Nowadays it looks like this: If you want to borrow for the cash contribution, you can apply for a so-called blank loan – or private loan without collateral. There are many lenders that offer just that and it is usually too big a problem to find a company that can help you. What you should be vigilant with is that many unsecured loans usually have high-interest rates and you should be careful to read through all the terms to avoid hidden fees and the like.
When you apply for a bank loan, the credit institution looks over your finances and then assesses your repayment options.
It is always a security to save as much as you can for the cash contribution, preferably the full 15% of the housing value. Should the house / condominium fall in price and you want to sell the house, you may not be able to afford to settle the debt with the money you receive for the home. Therefore it can be nice to have already paid 15% of the house, both for you and for the bank.
When you are going to apply for a home you are interested in buying, it is important that you apply for a loan promise from your bank. You use that to show that you have the opportunity to pay for the home you want to bid on. After you place your bid, contact the bank to review the information in the loan promise to ensure that you can proceed with the bidding. When you win the bidding, contact the bank one last time to sign a contract so that they can approve your loan application.
This is basically a mortgage loan to cover most of the cost. Should you not be granted a mortgage loan all the way up to 85% of the value of the property, you can apply for a mortgage loan.
Difference in bottom loans and top loans
Mortgages are the loans that cover the largest sum of your home’s value. By law, this can cover up to 85% of the total housing value. When you apply for a mortgage, you can expect a large sum and a long repayment period. Most often you will be granted a loan of between 70% – 80% of the home value.
A top loan is the loan you can take to cover the remaining amount, up to 85%. More or less, it is about reducing the cash contribution that is required for you to buy the property. As a rule, the repayment period of a mortgage loan usually extends upwards of 50 years, while a top loan is on average between 10 years – 15 years.
In 2010, the so-called mortgage loan was introduced in this country. According to the Swedish Financial Supervisory Authority, the purpose of the mortgage ceiling was to counteract an unhealthy development in the credit market. This was simply to avoid a competitive market around which player could offer the highest loan-to-value ratio. Before 2010, you could apply for loans that covered the entire value of the home, which created problems in some cases when the housing market is so variable. Housing values fell, hence some consumers could not repay their debt.
Common requirements for top loans
So one of the biggest practical differences between a bottom loan and a top loan is that the repayment period is considerably shorter. Some things that the bank will look at when they find out if you can get a loan are the following:
- Number of adults and children under 18 in the home
- Your form of employment
- Your income
- How much cash you will be able to put in
- Current loans in numbers and amounts
- Monthly fee for association (if you want to buy tenancy)
- How big a villa you want to buy (if you want to buy a house)
To think of
- Make sure your budget is steady – You don’t have many chances to make a mistake when it comes to repaying a loan. Double and triple check your budget before deciding.
- How big housing is – It’s easy to get into the housing costs and when you look at ten apartments that cost upwards of USD 6–7 million, a 4 million apartment will look “cheap” in comparison. Make sure you are realistic about your needs.
- Interest rate – Variable interest rate or fixed interest rate is one of the big issues. It all depends on what the market looks like when you want to borrow. The housing market is going up and down, but over the past 10 years, interest rates on mortgages have on average gone down quite drastically. Contact your bank to inquire.