Ready to take out a mortgage? Ask yourself 11 questions to check

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

The answers will help you make an informed decision, calculate everything and ease the loan burden.

For many, mortgages are practically the only way to acquire their own housing. True, her reputation is not very favorable. People are afraid that the bank will take away the apartment or, due to some problems, they will have to switch to bread and water in order to make payments.

This can really happen to those who decide on a loan quickly and thoughtlessly, without preparation. Here are 11 pondering questions to help you figure out how successful such a financial project will be for you.

1. How official and stable is your income?

The first of these parameters is important for the approval of the loan and the amount that the bank will be willing to provide you. Obviously, if you have a large white salary, you can apply for a larger loan and will be more willing to issue it. However, if you receive money in an envelope, this does not mean that you will be denied a mortgage. It's just that the conditions are usually less favorable. For example, a bank can increase the interest rate.

However, income stability is even more important. Mortgage is a long-term project. It will drag on for at least years, or even decades. All this time, so that there are no problems, you have to give a certain amount to the bank every month. And it's good to know now if you can do it. To understand, you have to ask yourself a lot of clarifying questions, for example:

• How valuable are you? If tomorrow there are redundancies in the company, how will you be fired?
• Is your company engaged in an important and demanded business? Is it stable or on the brink of liquidation? Profitable or about to declare bankruptcy?
• If you lose your job, how quickly can you find a new one?
• How many sources of income do you have? If one goes missing, will there be enough others to support a living and a mortgage?
• If you receive money in an envelope, what is the risk that the employer will one day pay less or stop paying at all?

Ideal if you work for a stable company where you are adored and well paid. At the same time, you have an excellent reputation, so in case of problems in the old place, you will be quickly taken to a new one. You also have several sources of income, and more than one person works in the family.

If you find a weak point somewhere, this is not a reason to despair. Rather, it gives you the opportunity to calculate risks ahead of time and lay down straws. Even if you are a freelance seasonal worker whose pocket is empty or thick, all is not lost. It just takes a little more effort to take care of the financially unsuccessful months.

However, if you have a very irregular income and you run the risk of being unemployed at any time, it is better to wait with a mortgage for now.

2. How much money do you need per month for living?

Better to calculate the budget for several scenarios: from basic survival to quite bearable existence. You will need the amounts to understand which monthly payment is right for you. So that the mortgage does not turn into torture, after paying the loan installment, you should have a portion of your salary, which will be enough for a comfortable life.

Sometimes people are in a hurry and choose too high a monthly payment. In a sense, this is logical: the term of the mortgage is getting shorter, as is the overpayment. But what kind of life will it be if you have to constantly barely make ends meet? You can tighten the belt for a year, not 10.

The amount you need to live is not overkill. You will have to record expenses for some time in order to understand how things are in reality. Moreover, this should be a long observation period. Because costs can vary significantly from month to month. For example, in April you have to pay taxes, in November - car insurance, in winter, because of heating, a communal apartment is more expensive than in summer. Without understanding the structure of your spending, you are not very ready for a mortgage.

The hypothesis of a relatively comfortable payment size can always be tested. Just set aside that amount and evaluate how you feel without it. Increase your down payment at the same time.

3. Do you have a down payment?

Usually banks want you to pay at least 10–20% of the cost of an apartment. Accordingly, the amount that you have depends on what kind of living space you can apply for. For example, if you have 200 thousand, you will choose from apartments worth up to 2 million, if 500 - up to 5 million.

But it's not just a matter of choice. The more money you can deposit, the less you will have to borrow from the bank. And this logically affects the amount of overpayment and the term of the loan. So the more money you have, the higher your mortgage readiness.

4. What apartment do you need?

The mortgage is associated with certain restrictions that will last for several years. It’s not easy anyway, but it will get even harder if you quickly stop liking the apartment. Therefore, the search must be approached with all responsibility.

The best option is to make a list of criteria that the future housing must meet. And then choose from them those in respect of which you are not ready to compromise. As a result, you will receive a checklist that will help you make the right choice.

5. What kind of apartment can you afford?

It is good if desires coincide with reality, but this is not always the case. And the matter is not at all about the cost - it is logical that you are looking at housing that is affordable. But there are also criteria that matter.

For example, a large footage is not only an advantage, but also a disadvantage. Payments for housing maintenance and heating are calculated per square meter. And this can increase the amount quite dramatically. Are you ready to pay 10 thousand rubles for housing and communal services from September to May for an apartment of 80 square meters and can you afford it - the question is. It is possible that it is worth taking a closer look at housing a little less.

Separately, it is worth talking about the maintenance of housing, depending on its "elite". Buying an apartment is half the battle. But monthly fees for cleaning, concierge and the like can vary significantly from house to house. All this must be taken into account so as not to face unexpected costs that will force you to switch to austerity.

6. How much money will you need to renovate your home and when?

You can choose an apartment in good condition in the secondary market and not think about renovation until you pay off the mortgage. But, for example, in a new building with bare walls, this will no longer work. This means that you will need additional money to enter.

A good option is to save up the required amount for repairs or reduce the down payment at the expense of this money. The bad thing is to take another loan. It is better to pay the mortgage a little longer than not cope with two loans at once.

7. Do you have a reserve fund?

You may lose your job and it will take time to find the next one. However, the bank will expect payments from you on a monthly basis. In case of such a development of events and other force majeure, it is good to have an inviolable stash.

Ideally, this should be an amount that is enough for three months of payments and a normal life. In practice, it is worth having at least two payments in stock, plus money for food and utilities, in order to change over. This is the minimum set; without it, getting into a mortgage is extremely risky.

8. Are you planning to have children?

Not only sad, but also joyful events make their own adjustments to the mortgage plan. Having children increases costs and reduces income due to parental leave for one of the parents. So if you plan on replenishing in the coming years, this should be considered.

There is also good news: now the maternity capital is already in place for the first child. They can pay off the mortgage.

nine. What bonuses and benefits from the state can you claim?

In some cases, it is possible to ease the mortgage burden through government support. For example, every Russian has the right to take advantage of the tax deduction for the purchase of an apartment and interest on a home loan. The maximum amount that can be returned is 260 and 390 thousand, respectively.

But that's not all. There is also a reduced rate and payments for repayment of mortgages for large families, the "Young Family" program and other amenities. Find out about your options before taking out a loan.

10. Do you have a chance to repay the loan ahead of schedule?

This is something worth striving for: early repayment of the loan will save on overpayments. You can count on winning the lottery, but the surest way to do this is to increase your income.

Increasing earnings is not a matter of chance, but the result of hard work. Therefore, it's time to think about what you are doing for this: working on a personal brand, studying, pumping skills. If you draw up a strategy in advance, nothing bad will happen, but good can easily.

11. Where do you see yourself in five years?

If the previous questions dealt with finance in one way or another, now is the time to add some philosophical inventions. At the beginning, we already said that a mortgage is a long-term project. Of course, theoretically, an apartment can be sold at any time on bail.

But why not ask yourself a simple question now, who and where do you want to be in five years. Do you see yourself in this city, in this apartment, together with the person with whom you are getting involved in a loan?

The mortgage imposes its own obligations. For example, you might stay in a job you hate because you have a debt, or put up with something else that makes you unhappy. Therefore, it is worth thinking hard about whether you really want to start this epic. If not, you are not ready for a mortgage. But if the loan takes you one step closer to your dream, you will succeed.