Payday loan for a purpose of constructiion
Your own rural farmhouse or house on the outskirts of the city is a dream of every Latvian life, but most of us do not even come to such a dream, because it is not so easy to store such money to build or buy such property, and the cost of constantly growing living is not at all helpful. Although this is a common practice in foreign countries, building private housing with bank financing in Latvia is not the usual thing, as Latvians are a scary nation, and the risk taken by the borrower turns out to be too big for many of us.
This time I will try to tell you more about such payday loans for construction and how they differ from mortgage loans or other types of loans.
Basically, a payday loan for construction works is very similar to a mortgage payday loan and is also issued by banks against a new or existing mortgage to hedge risky transactions. In essence, you will need an approved construction design that will be assessed by a certified construction engineer and the current and expected value of the property will also be assessed. After this assessment, the bank will decide how much you can get a payday loan for your new family home, but usually these are 70% -90% of the cost of your construction project.
Credit institutions issue these types of payday loans only for personal property building and require you to provide a variety of security measures, such as building design insurance, valuation, monthly checks, project status and development speed, as well as various harmonized documents with the building administration and your municipality for compliance with the law and profitability of the project .
Basically taking this kind of credit to start construction projects, you have to ensure that the bank will definitely get your money back with monthly interest payments, or in case of non-payment of the property itself, and that is why they need to pledge this new project or other real estate. property pledge, the value of which is comparable to the new project.
When you first apply for this type of credit, the bank’s agents will explain all your options, look at your monthly finances and find out how much credit you can get, and this amount is usually no more than 50% of your family’s total earnings ! If you meet all the bank’s rules and you have the opportunity to get a payday loan, then the bank will explain to you that such a payday loan does not have to be paid at the beginning of the month because it is specifically designed for family home building and during that time (12-24 months) you can not pay the principal and interest on the payday loan and start paying it out only after the construction project has been completed, when this construction payday loan is essentially refinanced on a mortgage with the usual mortgage interest and rising or falling payments.
In order for you to receive this type of payday loan, banks usually require the following documents:
- Family income documents
- Current and future projected construction project rating.
- Copy of approved building design permission,
- Contract for the provision of construction services and costs
- Notarized Land Register and Other Documents
- Construction project insurance.
These are basic documents, but usually banks individually determine other requirements and documents to be submitted, but you will find out more about this in the credit institution of your choice!
After all this, I would recommend that everyone think about whether it would be impossible to build a family home with such a payday loan, because there is no difference, do you pay rent in the apartment, or do you pay to the bank the principal amount of the payday loan, at least after the completion of the construction project and the payday loan. own a house that will probably serve for decades!
PS: Banks also advise the borrower to take out life insurance so that in the event of an accident the credit burden does not reach the family but is paid by the insurance company.