What are the steps before the loan disbursement?
One of the most anticipated parts of borrowing is the moment you see money all over the end. Today, the abundance of credit products is characterized by opportunities, so it is useful if you are properly aware of the process waiting for you before you embark on the whole thing.
Loans are available in a wide variety, so virtually only your life situation, goal, and wallet will determine which loan product is available to you as well. This goal can be taking out a new loan, but it can also be a loan redemption.
Loan calculators on the internet are a good help in terms of borrowing to find out if you have a chance and what to expect in terms of repayment installments. They will then give you a clue as to what you can expect in the APR range, in installments, etc., ie whether you have a chance to solve the given goal with that kind of loan. However, be sure to keep in mind that these calculators are not customized, so taking into account your unique life situation, it may be more appropriate to start borrowing at another bank.
If you ask, we can help you, ask in the Contact menu. If you jump in it yourself, you will follow the steps of borrowing:
Orientation, even before the borrowing process
You can solve a given goal with several types of loans. But it does matter which one you choose. In the orientation phase, think about the purpose for which you want to take out a loan and, if so, what cover you can offer to the bank.
After that, look at what types of loans you can meet this need for, as well as what the banks can offer you.
Types of interest
Basically, a loan interest rate can be fixed and variable.
The fixed rate loan is fixed until the end of the term, so you already know how much you will pay over the entire term. Surely expect the bank make you to pay the price of the security. This is reflected in the fact that fully fixed-rate loans are usually set with a higher repayment installment for the same term. Although it costs more than a floating rate loan, you are not exposed to a sudden “take off” of your installment.
For floating rate loans, you can choose how often your interest rate changes, along with your repayment installment. It can be from 3 months to several years. During this time, your repayment will remain fixed in the same way, but at the end of the interest period, the bank will recalculate. The advantage of this type of interest is that the initial installment is slightly lower than the fully fixed interest rate. At the end of the interest period, if the reference rate (to which the interest rate on your loan is also compared) has been lower than it was before, your installment will decrease, but if it increases, the installment will increase as well.
For forint-based loans, BUBOR is the reference rate, the level of which is at a historic low. This way, with a very short interest period, you can easily find yourself facing ever-increasing installments.
It is basically true that the longer the maturity, the lower the installment, the shorter the maturity, the higher the installment. However, this is not proportionate. A twice as long term does not mean half the repayment, but more. After all, you use your bank money for a longer period of time.
Before you start the loan application process, be sure to check what fits into your family budget according to the status after borrowing. Whether you’re taking out a loan as an individual or as a business, be sure to plan to keep a reserve in addition to your emergency reserve, and if you’ve calculated well, use prepayment instead. If you narrow down your own options, you can easily have a payment difficulty, and then the bank’s options are limited.
However, before making an actual decision, be sure to ask either several banks in person or seek expert help. There are factors that are impossible to set in the calculators, though an important issue.
Many such questions may arise, such as that
- what income and to what extent it is accepted by a particular bank
- whether the money must arrive in a bank account
- should you arrive in the bank account with the label “salary” or is it enough to take a regular credit?
- may give you a discount if you only receive a little more transfers to your account.
- It may not sound like much to get a 0.1% interest discount on something, but for a large loan, it matters a lot. Such is typically the case with a home loan.
Loans available for some loan purposes are also available with government support. This can be either a specific grant or it can even be an interest rate subsidy. In this section, see if you can use anything for your loan to reduce your burden.
As it is even more difficult for businesses to create an accurate calculator, it can be especially important to choose the right bank for your unique life situation.
If you want to know for sure how much credit you are entitled to from a particular bank, you can also find out in advance. Then the bank calculates based on what you say, you don’t have to confirm anything to it.
Applying for a loan, starting to borrow
Then you specify to the bank exactly for what purpose, for what term you are applying for the loan, how much income and other collateral you can present for this.
When applying for a loan, all you have to do is collect the documents requested by the bank and fill in the bank application form.
The required document can be as an individual:
- proof of your income (this is usually also accepted on the basis of a 3-month bank statement, they do not always ask for an employer’s certificate)
- submission of construction plans or just a contract of sale.
Required documents can be as a business:
- general ledger statement for the period specified by the bank
- valuation of the property offered as collateral
- construction, investment plan
- guarantee (even as an individual)
The bank will always tell you this in advance, so you need to collect this from a list.
The duration of a loan application is nominally not long, but it can take a long time to obtain all the documents for a more complex application.
You can also request a date from the bank branch to submit it, so you can organize your day more efficiently.
The credit rating takes place at the appropriate decision level of the bank. They will then review the documents you have submitted and see if you are eligible to apply for that loan. This depends on the legal regulations and on the bank’s internal regulations.
A prerequisite for a successful credit rating is that your income (above your other obligations) be adequate. So this is when they look at, among other things, that
- have you taken out a loan elsewhere
- do you have an existing credit line
- you repay your existing loans as usual, or in arrears or with them
That’s why if you have a credit line but don’t use it, you can either reduce it or eliminate it. The extent of the reduction is seen immediately, but the elimination has a lead time that you can count on anyway.
There are several countries, where the maximum burden on your income for individuals is determined by the IPT regulations. This makes possible to avoid over-lending and to filter out the use of black incomes. The bank may set stricter rules than this, not more permissive ones.
This regulation is, of course, only true at the time of borrowing, which can be changed later, either by a change in the income situation or by a change in the installment. Since the bank can no longer do much at this time, monitor the development of your own finances yourself. To do this, you can use the calculator in the Silver Moon downloads. By typing the current data into it, you can get an idea of what you need to do or what you need to pay attention to.
If you have applied for a loan with mortgage collateral, the bank will also examine its encumbrance. This depends on the value of what the appraiser considers to be, as well as on the settlement in which the offered property is located. The larger the settlement, the more credit it can be charged with, as the bank is more likely to be able to having their money relatively quickly by sell the property if the loan is terminated.
Signing the contract
At this point, it is necessary that all participants or their proxies are present at the bank and, if necessary, at the notary.
Contracting is already a relatively short process. Regardless, don’t take it lightly. After all, you will have to fulfill the obligations you sign. That’s why read it carefully, if you have any questions, feel free to ask.
It’s not usually a mistake to write a contract, but people work everywhere and making a multi-million dollar commitment without reading it is not a good idea.
Usually, in addition to mortgage-backed loans, the bank also requires a notarial deed. With this, you have no choice but to appear at the notary’s appointment at a pre-arranged time, the rest is arranged by the bank.
The loan will be disbursed upon receipt of all documents required for disbursement at the rate and in the manner specified in your contract. Thus, the disbursement of a personal loan is realized almost immediately and in a lump sum, the pre-filled transfer order is fulfilled in the case of loan redemption, but in the case of a construction loan the situation is a bit more complicated. You will then receive money from the bank according to the degree of readiness so that you can continue construction.
Repayment also begins as specified in your contract. The bank adjusts the installment after the amount disbursed, which depends on the maturity and interest.
Your contract determines whether there is a grace period while the bank only expects interest from you, and also what day of the month it expects to receive the installment.
When it comes to repayment, keep in mind that you also have the option to request a prepayment. This gives you the opportunity to reduce all refunds. While normally part of the monthly repayment is interest and only the remaining part reduces the principal debt, the entire amount paid as prepayment goes to reduce the principal debt.
- How many banks do you usually compare before borrowing?
- How often do you compare your existing loans to those now available to see if it’s cheaper?
- How much time do you think it will save you if you do not do this task yourself, but outsource it to a knowledgeable professional?
You can search for questions on this topic in the contact menu, or feel free to comment on social media.