A friend called me today and complained that the bank was threatening eviction from the mortgage apartment. They demand to pay overdue payments, and she has not been able to find a job for six months after the reduction.
Every time I hear such complaints, I understand that most of the problems arise because of the frivolous approach and even the irresponsibility of the borrowers themselves. I myself — only for a mortgage, this is a great option to buy an apartment and live now, buy for the future or invest. A mortgage can and should be taken, but it is necessary to approach a mortgage loan wisely and responsibly.
During my time at the mortgage bank, I have conducted hundreds of transactions, seen hundreds of family financial stories and, most importantly, how these stories develop during the first few years. And now I can share with you the main rules of a secure mortgage, so that new housing is a joy, and a loan is not a burden.
So, here they are.
A mortgage will not be a yoke for your family if the mortgage payment does not become a significant part of your budget. That is, you will be able to pay off the loan monthly and this will not radically change your lifestyle and will not infringe on the interests of family members. Perhaps you will go to Europe not three, but two times, you will change the car in five years, not in three years, and so on — here the options need to be adjusted to the needs of the family. But you will have something to buy clothes, food, medicines, pay for your studies, and you will not have to make a painful choice between "sitting with friends in a cafe" and "buy a subway pass tomorrow."
When calculating a mortgage loan for 15-20 years, think about how many years you will be able to repay it. Your needs will change a lot over the next 20 years, and most likely your expenses will grow. Children are born, health problems may appear and the like. Forecast your income for at least 7-10 years and do not take into account bonuses and non-fixed bonuses. There may not be any, but there will be payments.
Yes, for at least a year. Because life is unpredictable. Decrees, dismissals, layoffs, serious illnesses and injuries. You should be confident in your future, and not shake like an aspen leaf in fear of change. A strategic financial reserve will help you to sit quietly with a child or survive difficult times. Or have some assets that you can sell quickly.
If you attract relatives to co-borrowers to increase the loan amount and hope for their participation in the payment, then think twice. The loss of a job, a change in life circumstances or a deterioration in the health of co-borrowers often entail a change of plans for financing your mortgage.
By law, it is mandatory to insure the apartment itself and the risks of loss of ownership, and life insurance is not required. Do not pay attention to this "not required", do not listen to those who say that this is an extra expense, and brags about how cool he saved. Be sure to insure your lives for the entire amount of the loan. Yes, insurance is not cheap and you have to pay for it every year. But it's worth it, believe me, when you and your family have a mortgage loan a third of their life. Apply for life insurance!
The desire to save on a reduced rate and a fall in the dollar exchange rate will turn into a double payment with its own growth. Choose the currency of the loan in which you have the main income.
Carefully choose the area where you are buying an apartment. Especially if it is not an investment purchase and you will live in it, travel from there to work, look for a kindergarten and a school nearby. Never choose an area based on the principle of "what did you have enough money for". You should be comfortable there! It has been verified that if you estimate the time on the way to work and back home as "it will go" or "tolerable", then it will become intolerable very soon. And you have already bought, repaired, and there is often not enough money and moral strength for new solutions. Discontent will accumulate, and the existing mortgage loan will be to blame.
You take out a mortgage for many years, and if you are a young family, then children will probably appear soon. Think about comfortable accommodation for all family members in advance. Because buying a larger apartment in 2-3 years is likely to cost a considerable amount. You will pay for the bank's services for issuing a new loan and the services of realtors. If you have not made early payments, you will find that you have been paying interest all this time and owe the bank exactly the amount you started with. And if the cost of your apartment has decreased, then you will have to pay the bank extra. As a result, often a rather big family lives in a small apartment and blames an unaffordable mortgage loan for everything.
If there are problems, do not wait for the thunder to strike. Ask the bank for a postponement or restructuring. Believe me, banks often meet halfway. It is beneficial for the bank that the borrower pays on time and preferably longer. Therefore, do not hesitate, ask, and it may very well be that you will be rewarded.
In case things go wrong. If a well-built plan turned out to be not so reliable, you need to understand how you will act and where to live.
I repeat: life is unpredictable. But these simple rules will ensure you a quiet life and a good credit history.
