Get a mortgage… Basic aspects of “housewarming on credit”

A mortgage is a type of loan provided by a bank or other financial institution against real estate. Most often, a mortgage is used to purchase residential property, but it can also be used to refinance an existing home loan or build a home. you can The main characteristics of a mortgage include:

• amount of credit: The amount a borrower takes out as a loan to purchase or build real estate.
• credit term: The period during which the borrower agrees to repay the loan. Typically the mortgage term ranges from 5 to 30 years.
• interest rate, under which the borrower pays for the use of the loan. The interest rate can be fixed or variable.
• monthly payments: The amount the borrower must pay each month to repay the loan, including interest and principal.
• pledge: Real estate that serves as collateral for a mortgage loan and can be repossessed by the bank if the borrower defaults.
• insurance: Mortgage insurance, which can be mandatory or voluntary and is designed to protect the bank from loss if the borrower defaults.

In Russia, the mortgage lending program is widespread. It is supported by the government and various banks. Depending on the bank and the terms of the program, mortgage rates can be fixed or variable, loan terms can range from several years to decades, and the down payment can vary from 10% to 30% of the property value.

What questions should you ask yourself before taking out a mortgage?

Before as take out a mortgage, it is important to ask yourself a few key questions and carefully consider your options and needs. Here are some of them:

• Assess your financial capabilities and make sure your monthly mortgage payments will fit into your budget.
• Figure out how much you can save for a down payment and determine how much you’ll have to borrow for the rest of the property’s value.
• Decide how long you would like to take out the loan, taking into account your financial goals and capabilities.
• Consider which type of interest rate (fixed or variable) is most suitable for you and your financial situation.
• Check your credit score to make sure it is high enough to qualify for a mortgage loan.
• Calculate estimated monthly mortgage payments to see if they fit your financial capabilities.
• consider additional costs such as property taxes, home insurance, utilities, etc.
• think about your long-term plans and make sure that buying a property fits with your plans for the future.

The answers to these questions will help you make an informed decision about taking out a mortgage and choose the most suitable loan terms.

To begin with, it is convenient to estimate the total costs of a mortgage using the so-called “total loan payment” (Total Loan Payment, TLP). This includes all payments made on the loan for the life of the loan, including the loan amount, interest and all other fees.

Let’s look at an example. Suppose you have a mortgage loan for 1,000,000 rubles at 10% per annum for a period of 20 years. Your monthly payment will be approximately 9,650 rubles. As a result, the total amount you will pay over 20 years will be about 2,316,000 rubles, which includes both the loan amount and the interest paid.

However, this example is tentative as actual costs may vary depending on various factors. It is important to consider additional costs such as property insurance, property taxes, mortgage application fees and others.

When viewed as a percentage, total mortgage overpayments (that is, the difference between the total loan payments and the loan amount) can range from 20% to 100% or more, depending on the terms of the loan and the property chosen.

How to choose the most profitable mortgage loan?