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The home loan

Using a home loan

A home loan provides an opportunity for many people’s dreams of realizing their own home to come true.

Everything about the home loan

Things to do before taking out a loan

The planning

The process of borrowing is the same for all loans, so here, too, planning and thought precede actions. Since not only will you take out a loan here, but a high-value property will also become your property, there are 8 points you should definitely consider before buying a property.

A smart person plans ahead, so look carefully at what fits into your budget. You can use Silver Moon’s financial calculators for this.


How much credit can you take?

With the calculator you can calculate:

  • Under certain conditions, how much credit can fit into your budget.
  • What will be the monthly repayment
  • At what interest rate does the loan fit into your budget
  • How long could you pay off the loan

Ft / EUR / etc



Total interest repaid

Ft / EUR / etc

Total amount repaid

Ft / EUR / etc



Calculators available on the Internet provide a good basis for reviewing loans. There you can see what each bank has to offer in terms of range. Since these calculators are not for your unique life situation, you would rather ask for a call back to take a closer look at you.

The timing

There are times when you feel like it’s time to buy your own home.
This is both when you have enough self-sufficiency and when you are no longer doing better with renting.

average renting fee
Source: CSO


In the picture, you can see that the average rental prices are creeping up and up. Coupled with this is the fact that smaller and smaller properties are being rented out at ever higher prices. This obviously doesn’t mean you run and buy yourself your own property right now, after all, their price has also changed. Just figure out if you’re better off using your existing capital to buy now, or just wait with it.

Real estate issues

Property condition

A new home is typically a little more expensive, but the presumably lower purchase price of a used home comes with renovation costs. Think about which one you do better, what fits into your budget.

Your goals for real estate

Is that given home ready or do you want to build it now? If you build, the construction loan is more for you than the home loan.

Is renovation and expansion necessary?

With a home loan, not the only question is whether you are the owner or not. After all, you want to use it, you want to live in it. Plan your loan to see what it will look like in the final state.

Questions about your own financial situation

How much own funds do you have?

The amount of the loan, and thus the amount of your repayment, is determined by the size of the loan taken out. To do this, however, it is essential that you have sufficient fund.
When you make your own financial plans, don’t just rely on the purchase price of the property. The bank will only lend you this, but the additional costs (either a property renovation or the equipment) will already have to be financed by you.

How much deductible is needed to take out a home loan?

If the funds are mentioned, you need to see if there is so much at all in any form that the bank accepts. The bank goes into financing up to the value of the loan collateral, often not even before. The value of the credit collateral is determined by the appraiser or, for some banks (based on a sufficiently large database), is calculated backwards from the purchase price. In Hungary this is usually 80% of the market price. The value can go below this if the property is in poor condition or in the wrong neighborhood.

Since the bank only finances the purchase price, not the attorney’s or land office registry costs, this means for you that you need to have 25-30% of the purchase price, ideally even more, prepared for the average case. Then only the property will be yours, neither furnished nor anything else will be done on it.

How do you have own resources?

There are times when you would take out a home loan because of moving to a newly looking property. You can then apply for a bridging loan for your own unsold home by applying for a grace period of up to 2 years. This means that you will also get a loan for your old property, you will only pay interest on this during the grace period, but you may have already moved into your beautiful new home with better facilities for you. When you sell your old house, you pay off the bridging loan from the price of the old home.

How much and how stable is your income?

The range of eligible income is always determined by the internal regulations of the given bank. Don’t be surprised if one accepts 100% of what the other is down. So at one bank you may be a completely good customer and at another your rating may be bad, depending on where your income comes from.

In which, however, they all agree to look at stability. Don’t expect too much good for irregular incoming revenue. The same goes if your level of verifiable income is very low. This is because black income cannot be taken into account by the bank.

Do you have any other credit?

If you have other loans or have a credit line, the extent of these will also be included in the burden capacity of your income.

Several places (for example in Hungary) the income burden is regulated by the PTI regulations (it is the payment-to-income ratio).
Since the unused credit line is also included in the income burden, so if you do not use it or you may not be aware of its existence, you can either eliminate it or reduce it to a minimum.

