The mortgage is one of many loans available to both enterprises and private individuals by banks. In practice, the loan is most often in a non-cash form as a record on a given account.
It should be noted that only banks are entitled to grant this type of credit in Poland, while funds for this purpose come primarily from deposits which are then entrusted to the bank by their own clients.Therefore, credit agreements are regulated primarily by the banking law of August 29, 1997.
This Act specifies that: through a loan agreement
The bank undertakes to make available to the borrower for the period of time specified in the agreement the amount of cash for a specific purpose, and the borrower undertakes to use it under the conditions specified in the agreement, return the amount of the loan used interest on specified repayment dates and commission on the loan granted. Come and see it, my website will help you choose a good offer.
In practice, the following characteristics are given for the mortgage:
long repayment period
mortgage security for the purchase of a given property
combination of the subject of the loan and the subject of the selected collateral
low interest rate which is associated with a small degree of credit risk
possibility of selling a given claim
Therefore, the mortgage in question is mainly granted to finance a specific investment in real estate, both residential and for further housing purposes. However, in practice it excludes the purchase of any real estate through a home loan. In addition, as already mentioned before, the mortgage is related to the subject of the collateral because then the property is acquired, which becomes a direct collateral for the repayment of the loan.
In turn, the amount that will then be determined by the estimated valuation of the property just for the repayment of the loan is referred to as the so-called LTV from English loan is value and in practice it can be up to 100%. In addition, as mentioned above, the mortgage is characterized by a long-term contract, which is why the repayment period can be up to 40 years while maintaining a uniform manner of repayment of agreed installments.
The mortgage loan is also characterized by a low credit risk burden
This is primarily related to the fact that in this case assumptions with low volatility of the property value in the long repayment period were adopted.
Granting loans secured by a mortgage is carried out as part of the tasks of mortgage banks. It should be noted, however, that the legislator does not reserve only this activity within mortgage banks. As it turns out, universal banks have the right to grant loans secured by a mortgage. Therefore, it is important to distinguish between a mortgage-backed loan from a mortgage bank and a universal bank.