Is it possible and how to buy a flat without own contribution? – This is a question that worries many people dreaming of their own corner. We can already say that yes – you can buy a flat and take out a mortgage without a cash deposit. The regulations do not require that their own contribution be expressed in it. What does this procedure look like and can anyone use it?
Own contribution, despite sufficient creditworthiness, very often prevents you from getting a loan. According to current regulations, in order to apply for a mortgage, we must have a 20% own contribution, and in the case of some bank offers, 10% if we take advantage of additional low-deposit insurance. What if we don’t have enough to cover our own contribution?
Mortgage without own contribution 2020
There are several alternative forms of financing for your own contribution. These include, for example:
- security on another property
- funds from the retirement account
- reassessment of the value of the property being purchased
Other real estates as own contribution
This form of financing your own contribution is the so-called “pledge”. If the customer is the owner of an apartment, plot or other property whose value covers the required 10 or 20 percent own contribution, the bank may take this property into consideration and thus give a positive credit decision.
It happens that lenders recognize collateral for a loan on more than one property, but it is worth remembering that the property must be owned by the person applying for the loan – not e.g. a relative.
To make sure that the bank where you want to take a loan agrees to this solution, it is advisable to refer to the mortgage lending regulations. You can also use the help of a credit expert who will tell us which banks honor such a solution.
Such a solution does not involve the necessity to withdraw funds and forfeiture of retirement security. In this case, there is no need to deposit these funds – the bank secures them to the required amount of own contribution.
Reassessment of the value of the property being purchased
Some banks allow the difference between a property valuation and purchase price to be considered as their own contribution. If you want to buy a flat or a house on the secondary market occasionally, and its actual market value is higher than the sum expected by the seller, this difference can be considered as its own contribution.
Can I take a home loan without a down payment?
You have a flat, but you want to move out of it and build a house? It can be great security for a bank, and it can also be used as its own contribution. If you do not know how to buy a house without your own contribution, you can easily use the information given above or take advantage of the possibilities where the plot on which you place the house will be your own contribution.
It is important, however, for the plot to be valued by an appraiser. The lender pays attention to the value of the plot and its exact cost estimate, on the basis of which it will determine the estimated value of the future real estate and what is behind it, the amount of the required own contribution.
As you can see, the lack of money for own contribution does not prevent our chances of obtaining a loan. Ask a credit expert who will be the best for you and he will suggest possible solutions.