How to pass the loan from an apartment to a building under construction
Did you find that there is cheap money in the market and you decided to exchange your apartment for a house? In addition to increasing the mortgage, you will have to deal with the transfer of the credit burden from apartment to house. Good Finance investigated what steps you should take and what fees you have to pay.
Imagine such an example. You have a large apartment worth 150 thousand dollars. You’d like to sell it and build a house for the money you earn. You already have some money saved and borrowed, but it will hardly be enough for a rough construction.
So selling an apartment will free your hands and deliver the remaining cash to complete the house. But selling an apartment that you have mortgaged is not that easy. Few buyers are willing to buy an apartment with a loan. Therefore, the burden – ie the right of lien – for the apartment must either erase it by repayment or transfer it to an unfinished house. Since few would return to the bank the money that may be needed to complete the house, let’s look at the second option.
Pay attention to the height of the security
Before starting the process of transferring a mortgage security from an apartment to a land or house, you should check with your bank how much loan balance you have and whether your new property will be sufficient to cover it.
The bank does not always have to agree to transfer the charge from the apartment to the house. It depends mainly on the value of the property – whether the land and the house under construction sufficiently secure the current claim Good Finance against your apartment.
For example, if you have a mortgage balance of $ 100,000 and the plot of land under construction is of the same value, the bank may not agree to transfer the charge. For a new building gives credit only from 70 to 80% of its value by location.
The more you get from Bratislava, the less credit you get. So you should have a house under construction with land worth at least 125,000 dollars, so that the bank will transfer you 100,000 (80% of the 125,000) to a new building.
If a house is not yet of such value, setting up another property, such as your parents’ apartment / house, can help. When the house arrives, its value increases and the charge is erased from their house.
Not a house like a house
Therefore, you should check with your bank at what stage the new house must be under construction in order to transfer the burden. In some banks, it is enough to have a base plate and walls pulled out, elsewhere it is stricter, and want a holodeck or a house with at least 80% under construction. Also, check how it is with the assessment of the under construction and brick house. There may also be different criteria for banks. In the past, Good Finance used to underestimate the value of timber houses, or recognized them only when they were almost finished.
- When the property is problematic for mortgage purposes
Today, financial houses are more accommodating to wooden houses. However, they usually only refinance such a house if it is built by one of the companies that cooperates with the bank. Therefore, it is good to verify the construction company and not build a house yourself.
Financial houses also do not allow you to guarantee a loan, say a garden instead of an apartment. The garden can be liable only if the land is intended for construction.
Of course, unforeseen charges await you in the above operations. First of all it will be the payments for the experts who evaluate your apartment, house under construction and your parents’ house. If everyone asks for the usual 150 dollars, it’s not enough.
Good Finance also charges high fees for changing the lien from apartment to land or house because they see it as a change in contractual terms. For example, in Slovenská it is USD 149, you will pay USD 200. In other banks the fees are similar.
At the same time as setting up a new lien, you should also take into account the fees associated with the land registry procedure. There is a fee of $ 33 for an electronic deposit, $ 66 for a regular deposit and $ 265.50 for an accelerated deposit.