For many people, buying their own apartment is a dream come true. Few, however, are able to finance such an investment from their own resources, so the best solution seems to be to take out a loan. Of course, we immediately think of a mortgage, which, according to many customers, is the only reasonable way out of this situation. But what about cash loans ? Is it worth considering this option as well?
Your financial needs
Lots of people think that buying real estate should always be financed with a mortgage. They say in advance that it is more advantageous primarily due to the amount of installments that are lower than in the case of cash loans. Sometimes it may turn out that these are only apparent savings. When considering which solution to choose, it is important to determine the amount of such a loan. It may turn out that in our case the mortgage will turn out to be an option totally worth our effort.
What does this mean in practice? A mortgage is the best solution if, for example, we intend to buy an apartment for at least several hundred thousand zlotys, and at the same time our own contribution is relatively low and amounts to 20 percent. However, it is different in the case of people who have the majority of funds for the purchase of real estate and lack only tens of thousands of zlotys or would like to spend part of the obtained loan on finishing or renovating the apartment. In such a situation, after making a thorough analysis and necessary calculations, it may turn out that a cash loan is a better and easier option.
Free disposal of money
Another thing that you should consider when considering taking out a particular type of loan is the purpose for which you want to spend the money received. Certainly many people realize that a mortgage is a special-purpose loan. This means that the bank lends us funds to meet a specific goal that needs to be documented. If such a loan is to be used to buy real estate, the money goes entirely to the seller’s account. When we want to finance the finishing or renovation of such an apartment from the loan, the money will be on our account, but we will be obliged to settle all the works performed, which were specified in the renovation and construction cost estimate.
As you can see, a mortgage will be a good solution for us only if we have a clearly defined goal that we want to achieve with the help of borrowed money. In a situation where we do not have specific plans yet, and at the same time we do not want to explain to the bank every zloty spent, a cash loan may be a much better solution for us. In this case, the loan application does not have to specify the purpose for which it will be used, and therefore the bank will not settle us for its implementation. What’s more, when we decide to take out a cash loan , the entire amount immediately goes to our account and we can freely dispose of the money received.
When time matters
I think everyone is aware of the fact that the process of applying for a mortgage is associated with many formalities. Banks require their clients to provide them with a huge number of various documents, which must then be properly verified. Therefore, the time in which we are waiting for the bank’s decision to grant us the money we are applying for is significantly longer.
However, not everyone wants to wait or to visit the bank with subsequent batches of documents for the following weeks. In the case of cash loans, the bank reduces formalities to a minimum. The client’s sources of income and his previous debt history in BIK are checked. It can therefore take only a few days from submitting the application to the withdrawal of money.
The cost of taking a loan
Very often the most important argument of people deciding to apply for a mortgage are the costs associated with it. And of course they are right because both the interest rate and the monthly installments payable are usually lower than in the case of a cash loan. However, it should be remembered that mortgage loans are cross-sell offers for most banks. This means that when deciding to take such a loan, we simultaneously buy other financial products from the bank, such as a bank account, credit cards, or various types of insurance (for example, due to job loss). The costs of real estate valuation or mortgage establishment must also be added to the loan-related costs, which is associated with additional fees.