards.
So to the rescue, mortgage will help you own that dream house.
Mortgage transactions usually take 45 days on average and one wrong mishap of information could slow you down. So, proper preparation is the key here.
Don’t worry, this article organizes a lot of mortgage information and provides detailed precautions. Consequently, this will help you understand different types of mortgages.
Wait Up, Do You Know What a Mortgage is?
Imagine it as a financial tool, a kind of debt instrument that’s backed by a specific property you own.
When you take out a mortgage, you agree to repay the borrowed amount through a series of predetermined payments. If you fail to make those payments, the lender has the right to claim your property as collateral.
Is that explanation clear enough? I’ll try to provide a better understanding.
Mortgages are sometimes referred to as “liens against property” or simply “claims on property“.
These terms help emphasize that the lender has a stake in the property until the mortgage is fully paid off. The lender in this case has a legal right to claim the property if you fail to repay the borrowed amount.
Now, it’s important to delve into the different types of mortgages.
If you’re considering applying for a mortgage, you’ll need to approach a bank. Each bank offers a range of mortgage products, each tailored to a specific group of individuals.
These products come with their own unique characteristics. That’s why it’s crucial to assess your current situation and carefully choose the most suitable mortgage for your needs.
For instance, a home loan typically spans over 20 years and offers flexible terms. Therefore, before you proceed with a mortgage application, it’s essential to conduct thorough research and gain a solid understanding of the different types available.
Here Are Some Common Types Of Mortgages
This particular point lies in the way of calculating interest rates.
It is because the benchmark interest rate fluctuates up and down. This is usually based on the average interest rate of the fixed reserve, plus the additional interest rate for each applicant’s different conditions.
In addition to that, market interest rates mobilizes this type of mortgage. So in this way, it is fairer and more transparent than the self-determined interest rates.
Consumers will also get interest rates close to the market.
This kind of mortgage is a way to make the value of the mortgage flexible.
The general mortgage cannot be of use after the repayment of the principal. But this mortgage converts the repaid principal into a circulating amount. This maybe used directly as funds.
The interest will be base on a daily calculation, and the non-accounting interest will not of use.
Thus, this increases the flexibility of fund utilization.
This is a method of using deposits to offset the principal of the mortgage and then reducing interest payments.
Having said that, the loan account in this type of mortgage linked to the current account. And the deduction of principal deducted from the current account.
Then the calculation of interest will occur.
This is suitable for people who have deposits and do not want to increase housing loans, but want to retain flexibility in the use of funds.
Declining Interest Rate Mortgage
This is a method of valuing interest rates from high to low.
With interest payments, interest rates slowly be lower. This is suitable for people with long-term and stable repayments.
At the same time, people who do not have a loan transfer situation can consider.
Fixed interest rate is its biggest feature.
Rate hike is not affecting it, and you can clearly grasp the monthly expenditure.
Strictly speaking, the fixed type is a one-stage mortgage.
Though most of them are stepped, that is, the fixed interest rate is also fixed in the first few periods, and then return to the index type mortgage.
This mortgage is suitable for double-paid families or people with fixed income.
Let’s Take A Look At The Application Procedure For A Mortgage
Follow these 7 straightforward steps to apply for a mortgage. So, we can buy that dream house stat.
Step 1: Choose the right bank
First, evaluate your own economic conditions and repayment ability. Most banks have mortgage products, and each product has its own advantages and disadvantages, so shop around and find out the most suitable mortgage plan. You can go to the “Free Consultation Platform” of the Banking Association, the “Real Estate Information Platform” of the Ministry of the Interior, and the website of 28Mortgage. If you make a first purchase, remember to find a bank that undertakes “Government First Purchase Preferential Loan”.
Step 2: Apply
After choosing a bank, you can fill out a mortgage application and provide relevant supporting documents, including: copy of the sales and purchase deed, proof of the lender’s financial strength, half-year salary transfer bank account details or withholding vouchers. Banks will use these materials to determine whether they have the ability to repay, and provide guarantors if the repayment ability is not sufficient enough.
Step 3: Property Valuation
After the application is submitted, the bank will evaluate the loan amount based on the location of the house, the age of the house, the size of the yard and the living function.
Factors Affecting Real Estate:
1). The vacancy rate is high, usually in suburbs or new towns.
2). The post ratio is high.
3). Illegal construction is too high, and the market price is falsely increased.
4). Adjacent to disgusting facilities, such as: temples, spiritual bone towers, cemeteries, funeral homes, high-voltage electric towers, directly facing elevated roads, roads, sun houses, tailless (dead) lanes, sensual places, radiation houses, haunted houses, etc.
Step 4: Bank Internal Audit
The bank will review the borrower’s basic conditions, repayment ability, occupation, mortgaged house information, etc. to determine whether to approve the payment, and at the same time determine the loan conditions (number, interest, grace period, loan life, etc.).
Step 5: Sign The Offer Letter To Secure The Mortgage
At this step, the bank has approved the mortgage and is ready to sign a mortgage loan contract. There are a lot of guarantees, but the signing is the loan contract for the next 30 years, so you must carefully read the rights and obligations of both parties and check the loan interest rate, the partial repayment in advance, and the related damages. After completing the guarantee, an account will be opened as an account for future appropriation and repayment.
Step 6: Mortgage Setting & Insurance
After signing the contract, the bank will set a mortgage right. The amount of the mortgage right is set to 1.2 times the loan amount. Plus the compulsory insurance for fire and earthquake insurance. The premium burden is paid by the borrower, once a year until the loan is paid off.
Step 7: Drawdown Your Mortgage
The final appropriation is to match the delivery time to take your mortgage. After that, as long as the money to be paid is deposited into the mortgage account on time, it will be automatically withheld.
Applying for mortgage is tough, I know. But, with proper preparation and research about it, we can get make that dream house come true.
Well, what do you think about the article?
Does the information about “What Is Mortgage And Its Application Procedure“ helps a bit for your house buying plan? If so, please comment down below. We would love to hear your thoughts about this.
I am Jamie Chu and I work as the SEO Manager at the LOCALSEO, which provides SEO service for businesses based in Hong Kong.