However, it is usually not possible to move with an already approved mortgage. If the client still has sufficient income, you can take another smaller mortgage, or if the family owns another property, such as a cottage, it can be made available for so-called security. Another option is a loan from a building society.
Therefore, Stavební spořitelna Česká spořitelna Buřinka now allows the repayment period to be extended to 25 years for unsecured loans in the amount of one to 3.5 million crowns.
Previously, a client with a payment of 5695 crowns would borrow 900 thousand crowns a month, now with the same installment it will reach 1,027,000 crowns, ie 127 thousand crowns more.
At the same time, Buřinka does not condition drawing a loan by sending photos before starting work. Photos “before and after” can be sent via the savings bank’s website at once, when all work is completed.
“A closed and signed mortgage cannot usually be increased. At the same time, if the mortgage is not yet exhausted, it is not possible to refinance it. The solution is a second mortgage or a loan from a building society for the same purpose of construction. If we are going to negotiate another loan, it is necessary to have sufficient income, “confirmed financial advisor Michal Bardoň.
If the client solves the situation with another mortgage or a loan from a building society without a mortgage on real estate, it will depend on the LTV parameter. This is the ratio of the value of the mortgaged property and the amount of the loan we borrow. The maximum LTV is usually 90 percent. This means that we can borrow a maximum of 90 percent of the value of the mortgaged property.
The bank calculates the creditworthiness of the client, ie the ability to repay, not only in terms of income, but also the applicant’s necessary expenses. This means that even one mortgage or alimony, for example, reduces this creditworthiness.
Estimation is important
When assessing another loan, it is also important how the property will be valued by the bank’s appraiser, and the amount for which you buy, ie the market price, is only indicative. And the increase in the price of building materials does not directly lead to an estimate being raised accordingly accordingly.
“Example: according to the 2020 budget, we need four million for construction. We also have awards in the bank from 2020. We will use the land, which has cost millions, as our own resources. The future price of the house and the land is estimated at five million from the bank. The LTV mortgage is 80 percent. So we have our own resources in the land for a million and we borrow four million for construction from the bank, “explained Bardoň.
However, with the new budget in 2021, we will find that the construction will cost us not four, but five million. “Then there is the problem with LTV. Because we actually need five million to build and the house is valued at five million. Which would mean LTV 100 percent, and banks don’t provide that, “the advisor added.
Fast rise in price
According to Bardon, an appraiser from the bank will find it difficult to increase the future value of the house from five to six million due to the increase in the price of the material.
“The bank bases its estimate on the price of real estate, and not on the price of building materials. There may be a slight increase in the future value of the house, but it will certainly not copy the increase in construction costs, “said Bardoň.
Depending on the location, real estate prices increase by eight to ten percent every year in most regions. However, building materials rose in price by thirty to one hundred and fifty percent in six months.
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