You decided to buy your dream apartment. You’ve chosen a bank that will help make your dream come true. You went through a tedious loan process and finally you have lived to this important moment – the signing of the loan agreement.
However, before you place your signature on the document, which will seal the efforts for your own “M”, carefully analyze all the entries, so that the fulfilled dream of your cozy nest does not turn out to be a long-term nightmare.
A loan agreement is one of the few agreements that make us depend on being or not being, but rather living or not living – in our own apartment, away from parents or other roommates. This is an important document that requires us to thoroughly analyze and verify. It happens that loan agreements contain not very transparent provisions which, if neglected, may mean trouble in the future.
Data provided incorrectly
Before signing the loan agreement, we carefully check the correctness of the data it contains – not just personal information. Of course, the most important thing is to enter in the document the data of both parties to the contract. In our case, it will be: name and surname, place of residence, ID number (or other document), as well as PESEL number. Let’s also pay attention to the date the contract was drawn up and the place where it was signed. The date will help us calculate the deadlines contained in the contract and meet all obligations on time.
The loan agreement should pay attention to the provisions regarding the conditions that must be met when repayment of the loan. The Bank obliges us to inform about a change in our personal data (e.g. surname), address of residence. Many banks include in the agreement a requirement to inform the bank about a change in the material situation, including a change of workplace
We will also pay attention to the loan amounts specified in the contract, especially in the case of foreign currency loans. If we take out a denominated loan (the appropriate amount of currency is entered in the contract), then the amount paid in PLN will be equivalent to the amount from the contract multiplied by the purchase rate on the day of payment. – This means that if the exchange rate has fallen since the contract was drawn up, the funds released will be lower than the amount requested. In the case of a loan indexed in the loan agreement, we have the amount in PLN entered and it will be converted into the appropriate amount of currency only at the time of payment. In this case, we have a guarantee that the investment will be financed in full, and regardless of the exchange rate, the bank will launch an appropriate, sufficient loan amount.
The moment of signing the contract is not synonymous with receiving cash and buying your dream apartment. In order for our loan to be activated, we must meet several more conditions. In the case of purchasing real estate on the secondary market, a notarial deed of purchase and sale should be presented and a mortgage application should be submitted to the bank. In turn, when purchasing real estate on the primary market, we must provide a document called the assignment of construction input. However, the terms are always set by the bank and they may differ from one institution to another. We should, therefore, receive a list of conditions from our lender. – The conditions to be met before the loan is launched vary depending on the bank and the type of transaction. However, we must always present a notarial deed and a motion to the Court for a mortgage entry on the secondary market. In addition, the bank will require a property insurance policy. Due to the specifics of the entire transaction on the primary market, we need to present all these documents only after the loan has been launched and the developer has completed the construction.
Other conditions in the loan agreement
The loan agreement may be structured in such a way that the bank may change some of the provisions without the customer’s consent. Most often it concerns the change in interest rate resulting from the change in the level of reference rates. Often, without our consent, the bank may change the loan regulations or the fees for early repayment of the loan.
The agreement contains a lot of information about installments, payment dates, commissions and broadly understood fees. We must know which of them are mandatory and which we must watch out for. The so-called. handling fees, i.e. the commission for examining the application, for the preparation of the contract or for the annex to the contract are not standard in every bank and it is worth considering whether after adding all these fees, the loan chosen by us will actually be the most attractive.
Signing the contract and its subsequent upkeep is not easy and obvious. We have to fulfill a number of obligations to be able to live peacefully in our own “M”. First of all, we should inform the bank about any changes in our property situation – change in marital status, birth of a child, change in salary or work, and other random events. If the bank is not informed of these changes, we may be exposed to terminating the loan agreement. Secondly, the bank may order us to evaluate the property that will be used as collateral for the loan. The valuation should be made before signing the loan agreement, and sometimes also during it. If the value of the property drops significantly, the bank may also demand additional collateral or in the event of termination terminate our contract. Thirdly, in order to make another financial liability during the mortgage repayment period, we must obtain the consent of the bank. In some cases, consent is not required, but the first bank should be informed of the fact of a new loan. Fourthly, in the case of some banks, the borrower is required to repay the loan from a personal account kept at the bank in which we took out the loan. Fifth, of course, we have an obligation to pay the installments on time. If we are late with the repayment, the bank will charge us with a penalty interest rate much higher than the nominal interest rate on the loan.
However, the obligations are always set by the bank where we take out the loan, which is why they may differ. We should establish a list of our commitments when signing the loan agreement.
Cross-selling – what is that?
Cross-selling means selling a package of services or products at a lower price. Unfortunately, it often turns out that A “set” costs more than its individual elements. That is why it is worth checking all costs and usefulness of additional services offered by the bank. – If, for opening an account in a given bank, we get the opportunity to reduce the loan margin, we will carefully analyze the costs, because the reduction may be insignificant and the cost of maintaining the account quite high. In addition, the bank may also offer us a credit card in exchange for lowering margins. This transaction can be beneficial, provided that the required number of monthly transactions made on the card will be possible for us to complete. However, the cross-selling package with a mortgage is usually insurance. In many banks it can be obligatory. It is mainly about job loss insurance, life insurance and real estate insurance. A package bought from the same bank can also have a positive impact on the loan margin.