Many young people dream of their own M. Few, however, can afford it. Are you sure? What are the ways to increase creditworthiness? Is it worth taking a loan for an apartment with parents?
Getting a mortgage is not easy. Banks check the borrower very carefully. There are even more challenges for young people who cannot boast of a long work experience.
Creditworthiness – how does the bank assess it?
The basis of creditworthiness is monthly income. Banks pay attention to the amount and timeliness of our remuneration. Here, people who are freelancers, which is the case for many young people, will be in a worse situation than those employed under a contract of employment. An irregular income of a freelancer may discourage the bank from granting a loan for an apartment. Even if you have a regular income, but you have a lot of expenses, e.g. for family, your creditworthiness may be too low to pay a high loan installment. To check whether you can afford the planned loan, use the creditworthiness calculator.
One way to improve your credit standing is to take a loan with a co-borrower, e.g. one of your parents. Especially if he is professionally active and has high, stable income. It will definitely have a positive impact on your credit standing, so you can pay a higher installment. This will automatically enable you to take a higher loan.
Positive credit history
Another element that banks pay attention to are possible debts and timely repayment of liabilities. Loans, account limits or credit cards have a negative impact on the assessment of creditworthiness. On the other hand, loans that were previously taken out and were repaid on time can convince the bank that the potential borrower is a systematic and trustworthy person.
Loan for housing with parents and the borrower’s age
An important element of taking out a mortgage is also the borrower’s age. A loan for an apartment can be taken for a maximum of 30 years. Young people can get a loan agreement for a longer period than older people. On the one hand, young people have lower incomes and shorter seniority. On the other hand, however, extending the lending time affects the amount of the loan. In this situation, it is also worth considering options for buying an apartment from the secondary market.
A mortgage with parents is worth taking in a period when your income is not enough to take out a loan for an apartment yourself. Later, when the young person’s situation stabilizes, it is possible to exclude parents from the loan agreement.