Very often we use mortgage and mortgage terms interchangeably. It is worth pointing out, however, that in reality there are different products that may have other purposes. What is a mortgage loan and what is a mortgage?
Loans and loans serve the same – they allow us to borrow money. However, they really have other support in Polish law, and thus other conditions, requirements and even costs.
Most often we hear about mortgage loans – we can take them in a bank to build a single-family house or to buy a flat or a plot of land. However, we already hear less about mortgage loans. We can receive them both at banks and non-bank lending companies. So what is a mortgage loan and how is it different from the loan?
What is a mortgage loan ?
The mortgage loan is based on the provisions of the Civil Code. The security for this loan, just like a mortgage, is a mortgage on a given real estate owned by the borrower. It is worth noting that the purpose for which we want to get money in the case of a loan does not play a role.
Therefore, we can transfer the loan not only for the purchase of real estate, but also for a number of other purposes – buying a car, organizing renovation, traveling around the world, paying off debts that can not wait. A bank or loan company offering a mortgage loan does not penetrate, what are the loan goals – we can spend money on every goal and we do not have to explain it in the presence of the borrower.
The value of mortgage loans is usually calculated as 40-70% of the value of the property. Therefore, if the property is worth about PLN 200,000, we will receive a loan in the amount of PLN 80,000 to PLN 140,000. The repayment time of the mortgage loan is usually up to about 25 years. The longer the repayment period, the lower the installment, but also the loan costs.
The mortgage loan is confirmed by a contract between the parties. The document should contain all information regarding the amount, repayment period and loan costs. As a mortgage loan, the loss of real estate may be a collateral due to default.
What is a mortgage?
In the case of mortgage loans, on the other hand, we are dealing with a targeted product offered by banks. Only banks have the option of granting mortgage loans, which is why they can offer both loans and loans of this type, whereas loan companies operating non-banking can only offer mortgage loans.
The provisions regulating the principles of granting mortgage loans are specified in the Banking Law. It indicates, among other things, that the mortgage is intended only for a specific purpose – the borrower does not receive money in hand then, but they are transferred to the payee.
At present, the requirements of loans granted for flats and houses also indicate the necessity of having own contribution in the amount of at least 20% of the real property value.
A mortgage loan must also be concluded as a written contract in which all its parameters are determined.