If you can believe the statistics, on average, a Hungarian adult has a financial savings of HUF 7 million. But there is also one who can save hundreds of millions of forints, and who does not even have one forint to save. Adding to this, house prices have risen sharply over the past three years, many have no choice but to borrow money if they want to own a home.
Only 7 out of a hundred people are open to changing banks
that is, the majority would rather remain with their own account manager, although in the vast majority of cases they would be able to obtain a more favorable home loan if they dared to switch and transfer their finances to a new bank.
According to the central bank, the intensity of competition between banks could be improved, but there are still many ways to obtain more attractive terms on home loans.
The value of the property, the size of the loan amount and the income essentially determine the room for maneuver. First of all, banks are no longer lending as much as 80 percent of the value of the property, which means that they need at least 20 percent of their own funds. Secondly, according to the central bank’s decree, the amount of the repayment can not be more than 50 per cent below 400 thousand HUF, and above 60 per cent.
Each bank uses different customer ratings, but generally speaking, it does
The stronger your financial background, the better your bid
For example, if the amount of the home loan requested is low compared to the value of the property or the monthly installment payment is low compared to your income, you can definitely rely on a good credit rating.
Whether it’s a very cheap but fast loan repayment loan or a fixed-term home loan, you can get an interest rate discount of 1-1.5% under the following conditions (one or more).
(Of course, only if you can meet the conditions continuously, because if you are temporarily unable to meet it, you may lose the interest rebate temporarily for that period.)
- A specific income should be transferred to the lending bank each month. It may be a relief if the bank accepts not only wages but also any credit to the account.
- It is often the case that the lender requests an active bank connection, such as credit card transactions, direct debit orders and the like.
- Product tying is also common, and you may get a discount if you also buy other products from the lender (such as home insurance, life insurance, or credit insurance).
- If you only need a very low loan compared to the value of the property, you can automatically get the discount (low loan coverage ratio).
We’ve collected the most affordable offers available at Bank Monitor now. As you can see, even with a $ 8 million home loan, there can be big differences depending on how much you are taking the interest rate risk.
An interest period within a year provides the lowest installment, but in return you have to assume that the interest rate on the loan and thus the monthly installment will change every few months. The loan in the example would take 20 years, which is long enough
Increase interest rates significantly compared to the current situation
That is why more and more people are taking out loans securing longer-term interest rates. In this case, the bank assumes the risk of interest rate changes. We have chosen a 10-year interest rate fixation, meaning that the installment will not change for 10 years. Instead, for example, a one-year interest-bearing loan will change nine times after it is launched – a disadvantage we expect.
The difference between the average APRs is 3.2 percent, which means that a few percent higher interest rate base is enough to close the monthly installment gap. Therefore, before borrowing, it is worth thinking about how much it is worth to start with uncertainty at the outset. There are many arguments that, in the interest of safety, it is still worth paying temporarily for more, because at the end of the term you will not be sure you will be paying less overall.