Currently, mortgage rates are very favorable, which is why many people are starting to buy real estate. Many people are not buying their first homes, as experts say real estate is still a good investment. Borrowing a home loan requires a lot more complex administration than borrowing a personal loan. Finding all the essential information about a home loan in one place can make it easier to buy a home.
Important information about home loan! own resources
Banks lend up to 80% of the market value of the property they want to buy, which means that the buyer must have 20% of their own funds. However, this figure may vary from credit institution to credit, and may range from 50% to 60% of turnover. Another important question is the value of the real estate collateral.
It is also possible to take out a home loan without self-sufficiency, but it is much more risky than doing it yourself. For example, it might be a good idea to include other real estate as collateral in the loan transaction in addition to the property you want to buy. The point is that the financial institution will lend up to 80% of the market value of the two properties. In this case, the banks are required to enter into the contract as the debtor or mortgagee of the other property owner.
Important information about home loan! Income
The magnitude of income
There are two important factors that determine the amount of a home loan you can borrow. One is the measure of self-sufficiency and the other is the amount of justifiable income. The latter is important because it determines the maximum loan repayment rate, which is governed by the JTM (Income-to-Pay-Back Ratio), which aims to protect the public from over-indebtedness. The longer the interest period of the loan, the higher the loan repayment ratio to the income. This is because loans with a fixed interest rate for a longer period have a lower interest rate risk, which can significantly increase your monthly payments. The installment payment may not be higher than 25% of the monthly net salary, the limit is below 400 thousand HUF, and in case of income above 30%. And for mortgages with a fixed repayment period of five to ten years, the limits are 35% and 40%, respectively. The 50 and 60% limits apply only to fixed mortgage loans for a minimum period of ten years or until the end of the term.
Type of Income
What kind of income is also important for a home loan. There are two types of income for creditworthiness:
- Primary income: Salary, entrepreneurial income, retirement pension, final disability pension. It is a general requirement for income that, as an employee, the primary income must reach the relevant minimum wage. As an entrepreneur, the NAV is based on the amount shown on the income certificate, which is the primary income. For KATA taxpayers, 60% of the revenue is verified income. For entrepreneurs, at least one complete financial year must be certified.
- Secondary income: GYES, GYED, family allowance, bonus, etc. What and to what extent the bank takes into account secondary income may not be uniform and may vary from institution to institution.
Income from abroad
Many foreign workers are applying for a home loan, which is not an obstacle under current regulations. There is also a chance to obtain a home loan with income from abroad. The basic requirement is the existence of a tax card and a Hungarian address card. What you should know is that working abroad has more documentation to apply for a home loan than working in Hungary.
Important information about home loan! What kind of real estate do the banks lend?
The real estate classification on the property page basically determines the creditworthiness of a property.
- Residential House: 80% of the market value may not exceed the amount of the loan taken out.
- Non-Residential Holiday Homes : These are creditable if they are at least comfortable, that is, they have constant heating, hot and cold water and a bathroom.
- Farm buildings taken out on agricultural land, or outbuildings and courtyards: It can be loaned, if a house appears close to the city center or almost integrated into the settlement, the financing is around 60%. If the house is located in a homely environment, the amount of credit offered by the banks will not exceed 40-50% of the market value.
Important information about home loan! Interest rates, risks
Financial institutions now offer home loans at very favorable interest rates, but moderate interest rate increases are expected in the coming years. The shorter the interest rate changes, the cheaper and riskier the loan. Importantly, a possible interest rate increase will result in a higher monthly installment.
Use the Nancy Drew home loan calculator to find the best home loan interest rate. When applying for a loan online, you can find out more quickly if you have approved a credit institution than personally. The system submits your claim directly to the bank’s pre-review or review department, so you can find out whether you’re eligible for the credit within a few hours.