Shades of buying accommodation in a credit

Shades of buying accommodation in a credit

1. The most popular mortgage for today: for buying the property in new buildings or on the secondary market and what connected it with.

Applying clients to the bank depends on the program of bank credit financing. It means that if the bank promotes the program of credit financing on the primary market then this bank will have more demands for the mortgages on primary market.

If we are talking about demand in general then secondary marker is still more popular. There are some causes to it. Pay for the property now, client receives it quickly and in a concrete term. While buying primary property there is always a risk, for example, transferring the term of placing in commission. Besides, primary market does not offer a lot, and prices are not lower than on the secondary market. Buying a flat in the new building involves some problems: before setting it required expensive repair and all the time noise fro the neighbors how do the same thing do not bring a comfort to the client.

2. The procedure of credit financing while buying the property on the primary market.

There are two mechanisms of credit financing of primary market – on security of property, which is building through all funds of construction financing or on other security. For example, buy on security of secondary property or deposit. For majority of clients is more preferable first variant.

On the Ukrainian market is historically made that developers are almost always collaborate with particular banks for clients’ credit financing for the buying the primary property. Banks-partners study developer and define his reliability. It works in the following way, when a client wants to buy a flat in developing building, needs a credit, then he is sent only to the bank-partner, from the other side, the bank-partner gives a credit on security of property rights on developing building. Client does not have another choice, just ask for the credit financing by developer bank-partner as other banks do not have secure mechanisms for credit financing of the property purchase. Banks-partners use it very active. It means that if the client wants to get a credit for the flat buying on the primary market in particular developing building, the client will be offered only definite banks where he could get a credit and probably this credit will be more expensive than average mortgage rates on market.

3. Problems which occur while credit financing the purchase of property on the secondary market .

The main problem while forming the mortgage credit, is conformation the incomes of the client and presents of negative credit story. Also could be problems with not liquidity of the pledge (if the client with the view to economy wants to buy a separate room in a flat or flat in half-ruined house), board of trusties, not legal rearranging. Sometimes there are cases of unreliable sellers, but banks always check these deals and have hound out negative information, do not credit financing the client of such kind of property.

4. How bank makes a decision of credit financing.

First of all is always based on estimation of credit capacity of borrower. This estimation consists of three main parts: credit rules, estimation of paying capacity and speeding.

Credit rules – is definite rules which allow choosing the specific clients to the bank. For example, maximal and minimal age, minimal salary, term of living in region.

Paying capacity - is the financial opportunity to pay off the credit, in other words, presents of proper level of income.

Speeding - estimation of aspiration of the client to the payment of credit and opportunities in a future discharge.