Different mortgage terms
Not all mortgage lenders have the same terms and conditions for making mortgage loans. There are some differences, especially when it comes to the affordability calculation. The common rule of thumb applies to practically everyone that the cost of the mortgage should not exceed 1/3 of your gross income. The cost of the mortgage consists of the mortgage interest, amortization, and ancillary costs. However, there are differences in the calculation of the income, the simulated interest rate, the amortization and the ancillary costs. Furthermore, additional costs and income (alimony, further loans or credit card commitments, net loss from the rental of properties as well as income from securities, net income from the rental of properties or other income) are taken into account in completely different ways.
Differences in the income calculation for the affordability calculation While some financial institutions start from gross income, others calculate from net income. Some include the costs of further loans and alimony, etc. in the affordability, while others leave these costs outside. It happens that costs are deducted from gross income or added to mortgage costs. The same applies to income from securities or net income from the rental of properties.
Different simulated interest rate Some simulate with an interest rate of 5%, others with less. Or a distinction is made between customers of retirement age and customers in the work process.
Different amortizations The first mortgage is 65% of the purchase price or the estimated value / market value of the property. Anything over 65% of the loan is considered a second mortgage. Typically, the 2nd mortgage should be repaid within 15 years. There are also financial institutions here that demand higher amortization. There are also conditions that the 2nd mortgage must be repaid by the age of 65. So if you are over 50 years old you have to pay back in less than 15 years. The whole thing stands and falls with the market value of the property. A different valuation practice can of course influence the amortization here.
Different ancillary costs Normally, ancillary costs of 1% of the market value of the property are calculated. But here, too, there are financial institutions that calculate with the effective additional costs from the valuations of the properties or otherwise deviate from the 1%.
Loan-to-value norms The lending describes the relationship between the mortgage loan and the estimated value / market value of a property. As a rule, residential buildings are mortgaged with a maximum of 80% (higher with additional coverage). There can be differences in the assessment of whether an object is described as a luxury object or not. Some distinguish between luxury and not based on the size of the net living space and others according to whether the market value is customary for the location or not.
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