The question of whether it is worth taking a mortgage can not simply be answered yes or no. First of all, it should be taken into account that the purchase of real estate, even an apartment, is an expense of several hundred thousand dollars. Therefore, hardly anyone could afford such a purchase for cash.
Few people earn enough to cover such an investment with current revenues. In turn, many years of saving, taking into account inflation and the fact that when our money lies in the proverbial closet, lose value, it is also not the best idea. Knowing about these factors, the question of whether it is worth taking a mortgage takes on a completely different dimension. It turns out that this is our only option to finance the purchase of your dream apartment. Therefore, you should not ask whether it is worth it, but rather how to increase your chances of getting the loan you need or how to find the best one.
Mortgage – consequences
Although we earn more and more, still few people can afford to buy an apartment for cash. Therefore, the only solution in this situation is a mortgage. Even if our creditworthiness is at a high level and we have no worries about whether the bank will approve our loan application before we borrow money to buy an apartment, we should know what it involves. Due to the amount of the mortgage, the loan period is long enough. Of course, if we can afford to pay the high installment, it could be several years. However, most often it is a dozen or even several dozen years, when we undertake to pay installments. Yes, a mortgage, above all, should be understood as a financial liability for a very long period of time. And that’s what we should be prepared for most of all.
Over the next years, every month, according to the repayment schedule, we will have to pay the debt. Life shows that such a burden not only affects our finances and maintaining liquidity in the home budget, but also the borrower’s psyche. Like nothing, and has significant consequences. Therefore, the decision on each financial liability should be preceded by a thorough analysis of our possibilities and predispositions, especially when it comes to long-term loans. If we plan to buy an apartment on credit, and our finances and credit history do not prevent it, we can raise one more important issue, namely, mortgage and a change of job. Does it matter? Yes, and it is very large.
Mortgage and a change of job
Changing jobs and mortgages can be understood in two ways. First of all, it may refer to the situation before submitting the application for financing to the bank. Secondly, due to the long term of the loan, the change of work may relate to the period after the grant of financing, during the repayment of the mortgage. Let’s deal with the first situation first. It is at this moment, because a change of job has a huge impact on our chances of a mortgage in the bank.
What not to do before applying for a loan?
Mortgage and a change of job? Certainly these two issues cannot be combined. We must decide which thing is more important to us today. Why? One of the elements on the basis of which the bank assesses our creditworthiness is the amount and source of income. Most often, a minimum of 3 months before submitting the application are taken into account. It does not matter that changing jobs results in an improvement in our financial situation. It is also irrelevant that we changed our work day after day and we do not have any break in employment.
The bank is interested only in our current employment – seniority, the duration of the contract and the amount of remuneration. Stability of employment is of great importance. So if you decide to apply for a mortgage in the first month of starting a new job, it may turn out that not only we do not have a minimum seniority but our average income is 0 dollars and thus, we have no creditworthiness. Mortgage and a change of job? It certainly doesn’t go hand in hand. So we have to decide what is more important and postpone one of the investments for at least 3 months.
Changing jobs and mortgage is not the worst step we can take. It turns out that the resignation from the employment contract and the transition to our own business further distances us from a positive decision on mortgage. In this case, the bank usually requires income to be shown not in 3 months, but up to 12 months before submitting the application. It also sometimes happens that the compulsory period of conducting business, which entitles to a loan, is even 24 months. So if we are planning such changes in our lives, it is worth thinking about whether it is a good time. These are situations in which a change of job has a significant impact on the mortgage. And what if we decide to change the place of employment after receiving a positive decision on the mortgage and our account needs cash, or has already been issued and we have been paying back the loan for several years?