What does the client need to know about the loan application?
With the loan application, the “loan applicant” addresses the bank after initial preliminary talks and drawing up a financing plan in order to initiate its financing project in the formal way.
The bank will examine the incoming loan application together with the attached documents, the creditworthiness and creditworthiness of the applicant. If the bank’s decision is positive, the potential borrower receives the loan approval – the contract is ready to be concluded.
For the further steps, further documents (border certificate, shell and final acceptance certificate, mortgage order, fire insurance certificate, declaration of division for condominiums) must usually be submitted or the corresponding collateral must be ordered. Only then will the agreed loan amount be paid out.
What does the loan application look like?
There is no uniform loan application – it varies from bank to bank, but usually contains certain basic building blocks.
This includes, for example, querying the following information:
- Name, address of borrower
- Name, address of lender
- Loan amount
- Interest rate (if variable: conditions of interest rate adjustment)
- if applicable, commitment interest
- Payment dates (monthly, quarterly, etc.)
- Fixed interest period
- annual repayment amount
- Land charge, other collateral
- Payment type (partial, complete)
The general terms and conditions also contain further information such as prepayment penalties or specific deadlines after the end of the fixed interest period.
- Have the general terms and conditions (general terms and conditions) handed over to you for easy understanding!
What documents do I need for the loan application?
A plethora of documents is required to apply for a loan. Accordingly, applicants should start with the procurement of all necessary documents at an early stage. In some cases – for example with prefabricated houses or the heritable building right – additional documents are required.
You should have the following documents ready for the loan application:
- Financing plan
- Construction cost calculation
- Construction plans and official site plan or land map
- Purchase contract and photo of the finished object
- Valuation report
- Extract from the land register
- Proof of income and own funds
If the aim is to finance an apartment building, the current rent index should also be included.
In the case of leasehold law, a copy of the corresponding leasehold law contract is required by the credit institution and in the case of prefabricated houses the contract for the production of the house should be submitted in any case.
When do I sign the loan contract?
In general, it makes sense to conclude the contract only after the notary appointment. The reason: If you do not agree with the seller, the loan contract must be terminated, there are costs for the borrower.
On the other hand, there is a risk that banks – after signing the purchase contract – will suddenly withdraw (despite a positive response to the loan application). How can borrowers avoid this risk?
Those who strive for a building loan and find interesting financing can best fix the whole thing with a binding financing commitment.