The process of applying for a mortgage is very complex. It requires the presentation of many documents and thorough analysis by the bank. Finally, there is the longed-for moment of receiving a positive decision. However, this does not give 100% certainty that the contract will be signed!
If the prospective borrower receives a new job offer before signing the loan agreement, it is better for him to think about changing the place of employment. Although banks rarely carry out further verification after a credit decision, it is better to be on guard.
When granting credit
Banks usually require that the employment contract the client has lasted for at least 3 months and does not expire before at least 6 months have elapsed. Contracts for a trial period are also excluded.
Of course, the bank may apply a deviation from the procedures, but it’s worth getting to know its policy in advance.
It may turn out that the bank will require the entire credit analysis to be carried out from the beginning and the future borrower will have to wait with the new application until they reach the minimum length of service required by the bank.
If, after receiving a positive credit decision, the bank finds out about the prospective borrower’s transition to sick leave or maternity leave, he may also raise some reservations.
If the exemption was granted for more than 30 days, the bank may cease to recognize the source of income that it took into account when calculating creditworthiness. In the event of transition to maternity leave, the crediting institution may, however, request a statement that the woman does not intend to take parental leave and will return to work.
Another flat? We start from the beginning!
If the future borrower decides to change the property he initially intended to buy for another one or for some reason the transaction cannot be completed – the entire credit procedure must be carried out almost from the beginning.
A mortgage is granted for a specific property, which must first be checked in legal and technical terms. Fortunately, sometimes banks allow the possibility of using a short procedure.
In this case, however, the bank will ask the borrower for all documents regarding the new property (excerpt from the land and mortgage register, preliminary contract, sometimes valuation, etc.). Unfortunately, most banks will require a new, complete application.
If the bank re-verifies the future borrower after issuing a positive credit decision, large purchases may also be unwelcome, especially if they mean the need to take out a loan.
Buying a car for a loan or household appliances in installments can mean that in the eyes of the bank the borrower will reduce his creditworthiness and will be able to afford a lower loan than the one he was granted earlier. So if the bank finds out about such a purchase before signing the contract, it may require a recalculation of creditworthiness, due to the greater risk that the borrower will not be able to pay its liabilities on time.
The loan will not only be granted
Often, potential borrowers are happy that their application has been approved and the loan will be granted on favorable terms. Once your emotions have subsided, however, it’s worth following the contract terms again.
Often, these preferential credits granted as part of the promotion turned out to be not as cheap as it seemed at first. Banks more and more often use so-called “cross-selling”, so they condition the granting of a loan on promotional terms by purchasing other, additional products.
In the case of mortgages, banks often agree to lower their margin in exchange for using other services, for example, setting up an account, deposit or applying for a credit card.