If you have a loan that you are in arrears with, or have just been in, and this is reflected in the central credit registration system, expect the bank to either not give you a loan or impose stricter conditions (e.g. you also ask for a guarantor for the loan).

Mortgage participants


If you meet the bank’s expectations, you can even take out a home loan on your own. Thus, the debtor is one of the protagonists. They look at his income as well as whether he can be credited based on his age.

The partner of the debtor (with the same rights and obligations as the debtor)

A home is typically purchased by married couples from common property, or at least will be the subject of common property in legal terms. The debtor partner has the same rights and obligations as the debtor.
Her income is also taken into account by the bank in its assessment of the regulation, so she must also be creditworthy. Note that in the event of a divorce, all the debtor will remain in the same bond with the loan as before. Even if you no longer live there or have just started a new family. In order for you to be released, a contract amendment must be requested, otherwise the bank will not reduce its own security factors.


If neither the debtor’s nor the co-debtor’s income is sufficient for the bank to judge the loan, they can also ask for a guarantor. In the vast majority of cases, this is a close family member, but this is not an expectation. Note that by requesting a guarantee, the bank states that it is likely that the debtor and co-debtor will not be able to pay the loan and would pass this risk on to you. That is, it is not excluded that a guarantee means to you that you are buying someone an apartment. Then the payment is yours, the property is theirs.

If you are a business leader and want to take out a larger amount of loan, it is not inconceivable that a guarantee from your own company may be required behind your own credit. This is because the bank also looks at the creditworthiness of an otherwise well-functioning company, and with this you can be creditworthy even if you may not consider your own income to be sufficient. (Because let’s say the dividend branch is not accepted)


A mortgagor is a person who offers real estate owned by him that is also acceptable to the bank as mortgage collateral. His identity may be the same as that of the debtor and co-debtor, but there are no restrictions on this. If the property offered as collateral cannot be encumbered to the required extent and no more own funds can be achieved in cash, the bank will also accept the property involved as additional collateral. It is then natural that the person outside the debtor and co-debtor will be the mortgagor. In this case, the bank only examines the offered property in value and so on, not the creditworthiness of the mortgagor.

Home loan coverage

Home loans are available with mortgage collateral. This means that it is absolutely mandatory to offer a property behind it that the bank also accepts.
Mortgage collateral allows the bank to disburse the loan for a long time and at a low interest rate compared to personal loans.

What you need to know about coverage

The value of the property

The value of a property is usually determined by a valuer. He is the one who assesses the condition of a given property and determines not only the market value but also the escape value. The escape value is the value at which that property can be sold for sure within 6 months if necessary.
Due to the fast and smooth administration and the reduction of costs, banks are increasingly inclined to accept the value included in the sales contract as the market value in more frequented places, and they calculate the escape value from this themselves. This is not yet used by all banks, and where it operates, only in areas where many properties have already changed hands, a reliable database of the value of properties there has been established.

Mortgage capacity of the property

Several places it is defined by law, that a property cannot be lent up to 100%. In the case of forint-based housing loans in Hungary, the amount of the loan can go up to 80% of the value of the property.
But this allows the bank to set stricter rules.

If your budget is at its end, you can talk to the valuer to pull the value up a bit. However, I do not recommend this so that you can cut into it without deposit. Too large a deviation must be thoroughly justified by him, with a small deviation you will not go far. In such a situation, either look for another property or get additional cover.

Possibility of additional coverage

A property offered as mortgage is often the property you buy, but this is not necessarily the case. They are often the same because there is simply no other apartment or house to offer. If you do not have enough cash, but you have a cover, it is also possible that the cover will be enough for the total value of the loan on its own.
Before solving your resources solely and exclusively from real estate collateral, be aware that this is not accepted by all banks. In many places, you may be required to have cash on your own as well. Although you can solve this by bypassing it (you need a free-use loan or ask somebody to have personal loan to cover it), I think it’s easier to choose another bank in this situation.

Repayment of a home loan

A home loan is typically repaid in an annuity. That is, you pay your repayment each month according to the interest, outstanding amount, and term of the loan. Until there is a change in interest rates, this amount is constant, within which the ratio of principal to interest is divided. Repayment of the loan shall begin immediately in the month following the disbursement, unless the bank decides otherwise individually.

