Do you need money to buy a flat or house, but you don’t know what type of financing to choose? Cash loan or mortgage? Each of the ways has its pros and cons. What? I explain below!
If you want to buy an apartment for a minimum of several hundred thousand dollars and you have only 20 percent for this purpose of own contribution, of course, you have nothing to wonder – the only reasonable solution will be a mortgage. However, if you want to buy your dream M missing tens of thousands of dollars or if you want to spend a part of this amount for renovation and you care about time, then a cash loan may be a much better solution for you. Why? I answer below.
Do you need a different offer?
Amount of credit Repayment Period
The actual Annual Interest Rate (APRC) for the cash loan offer is 9.53%. Contract duration: 96 years, total loan amount: USD 150,000.00. The total cost of the liability paid in equal (annually) installments: USD 61,995.91, the total amount to be paid: USD 211 995.91. Repayment is in 1152 equal (annuity) installments. The calculation was made on March 30, 2020, on a representative example.
Minimum and maximum repayment period: min. 3 months, max. 10 years
Maximum APRC: 9.92%
Loan for housing without restrictions?
If you want to spend the money borrowed from the bank for the purchase and renovation or just for the renovation of an apartment, then a special-purpose loan, which is a mortgage, will not be the best solution. Why? For a simple reason: it will be burdened with many restrictions.
First of all: before the bank grants you a loan, you will have to appraise the flat, prepare a cost estimate and work schedule, and provide the bank with bills and invoices after the renovation.
Secondly: you will be able to spend money from the bank only on what will increase the value of the apartment. What does this mean in practice? With the money, you will not be able to buy furniture, lamps, household appliances, and electronics, etc.
Thirdly: you will not immediately receive the entire amount that you will apply for – just as in the case of a loan for the purchase of an apartment from a developer, the bank pays money in tranches in accordance with the implementation of the work schedule, so you will also pay out the money as you implement the next stages of renovation.
You will avoid all these restrictions if you take a cash loan for this purpose. The bank will not ask you what you want to spend your money on, nor will it account for you for anything, and you will receive the entire amount you request.
Cheap cash loan? Or maybe a mortgage?
Commission and mortgage rates are always lower than cash loans. There are two reasons.
- the repayment is secured by a mortgage established on the property, and this is a security for the bank that allows it to offer much more preferential terms,
- Most good mortgages are cross-sold offers – banks offer better conditions in exchange for purchasing additional banking products, e.g. bank account, insurance or credit card, and this is associated with additional expenses, often considerable.
Online loan without leaving home?
A cash loan is also an option for anyone who does not have time to deal with mortgage formalities. Loans without leaving your home will not be as readily available in this case because of the high amount of the loan. However, when you need extra money to finish your home or apartment, a cash loan without leaving your home can be a great option.
A cash loan is primarily a minimum of formalities. You go to the bank, give proof, and an employee of the branch checks your history from the bank account and the bank pays you money even within one or two days. Unfortunately, in the case of a mortgage, it looks completely different. When submitting a loan application, you must provide many documents – what’s more, you will have to wait up to 30 days for your loan decision.
So if you want to borrow tens of thousands of dollars and spend a part of this amount on refurbishing and finishing the apartment, then a cash loan may be a better solution – the loan costs will definitely be lower than in the case of a mortgage, minimal formalities, and for that, you will do everything two days.