Many young Poles face the challenge of obtaining a mortgage for the purchase of their own financial comparison analysts advise – the creditworthiness may be increased by applying for a commitment together with parents.
Mortgage together with parents
A large number of young Poles have problems with acquiring a well-paid profession or have a short work experience, work on “junk” contracts, have unhappy prospects for the future. On the other hand, he needs money to buy an apartment. Experts from the financial comparison website suggest an idea to increase their chances with the lender – taking a loan together with better-off parents. Such a solution will help to obtain satisfactory creditworthiness, but unfortunately it also has some disadvantages.
Plus, joint application for a housing loan with parents is clear – joining the group of applicants will significantly increase your creditworthiness, or simply be a last resort, for the bank to borrow money at all. Parents, of course, have to earn decent money and have an impeccable credit history. Theoretically, it is possible for only one parent to join the loan (when the other one does not earn and his presence among borrowers would not have a positive impact on creditworthiness), but only if they do not have a community of property.
The parent must also be aware that his person is not only needed to increase creditworthiness.
He simply becomes a co-borrower, and is equally responsible for this commitment and its timely repayment as its child.
A disadvantage of this solution, however, is the relatively short time over which installments can be repaid.
Banks apply the upper age limit for borrowers, usually at the level of 70-75 years, rarely 80 years. This means that with 50-year-old parents, a loan can usually be taken only for 20-25 years, and not e.g. for 30 or even 40 years. And it is known that the shorter the repayment period, the higher the installments you have to pay monthly (although, on the other hand, the smaller the total amount of interest paid).
It is also worth remembering that if a young person after some time becomes more credible – he will be able to boast of higher earnings, a more secure workplace, etc., he can apply for an annex to the loan agreement, and “disconnect” parents from the loan. The bank recalculates its creditworthiness and if the parents’ help is no longer needed, it will approve the application. What’s more, then you will be able to extend the loan period, and thus reduce the monthly installments. The opposite situation is also possible – joining an additional borrower while the loan is being repaid, when financial problems arise.
The co-borrower usually does not have to be a co-owner of the property.
It should also be remembered that although a parent as a co-borrower is probably the most common case, it is also possible to apply for a loan with another family member or even with an unrelated person.