5 Documents You Need When Applying for a Home Loan

Few people succeed in saving up for an apartment from scratch, and this happens not only in developing countries. This is what home loan is for. However, whether it is worth taking a mortgage on housing is still worth figuring out. After all, this is a loan not for two years, but for many years. It is difficult to predict what may happen during this time, it will also be difficult to predict the possibility of repaying this loan in the future. In this article, we will try to understand this issue.

Required Documents

First, let’s find out what documents are needed to get a housing loan. 

Standard package of documents for obtaining a housing loan:

1. Passport of a citizen and other documents confirming the identity and marital status;

2. Personal income tax certificate for the last two years (for employees) or business reporting and personal tax returns for the last two years (for those who run their own business);

3. Certificate of ownership of real estate and documentary evidence of other assets;

4. Bank statement for the last 6 months;

5. Information about existing financial obligations.

Naturally, the validity of the passport should not end in a month or two. This will complicate the documentation in the bank.

If your passport expires soon, we advise you to take a photo as soon as possible (even at home, you can also edit the photo in Photoshop) or find the nearest place for pics. And then run faster to get a new passport.

Documents such as the following are often required:

• Confirmation of the address (if there is no such document, then an extract on payment of bills is required);

• Some banks do not require account statements, but if they do, they will notify you of this. Usually they look at current accounts not in the bank where you are going to take a loan, as well as an extract from foreign accounts, also from other banks.

Important! If you are a foreigner, then all documents must be translated into English, as well as certified by a lawyer.

Is it Worth Taking Out a Home Loan

Mortgage problems are still plaguing many families. Of course, everyone makes their own decision. But there are some general tips when you should not take out a home loan.

• Little income

As a rule, banks issue a home loan in the amount of no more than 80% of the cost of the apartment, i.e. you need to accumulate 20% on your own. Use the mortgage calculator to calculate the maximum loan amount you can get based on your income. If there is not enough for an apartment, then you will have to save more.

• If you almost have enough money to buy a house

In this case, it is better to take a regular, consumer loan. Although the rate on it is higher than on a mortgage, obtaining a home loan will require additional costs for bank services, apartment appraisal, insurance, and state duties.

• If you have another loan

Firstly, you will have to tell the bank about this. Payments on this loan will be deducted from your income, on the basis of which a decision is made on the size of the mortgage loan.

Secondly, calculate for yourself what share of income you will have to pay on two loans and whether you are ready to hold out in austerity for a year or two, or even more.

• Upcoming major changes

Change of job or the threat of losing it, divorce, the birth of a child. Changes may require either an increase in costs or a transition to savings. It is better to wait for a calmer situation.

• Economic crisis

As a rule, accompanied by a sharp increase in inflation, banks increase interest on loans (for example, at the end of 2014-2015). At this time, it is better not to take a home loan, but to wait until the peak of the crisis passes and interest rates fall.

Important! If you rent a house and the amount of the home loan payment is comparable to the rent or slightly higher, then in this case it is also more profitable to take a loan and pay for your own apartment.

Pros and Cons of Home Loan

Let’s take a look at the pros and cons of home loans.

Pros:

• You can immediately buy your own home, and not save up for it for years;

• A home loan can be issued for a long period, which allows you to reduce the amount of the monthly payment to the most comfortable;

• Special lending programs and promotions that allow you to save;

• Investing and protecting against inflation.

Cons:

• You need to accumulate the amount for the initial payment;

• Overpayment for housing purchased in a mortgage at the expense of interest on the loan;

• Restriction on the use of the apartment – until the loan is repaid, the borrower has no right to redevelop, sell or donate his property without the permission of the bank;

• Mortgages require financial discipline and organization.

We have analyzed the pros and cons of a home loan. Taking out a home loan is entirely up to you. We only provide facts.