When you are going to buy a home, the seller will demand a down payment when you sign the purchase contract. The down payment is called a down payment and acts as collateral for the seller. It simply shows that you are a serious buyer who will not pull out. In this article, we work out the difference between down payment and cash deposit and how it works to take out a down payment loan.
What is down payment?
For home purchases, down payment is the part payment that you as a buyer pay in connection with the contract signing. The down payment is usually 10% of the home’s purchase price and acts as a security for the transaction. The remaining amount is only paid on the day of admission. Often the down payment is paid to the broker who then transfers the money to the seller.
The difference between down payment and cash deposit
It is common to confuse the concepts of down payment and cash deposit, but in fact there are two completely different things. Down payment is a down payment of 10% of the purchase price that you pay when you sign the purchase contract for a home. The cash contribution is the amount you need to finance cash when you buy a home. According to law, you can only borrow a maximum of 85% of the value of the home. Therefore, the cash contribution is always at least 15% of the purchase price.
Can the down payment be included in the cash deposit?
Yes, there is no legislation on how to distribute the cash. If you pay the down payment of 10% in cash, the sum is counted as part of the cash contribution. The main thing is that you do not take a mortgage on an amount greater than 85% of the value of the home.
What is a mortgage loan?
A down payment loan is an unsecured loan offered by many of the major banks. This loan may be relevant if you have not been able to save for the down payment before the contract signing date. Some examples are if your money is locked in your existing home, or if you have received a loan promise from a bank but do not have enough money in the account.
Terms and interest rates for down payment loans
Mortgage loan is an unsecured loan that must be repaid no later than the day of admission. There is no repayment of a down payment loan, but the loan is repaid in full upon entry. Mortgage loans usually have a higher interest rate than a mortgage, but lower than a private loan. In addition to interest, you often have to pay a fee for the loan. Include these costs in your mortgage loan so that you find out what the loan will actually cost. The lender’s requirement is that you have applied for a mortgage or loan pledge from them and been granted it. Since the loan terms may look different depending on the lender, it is important that you compare loans from several lenders before deciding.
Tips on down payment and down payment loans
If you need to lend to the down payment, it is important that you apply for a loan promise from a lender that offers down payment. It is also important that you compare offers from several lenders so that you can ensure that you get the best possible conditions. We at Wiselend can help with that. With us you get personal mortgage loan advice, in addition we only take a credit report on you when you apply for mortgages and mortgages.