One of the biggest financial decisions in a person’s life is buying and financing their first home. If you are new to taking out a home loan, here is everything you need to know to make it go smoothly.
If you have decided to move and you are thinking about buying a property, it is worth doing some preliminary work to specify your options and needs. On the LHV website it is possible to quickly calculate the maximum loan amount or monthly payment using various calculators. The calculator also points out which steps to think through, such as the amount you already have available to pay down the loan and whether additional types of collateral are available.
It is then time to look at the available real estate offers, to choose the home that is right for you. Attention should be paid to location, proximity to services, the building, and the property itself. The home you buy should definitely meet your basic needs and be pleasant to live in. If you compromise too much, dissatisfaction can soon start to interfere with everyday life. Also, consider your options for furnishing your home – it can often cost thousands of euros to buy a kitchen or other furniture.
Furthermore, it is important to take a good look at the condition of your future home: whether the building is of good quality, the state of the water and electricity systems, what needs to be repaired soon, the state of the various fixtures and fittings, and whether documents – such as a valid permit for use – are in order. In recent years, the energy class, or how energy efficient the property is, has become one of the main considerations when buying a home. A property with good insulation and economical heating is a good long-term investment, while buying a poorer energy-efficient apartment or house can be a costly project in the long run. Please note that for the purchase of a property with an energy efficiency rating of A, the bank is willing to provide a green home loan under the most preferable conditions and at the lowest cost.
Once you have found a suitable offer, it is time to apply for a home loan. The home loan application is easy to complete on the LHV website and by submitting it, you will receive the best service from a LHV home loan manager. You will receive an initial loan offer in as little as 24 hours, or find out what documents you need to apply for a loan or what questions you still need answers to.
Please note that the home loan is available for amounts starting from EUR 20,000 and up to 85% of the market value of the collateral. The exact amount of the contribution depends on the asset being purchased. If you can use a KredEx surety, it is possible to further reduce your own contribution. The maximum amount of loan payments per person should be less than half of their monthly income, taking into account changes in EURIBOR as well. The home loan can be taken for up to 30 years.
Once you have received a positive reply to your application, the bank will send you the detailed terms of the agreement. It is worth taking a closer look at these. Please note that the value of the loan, or the interest rate, is made up of the bank margin plus 6 months’ EURIBOR. The margin always depends on the individual client and the transaction. In addition to the interest rate, you should also look at the other terms and conditions of the loan, such as the agreement fee, but also the flexibility for later steps, such as the freedom to repay the home loan early, which LHV offers free of charge. The decision to borrow should always be carefully considered, bearing in mind that it is a long-term commitment. It is not wise to take out a loan that you cannot handle in the future and responsible lenders do not offer such loans to clients.
Once everything is in place and your questions have been answered, it is time to visit the notary. LHV helps clients find a suitable notary and time to set a mortgage for the collateral. Notarial acts can be performed all over Estonia. It is also possible to use the electronic notary service, which means you do not have to physically visit a notary’s office. Notary fees are added to the cost of the transaction.
After the notarial procedures everything proceeds smoothly, as LHV usually issues the loan within a day. The first repayment will be taken automatically by the bank when the next payment date arrives. Estonians are big believers in owning property and many believe that moving from renting to owning a home is a move worth considering in the long term. A home loan can help you take this step. Read more: lhv.ee/home-loan.