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Choose not only a real estate but also a mortgage

Unthinking debt can cause long-term financial problems for the family as all loans and borrowings need to be properly repaid, otherwise there is a risk of execution. A well-chosen mortgage is a reasonable debt and a sound financial decision.

Whilst choosing a flat or a house is devoted to the majority of people with enough time and has relatively clear requirements for availability, equipment or size, it is not so often the case for a mortgage. That's not right. The choice of the mortgage loan takes a lot of time, choosing the ideal variant in relation to the family financial situation and the current offer on the market is possible to save ten thousand crowns during the repayment of the mortgage. Since April, there has been a tightening of the conditions for mortgages, so it is possible to save a real estate adviser to finance the purchase of real estate even more in the past months. "Money matters should be consulted with a professional consultant before the actual selection of the real estate to determine the unequivocally unbeatable price of the property due to the financial possibilities of the family," adds Emil Broz (FinFocus).

Not only your own living, but also investment

Mortgage loan can be used not only to solve your own housing situation, but also to acquire an investment property. Buying additional properties for long-term lease or for later sale with profits is a popular investment decision. Indebtedness due to high-quality property, which corresponds to family financial options, is the right financial step. Acquisition of own real estate can also be understood as a financial retirement pension, with the role of self-financing in retirement age significantly increasing in the future. In order to minimize monthly expenses, it is advisable to live in a retirement home, which has been redeemed even in working age. Rental housing is especially suitable for young people who move more often to work. For pensioners, however, no longer. "Regular retirement income is then a big financial bonus, with the need for a higher amount of money to re-sell the second property," adds Emil Broz.

Why do you need your own finances?

According to the CNB's recommendations, banks should not provide mortgage loans in excess of 90% of property value since April, with only 15% of mortgages being provided by banks over 80% of the value of the property. Even though mortgage lending conditions have been tightened since October 2016 (a maximum of 95% of mortgages could be provided) and now as of April 2017 and interest rates are now slightly rising, the conditions for drawing on the mortgage loan are still favorable. But with a mortgage, it's good to plan ahead. It is not enough to have other financial resources up to 100% of the value of the property, but it is also necessary to count with other expenses related to the acquisition of real estate, such as real estate commissions or payment of tax on the acquisition of immovable property.

Do not see the future just pink

Some mortgage applicants are overestimating their financial situation because they expect rapid wage growth in the coming years and do not have their spending on a long-term basis. Eventually, they manage to meet the bank's requirements, but they may still have problems with repayment. Financially, it can be very stagnant for several months, but it is very difficult for a long time. It is therefore advisable to always have a sufficient margin to ensure that a potential income drop in some months, for example due to temporary unemployment or a reduction in income from employment or self-employment, does not pose problems with mortgage repayment. "Before managing a mortgage, it is good to have family finances under control and to know in detail not only the revenue but also the structure of the expenses," adds Emil Brož.

Source: tz, edited editorially

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