Buying a home, especially if it is the first real estate buying experience, is a responsible and purposeful process. It often goes hand in hand with taking out a loan and can even seem scary because it involves important decisions, responsibility and a lot of money. The advice of Luminor Bank’s home lending expert Kaspars Sausās can help you put this whole process “in order” to better understand the main steps to be taken from the idea of buying a residence to signing a loan and living in your new home.
Set clear goals and selection criteria
The first thing to do when starting the journey to a new home is to set clear goals. Housing in the city or outside it, the number of rooms and other details – the more clearly you know which apartment or house you want to live in, the easier it will be to make the right choice. If you plan to buy a newly built private house or an apartment in a new project, open house days organized by real estate developers can be useful – it’s a good opportunity to study some specific projects and see the housing layout in real life.
When buying a home, you should take into account that you may not live in it for the rest of your life – the existing property can be sold or rented as your family situation, living conditions and wishes change.
Consult with the bank and receive a loan offer
The next important step is certainly a consultation with the bank to find out the most suitable type of home purchase financing and the amount of financing offered. Sometimes it is the maximum loan amount offered by the bank that forces them to adjust their choice of housing, so buyers tend to approach the bank first and only then start looking for housing. Customers also sometimes have to do homework on their financial management to prepare for a loan.
Also, before receiving a home loan, it is always recommended to find out the loan offers of at least two banks in order to objectively choose the most advantageous option. The biggest difference in the price of a loan is the interest rate – even a few tenths of a percentage over a 20-year period can make a difference of several thousand euros, but it is no less important to compare other offer items, such as loan repayment terms, commissions and other administrative expenses.
Explore the surroundings of the home and don’t be shy to ask questions
During the home buying process, you should take the opportunity to ask even the seemingly smallest questions of the home sellers to find out all the uncertainties, possible risks and potential additional costs. Find out everything about the regular costs of the home, including taxes and utilities, research and ask everything about the immediate area, such as public transport, to be sure that the home meets your expectations.
Get credit approval and sign all necessary documents
When all the important choices have been made and the relevant documents have been submitted to the bank, it is time to sign the documents. The mortgage loan agreement for the selected property is signed remotely or in person, the documents must also be signed before a sworn notary and the pledge must be registered in the land register. Although there are many documents in this process, the bank’s specialists will always support and explain the order in which everything should be done.
It is also recommended to compare the potential loan payments with the rent prices in the specific area, preferably so that if necessary, the property can be rented out, fully covering the monthly loan payments.
Get the key to your new home and gradually repay the loan
When the documents are signed, the most pleasant part remains – receiving the keys to the new home and starting to live there. The loan repayment process below is quite simple, as the monthly loan payment is made automatically from the bank account. It is also valuable to know that, if possible, the loan can be fully or partially repaid before the due date. It is quite easy to do this at any time through the internet bank, by paying the amount available to you, but in case of uncertainty, you can also contact the bank’s specialists.
Luminor
