For young people who want to feel like free birds and fly out of their family nest – studying is the first serious moment in life. At this time, they must demonstrate a dose of independent decisions, appropriate organization and innate resourcefulness – also in choosing their own. Here the range of possibilities is quite large – students can choose an apartment in a flat, in a dormitory, alone or with several people. However, more and more often a working employee also decides to buy real estate. In which cases is it possible and to pay attention?
Student on his – how to take a mortgage?
As you know, most young people, after passing the final exams, decide to go to university. Often this involves moving to another city, but also a lot of disturbing thoughts. How will it acclimatize in a new place? How will I manage financially and will I find a suitable flat? And so, so far the problems known only from the stories become a series of everyday dilemmas.
It is also worth noting that as a student – young people cannot take up any work for a longer period. Unless we mean mowing my aunt’s lawn or looking after the neighbor’s children. The moral of this is that future and current students do not have much room to show off … So how do you get a mortgage on your own four corners, without a proper credit history?
Credit – the first major financial commitment
Banking institutions do not directly offer such a product as “student mortgage” – because every student is treated as any natural person applying for a mortgage. Thus, after submitting the loan application, the bank thoroughly verifies the future borrower by checking its creditworthiness – ie the ability to repay the contracted liability together with interest, within the period specified in the contract. It is influenced not only by regular and stable income, but also by the status of the employment contract, assets owned and marital status.
Importantly, each bank has a different algorithm for calculating creditworthiness, so before you decide on one specific offer – it is worth using credit rankings and choose some of the best options you are interested in. Remember that the fact of studying does not affect the lender’s decision, but the source of income and seniority – by all means! The loan period, the amount of the contract and the own contribution are also key. We presented ideas for financing it in an earlier article.
Full-time and extramural studies – does the form of education matter?
As we know, banks do not discredit students who continue their education and treat them as any other applicant. However, whether an aspiring student studies in full-time or part-time form is of great importance for the credibility of the client. Why? The prescription is in employment, which affects the salary and regularity of income, and thus the assessment of creditworthiness! Especially when a young person plans to take out a mortgage alone.
Of course, if there are people who cleverly reconcile full-time study with work – the better. The Bank takes them into account in the same way as students learning extramural and earning during the week.
Employment contract and mandate contract – does the form of employment matter?
Definitely more attractive credit terms, such as a lower margin or commission are otherwise available to part-time students with permanent employment. Preferably those who have an employment contract and at least 2 years of running their own business, with relatively good financial results and plans for further development. In such a case, even the matter of tuition fees does not reduce creditworthiness. The condition is also a stable income and a relatively high salary that the applicant can boast of.
An employment contract is also a more reliable and reliable form of employment than a work contract or ordinary civil law contract. People who work on the basis of a civil law contract will receive a loan for young people much faster with the help of a second borrower. See mortgage with parents. However, in all cases, banking institutions require proof of income – statements of account and the amount of remuneration, as well as a statement of income. However, in the case of a fixed-term contract, it is necessary to provide a promise (preliminary contract) of employment.
First steps towards credit
Housing loans are a big risk for banks – especially when it comes to a young person who is just stepping toward independent decision making and developing a career path. Therefore, for better credibility, remember to ensure that all documents are thoroughly completed. What should you remember about?
First, a contract of indefinite duration:
- Certificate of regularity of income received on the bank account,
- Account statement, which is affected by RMUA remuneration / forms, in the case of cash remuneration
- Certificate of employment
- Contract of employment
Secondly, a fixed-term contract:
- Income attestation certificate,
- Account statement that is affected by the salary
- Certificate of employment
- Contract of employment
- Employment promise / statement from the employer that there are no contraindications to extend the contract
Third, the mandate contract:
- All mandate, work or service contracts
- Statement from personal account, which is affected by remuneration
- PIT-37 for the previous year
Credit refusal and mortgage with a co-borrower
If, despite submitting the application and submitting all the documents, the bank consistently refuses to grant a loan – a young man who does not want to be sentenced to rent expensive homes may opt for a loan with another person. A young student can be supported by parents, older siblings, stepfather, stepmother, but also other family members, as well as persons unrelated to the applicant or his partner, without being married. Interestingly, at any time during his life the applicant, if he feels stability and financial liquidity, may give up the help of his relatives. However, a student who is already married and has not signed a property separation (intercyza) – if he wants or not, he will incur debt with his spouse.
What does the bank risk when granting credit to a student?
The biggest unknown for a banking institution is the solvency of ambitious students. After all, there is no certainty that the customer, who at first glance seems to be solvent, actually demonstrates a solid regularity in paying off the contract. And this is even more difficult, because the student-borrower usually has no credit history, and if it exists, it is poor and says nothing of the applicant’s timely obligations.
In such a situation, due to the low scoring – the loan application may be rejected by the bank. It is often the case that lenders also require a specific own contribution. Therefore, before such a credit decision, which is important and binding for many years, is taken – the future borrower should not limit himself to visiting the bank. The eye of a professional credit advisor will be useful in searching for credit offers tailored to individual expectations and financial possibilities. This is also important because the loan agreement often includes a sub-section on consultancy services that are included in the bank’s commission. So, without taking advantage of the opportunity, the bank allocates some of the liability to the adviser anyway.