There are basically three things that affect the rate of repayment:

  • the amount of capital raised
  • the term
  • the amount of interest

The term of the home loan

The term of home loans typically ranges from 15 to 20 years, but you can apply for up to 35 years. It is basically true that the longer you take out your loan, the lower your installment, as the capital is divided into more parts. However, this is far from proportionate, after all, you use the bank’s money for a longer period of time, and at the same time your interest burden increases.

To reduce your own burden, use the prepayment option. The amount paid will then reduce your principal debt. Since interest is always calculated on your outstanding debt, the interest repaid will also decrease.

Home loan interest

Fixed interest rate

The fixed interest loan has the same repayment installments until the end of the term. This way you will know from the beginning what to expect. Although you are not exposed to the risk of an interest rate raise, be sure to expect the bank to “honor” the price of the enhanced security at the start by setting a higher installment. The extent of this is no secret, already at the stage of interest the bank will give you the necessary information.

Variable (floating) interest rate

The interest of your loan is then depends on a reference rate. For forint loans, this is typically BUBOR, which is now at a historic low (but any other reference rate can be so low). In the case of floating rate loans, the interest rate of your loan and the repayment installment are fixed during the selected interest period. After this period, the bank will look to see if the reference rate has changed and adjust the new payables accordingly.

HUF reference rate

What does home loan interest rate depend on?

Home loan interest rates depend on many factors.

The financial institution

The first of these is which financial institution you take out a loan from. Although there is not too much difference between them, because they all work in the same market, regardless of this, each bank has its own preference in lending. The bank where it is typically easier to get a loan, the higher the interest rate on the loans (after all, the overdue loans are paid out with the others), where you have to do a little more for a home loan, there you can get a lower interest rate.

The amount of your income

The higher your income, the less risky you are in the eyes of the bank. Especially if that income isn’t overwhelmed with pre-existing loans. A person who handles the money well, otherwise good customers are also valuable in the eyes of the bank, so they try to give interest rate rebates in order to build a stable loan portfolio.

Discounts used

Many banks offer interest rates discount of a few tenths of a percent if you take out home insurance with them, assign life insurance for the amount of the loan to the bank, or if you use their current account to receive your income. A few tenths of a% doesn’t sound like much, but a home loan is a large amount item and you’ll pay in the long run. That way, hundreds of thousands could stay in your pocket just because you took the opportunity.
You can say that home insurance or life insurance for the amount of the loan is not a disbursement condition, so you will immediately pay the discount elsewhere. I’m saying it’s still worth using even if you don’t use it at that particular bank. After all, if you calculate, you may not be better off with a more expensive insurance even with a discount. Trouble, on the other hand, cannot be calculated, don’t let your whole life collapse because of an overturned candle.

The interest period

The interest period is the period within which your interest rate remains fixed. At the end of the period, they look if the reference rate at which your loan is being measured has changed. If it has changed, your loan interest rate will increase or decrease by this amount, and so will your repayment.
The shorter the time you ask for the interest period to be set, the more you take on the interest rate risk. The longer you set it up, the more secure you are.

Your options for reducing your burden

You have the opportunity to reduce your existing burden even before and after borrowing.

Before borrowing

Take a look at what discounts the bank offers you on the one hand and what you can accomplish from these.

Not only the bank offers you discounts, but also the state can offer. This can be either an interest subsidy for the purchase of a home or even social support.

After borrowing

After borrowing, it is harder, because then you have to modify the existing contract, which usually has a fee. This way, calculate if it’s worth it to you overall, along with the contract amendment fee.

In this case, you can basically use prepayment (also when using postpaid support) as well as loan redemption. When redeeming a home loan, be aware that you cannot combine it with other loans and you cannot take it from one bank to another indefinitely. This is when you lose your “home loan” label and become a mortgage-based free use loan. On the one hand, this is a little more expensive, and you may lose some of the rights that the bank only gives on home loans.


  1. If you have already taken out a home loan, how much have you spent on financial planning beforehand? What did you decide?
  2. How much do you think it can mean to replace your previous loan with a cheaper one?
  3. Have you reduced the term of your home loan with prepayments?

You can search for questions on this topic in the contact menu, or feel free to comment on social media.

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