Getting a home loan you want may be more difficult than you thought: Banks have set their own requirements

You will not receive a loan to buy the entire property

Obtaining a mortgage loan can be hampered not only by the financial situation of those who want to obtain it, but also by the condition and legal status of the home they want to buy. According to Mindaugas Statulevičius, head of the Lithuanian Real Estate Development Association, problems in obtaining a loan may arise in cases where the home to be purchased does not meet the criteria established by the credit institution. In general, it is a poor condition of a real estate object, so its value is extremely low.

“The property must have certain criteria. There must be an appropriate physical condition, there is also a question of liquidity of the property, whether or not the property will depreciate very quickly in principle, then the credit institutions estimate that we can grant a loan for an amount, but after a few years due under various circumstances, the property will be difficult to sell, it will also be difficult to repay the short-term loan, ”says M. Statulevičius.

What are the circumstances that could cause an asset to deteriorate? According to M. Statulevičius, the physical condition of the object itself is taken into account, as well as the environment in which it was built, and if further development of the area is planned, for example, if polluting and noisy communications will be built nearby.

“On the other hand, very often the institutions do not say no, they pose conditions that will be difficult for the buyer to implement. The initial contribution is very high, the risk will be transferred to the margin, the periodic payment of the loan, etc.” explains the interlocutor.

However, according to M. Statulevičius, one must not forget another aspect, which is evaluated by the institution that grants the housing loan, the purpose of the acquired real estate. The expert explains that it is often difficult to obtain a loan for a non-residential property, but buyers want to buy a property with a plan to convert it into a residential property. According to the interlocutor, such real estate objects are generally subject to a higher initial tax, and so on.

“For a property to be completely unbelievable, it must be in poor condition, with many criteria to meet. Of course, there are also legal problems, if the property will have many co-owners, how the property management, maintenance, sale, will agree with each other on such legal property problems, ”says the head of the LNTPA.

Must have certain criteria established

The criteria for when the home is not credited are determined by the banks themselves. As the specialists of the Supervisory Authority of the Bank of Lithuania explained, Delfi Būstas does not establish specific requirements or criteria for mortgaged real estate.

“Failure by the consumer of its obligations under the credit agreement would oblige the creditor to sell the promised real estate. Therefore, not only the valuation (price) of the mortgaged property, but also other characteristics, such as the liquidity of the property, etc., are important to the creditor. Therefore, according to its internal procedures or policies, the creditor is considered to have the right to take into account certain parameters of real estate, ”reports the Bank of Lithuania.

Delfi Būstas asked the largest commercial banks in Lithuania what criteria must be met when buying real estate to obtain a loan. Swedbank has reported that the bank provides home loans for the purchase of real estate suitable for the permanent residence of an individual or a family, although each case is evaluated individually.

“The real estate sector complies with the construction requirements, has the necessary communications and services and is legally ordered. However, if no insurance company agrees to insure real property at replacement value, such assets cannot be promised to the bank, ”the bank sent a response.

Seb’s response also states that each mortgage loan case is individual, the decision is made taking into account and evaluating many different aspects related to a particular person, their situation and the property to be purchased. However, in the case of unfunded assets, a mortgage loan could not be granted for extremely depreciated and poorly maintained homes that are not insured by insurance companies, as well as for unregistered, illegal and non-project objects. .

Similar criteria are established by Luminor Bank. According to Regina Ungulaitienė, Head of the Private Client Financing Group, many aspects of real estate are taken into account when providing housing finance: it is also determined by the location of the property, local infrastructure, accessibility, as well as the real condition of the building, apartment, house. in the asset valuation report.

“Assets located in areas that are liquid in relation to the real estate market are considered, by default, more liquid. Larger cities and densely populated areas that are close to engineering and social infrastructure and have historically low unemployment rates are also considered. The total liquidity of the property is very important to evaluate its possible financing, ”says R. Ungulaitienė.

It is true that the interlocutor adds that the most important factor in buying a home with a loan remains the client’s ability to pay the loan and pay all related contributions.

Invite a property appraiser.

When talking about real estate for the purchase of which loans are avoided, banks mention the poor condition of the real estate object. How should the home be equipped, what should its condition be so that no loan can be granted for its purchase?
According to M. Statulevičius, the head of the LNTPA, to solve this problem, independent property appraisers are often invited to determine the value of the property.

According to Audrius Šešplaukis, head of the Valuation Department of the real estate company Inreal and president of the Lithuanian Association of Property Appraisers, the property is valued without knowing whether the bank will grant a loan or not. Explains that appraisers value assets based on historical factual data.

“Apartments are generally subject to a comparative method, taking into account notarial transactions for the purchase or sale of similar or similar assets that are not older than 36 months (due to changes in the market, always try to use the most up-to-date information possible ). Under responsible loan regulations, up to 85% is funded. the market value of the property or the amount of the sale, whichever is less. However, depending on the purpose of the property or other characteristics or circumstances in the market, the part financed may be smaller, ”says A. Šešplaukis.

According to him, it is likely that the lack of a loan is not due to the value of the property, but to the legal aspects of the property or the financial capabilities of the buyers themselves.