What are the basic, healthy parameters of such a genuine non-bank mortgage, and what should you pay particular attention to before negotiating and during the repayment itself ?!

By the term genuine I mean a mortgage that is provided by a non-banking firm that is able to really ignore the bad condition of the applicant’s register, which can then use the money for anything. And if the applicant is also an entrepreneur who uses money from the mortgage mainly for business, it is a business mortgage, it can also be provided without proof of income, overall examination of the creditworthiness and increased demands on it.

This is a mortgage, where he provided deals primarily with property serving as collateral and its value, condition. And if these parameters of the property are in order and the required amount of the mortgage does not exceed the upper limit determined by the provider usually 50-70% of the value of the collateral, at a speed of lending the applicant money. Ideally under fair conditions.

Healthy parameters of non-bank mortgage


When we mentioned the property to pledge against non-bank mortgage. The LTV (loan to value) can be expected with a maximum amount equal to 70% of the value of the property, which goes against mortgage pledge. The client’s ideas about financing 80-100% of the price of the property are thus unrealizable, non-bankable way. Of course, if the client succeeds in pushing through the bank, which we often try and succeed despite certain records in the register, it is still possible to talk about “100% – 100%” mortgage. Here, much depends on the appraisal of the property, the applicant itself, his intention.

And what else is important in making decisions, apart from the main two interest rate and maturity indicators, which we will discuss in the next paragraph below?

Definitely never pay anything in advance before paying the mortgage, because there is no reason to do so and there is a high risk that you will lose this money and you will not get the promised product anyway. The only fee in advance that is fine and you can normally see it with banks is a payment of approximately 4 to 6 thousand USD, depending on the type of estimated property: apartment, house and other certified appraiser for making a property estimate. However, only bank houses require this fee in advance, and in some cases this money is also paid by the bank as part of the “Free Estimate” action. I do not see this for non-banking firms and if they send their appraiser, the cost is usually included to the “negotiation fee”.

In the case of a non-bank mortgage


The entry fee is usually paid by a “closing fee – negotiating a contract”. This includes, for example, legal services, time, administrative, travel expenses spent on a successful and smooth negotiation, At the entrance it is meant that the provided mortgage is increased by these costs, or the costs are deducted from its total amount and the applicant is paid the mortgage by these costs, which is not lowered in advance. up to 5% of the total amount of the loan, even if the mortgage lender, whether the intermediary or the person authorized by the provider – usually his employee – has to contact, act and circulate a larger number of creditors, for example , or to be negotiated other “redundant handlers”.

It is equally important to have a promise, a guarantee from the provider that the interest rate will not change, ideally throughout the mortgage maturity period, at least at the agreed fixation period. This is to prevent the mortgage interest rate you take for advantageous interest from being unexpectedly changed during the repayment. This would result in a higher monthly payment, which you may not be able to “tighten” in terms of monthly income and expenditure. Even if there is a late payment.

And this is another essential thing that needs to be clearly specified with a non-banking provider. What if my employer pushes my payday for the installment day? What if I get some unexpected, excessive and acute costs some month more than a mortgage payment – even if it should always be in the first place in the “payment priorities” and will not be on time to repay it? This could mean late payment or non-payment of invoices by customers, unexpected operating expenses, or total failure, so it is good to ask questions like this.

Does he understand this provider?


In these situations, does the borrower not want to “sink at the first good opportunity”? For example, is it possible to agree on a “restructuring” of the commitment, ie a temporary reduction in the monthly payment? Or what sanction can a debtor expect in such cases? Is it an acceptable one-time fine of thousands of dollars with an effort to get back to proper repayment, or a fine in tens of percent of the loan with the threat of early redemption and an increase to enormous amounts? Will the interest rate stay the same or will it increase how much? You probably guess which approach is held by a fair non-bank provider, and which provider is trying to “shake out” the debtor as much money as possible. Which of the barricades each one stands on.

It is also essential that the mortgage can be paid for free at any time during the maturity period or reduced on the balance in the form of an exceptional repayment. This is in case you manage to earn some money over and above the monthly budget, which you may not have just how to make better use of it, and with them “exceptionally repay” (redeem) part of the mortgage.

Or if you succeed in the market during to find, approve and negotiate a more advantageous and secure mortgage product, ideally with a lower interest rate and repayment. And you will want to “transfer the existing mortgage” with this product. This is always possible, mostly free of charge or at most 1% of the amount to be refunded.

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