Mortgage on new production – everything you need to know.
The disadvantage is that newly produced condominiums are usually more expensive than existing ones.
An important factor is the new tenant-owner association’s finances and ongoing fees. Since a new association has no previous operating costs to fall back on, this becomes a theoretical calculation. In addition, new associations are often higher-leveraged than older ones. Here it is important to look out, so that your housing budget is not a joy calculation. It is a common problem that the fee will be higher than expected in new associations.
As usual, the new amortization requirements apply. You can borrow up to a maximum of 85% of the value of the property. You always have a cash stake of at least 15%. Depending on the amount, loan ratio and income you may need to repay up to 3% of the loan per year.
Does the bank keep its loan promise?
When buying newly-produced apartments, it is common for you to commit yourself a long time in advance, before the construction is completed. This requires a stable loan promise from a bank, which lasts over time. Unfortunately, the conditions can change and the bank will say no to a preliminary loan promise.
If you apply for a mortgage loan by comparing free of charge the various banks’ mortgages with us at Chingachgook, then you have the confidence that we will be with you throughout the process. If a bank should back out of your home purchase, then we can offer other alternatives. This way you can increase your security when you enter into a purchase of a housing that is not yet finished.
Booking fee and advance agreement
When you purchase a condominium that is not yet finished, it is standard for you to pay a booking fee. This differs between different builders.
But one example is that this fee is USD 20,000, of which all but an administration fee of USD 7,000 can be refunded if you change your mind. In other cases, the entire booking fee may be locked and lost if you do not complete the purchase.
A fee is also charged when you then formally sign a pre-purchase agreement. It may also vary, but in the example above it is USD 50,000 including the 20,000 you have already paid.
Normally, the booking fee is paid to the construction company and the advance fee to the new tenant-owner association. However, it is common for construction companies to help get a new association started and then both fees are paid to the construction company.
These fees can vary from being a fixed standard amount to being a share of the new home’s total price. What applies in your case you find out by contacting the builder or broker who sells the item you are interested in.
After the purchase
After the purchase, before moving in, an independent inspector will do an initial inspection of your newly built home. Then it can be good if you are with. During this time, the final inspection also takes place.
Once the new tenant-owner association is registered and its financial plan is approved, it is time to sign a lease agreement. In connection with this, it is also decided when the final payment is to be made, but at the latest before moving in.
Two years after the final inspection and move-in, a so-called guarantee inspection takes place. Then errors that occurred during the warranty period should be noted and corrected. Thereafter, construction failure insurance also applies for an additional eight years.