Banks have requirements regarding the real estate for mortgage lending. For example, it is difficult to get a mortgage if you find an apartment in a building with wooden floors. Non-targeted loans do not have such restrictions.
No down payment
To take out a mortgage, you need to collect at least 15% of the cost of housing. For this, maternal capital and special state subsidies are often used. But when there are no savings, mortgage lending is not suitable. The difference with a non-targeted loan is that an initial payment is not required: you can immediately receive the entire amount needed to purchase real estate.
The apartment is immediately your property
While you are paying off the mortgage, the bank remains the owner of the property. This complicates any real estate transactions. In the case of a non-targeted loan, everything is much simpler: you register the property as your property and can sell it if necessary.
In the context of mortgage lending, the purchased property is lithuania mobile database almost always insured. This adds about 2% overpayment each year. Non-targeted loans have the advantage that such a requirement is absent.
Disadvantages of consumer credit
Limits on the amount
To get a large amount without collateral, you need to have a very high income, a good credit history, and low debt. If you have a small income, you will need collateral in the form of collateral and guarantors. If this is not feasible, you are unlikely to be able to get more than 700,000 ₽.
High Stakes
On average, cash loan rates are higher than mortgage rates. But if you can provide collateral (a pledge or surety), the bank will receive additional guarantees and offer a lower interest rate.
Large monthly load
It is difficult to take out a non-targeted loan for a term longer than 7 years. Because of this, the monthly payment is usually very large.
Pros of a mortgage
Government support
There are many government benefits and subsidies that can be used to buy real estate with a mortgage. You can find programs for young families, military IT specialists, rural residents and other categories of citizens.
Low rates
Since the property is insured and registered as collateral, banks can offer very favorable rates on housing loans.