When applying for a mortgage, we must complete many formalities. One of the important requirements is to demonstrate positive credit standing before the bank. It can be confirmed by the bank promise. What is a loan promise?
This is a document guaranteeing the receipt of a mortgage on the terms agreed with the lender. The institution, after analyzing the client’s financial capabilities, determining the possible terms of cooperation. By issuing a promise of credit, he approves it. As a result, a customer interested in a loan can terminate the contract without undue risk. The promise secures risky decisions, including, for example, paying a high down payment.
The bank promise does not apply to covered loans. In their case, the customer’s creditworthiness is also checked, but no document is needed to confirm this. By issuing a loan decision, the lender will inform the client whether their possibilities to apply for additional money are sufficient.
Where to apply for a promise?
To obtain confirmation of our solvency in order to implement further housing plans, a promise of credit must be obtained. It is issued by a bank. So we have to go to his facility and apply for a promise. The document should contain information about us, the conditions of our loan and plans related to its purpose.
The promise from the bank is issued for about 30 days. During this time, we should complete the formalities related to mortgage. We will have to wait up to 2 weeks for the promise. The waiting time for issuing a document depends on the bank’s policy and our financial standing. It is good if we have a financial pillow in addition to the own contribution to the loan. It will serve emergency fees that were not included in the cost estimate for the purchase of our apartment.
Does the promise of credit cost? Yes. Issuing a document is associated with a fee. The promise costs even several hundred dollar.
Bank’s promise and mortgage
Applying for a mortgage is a complicated procedure. Requires a lot of formalities. Banks not only check our creditworthiness, but also the condition of the property we want to purchase. The institution is also interested in the value of the building and legal issues.
It is worth knowing that the promise of credit does not give maximum certainty that the bank will grant us a loan. Although the document confirms the high BIK score, the bank may state that the value of the property indicated by us is excessive. However, there is a final document that obliges the bank to withdraw cash. It’s a credit decision. After it is issued, the bank must grant the benefit to us under pre-determined conditions.
We should remember that issuing a credit decision depends on our financial standing. If it is too low, we will not receive the necessary document and thus the loan. It is worth adding that issuing a credit decision is free. In many cases, it’s a good idea to apply for a decision immediately, not a loan promise.
The bank did not grant a promise for a loan – what to do?
Do not blindly rely on the promise of credit. Although it is a reliable document, it is not completely binding. The bank may change your mind regarding our mortgage at any time. This especially happens when our financial capabilities decrease. So how do you increase your credit standing and avoid that the bank will not issue a promise?
First of all, it is worth carefully analyzing your financial options. If we are not able to deal with regular payments, eg for bills, now, it is not worth applying for a large loan. If we are convinced of our financial credibility, we should perform a reliable valuation of the property that we want to purchase. In this way, we will be sure that the value of the premises has not been overstated or understated.
If the bank does not give us a loan promise, we should try again. It’s good to ask for a credit decision, not a promise. It is also worth paying for a down payment for the property. If the bank refuses to grant a loan, the advance will be returned to us free of charge. This entry should be included in the clause of the document confirming our payment.
We can apply for a promise of credit at several banks. If any of them refuses to cooperate, we will still have several options available. However, we must remember not to rely on it completely. It may turn out that the bank changes its mind, and the opportunity to buy a house or apartment is lost.