A mortgage is, in other words, a non-purpose mortgage secured by real estate. It is a term that is often used in our country. The reasons for the practice are different, but they have a common denominator. This is the law on housing loans, which specifies exactly what a housing loan secured by real estate can be used for. There simply has to be a defined purpose associated with the acquisition of real estate, whether it is construction, purchase, inheritance settlement, reconstruction, or refinancing of a previously granted loan for these purposes.
What is mortgage and what can I use it for?
A mortgage is something else. The bank is not so interested in what the money will be used for. It is a consumer loan secured by real estate. Practically money can be used for anything. They are not purpose bound.
THE mortgage is often used to buy a car, buy real estate abroad, or to repay previously granted loans, which are not mentioned in the law on housing loans.
Advantages and conditions of a non-purpose mortgage
The biggest advantage of A mortgage is the futility of the mortgage. However, in the case of A mortgage, the applicant must meet the conditions as in the case of a normal mortgage, which are:
- must have documented income for the required period
- must meet the DTI condition
- must not be in arrears with payments for existing loans or for those still visible in the history of the credit register
- must have at his disposal the real estate which he will offer to the bank as security. This property is also subject to the same conditions as a classic mortgage. It must be a real estate in the territory of the country, there must not be such a burden on the title deed that the bank would not accept.
Although the interest rate is slightly higher than with a classic mortgage, it is incomparably lower than with other types of consumer loans. The loan amount can be set much higher than with consumer loans.
Another use of a non-purpose mortgage
It follows from the above that we can use the mortgage even in difficult life situations, such as repaying expensive loans from non-banks, but we can use it to fulfill our dreams. For example, buying property abroad, whether it is a cottage or apartment on the beach or in the mountains. Alternatively, we can start or oppose our business with it.
With a reasonable setting, it can also be used as an investment when the return on money that the bank provides us is higher than the interest that the bank demands and generates a profit for us. An example could be investment real estate, or investments in the financial market in the form of various derivatives.
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