Buying an apartment that is in the early stages of implementation is at greater risk.
Despite this, many clients of development companies are choosing the premises to be built
The reason is quite prosaic – flats offered at the stage of “holes in the ground” or foundations (so-called zero state) are sold at a certain discount. In current conditions this discount may amount to several percent.
Persons interested in the premises, which will be finished in a few months, should remember about the position of lenders. National banks pay attention to the risk associated with financing the emerging apartment.
The developer must go under the banking magnifying glass
Information provided by individual banks indicates that the applications for loans for built flats are assessed on an individual basis. The exception is Cash-Hand Lend. The above-mentioned creditor excludes the possibility of financing the emerging premises (see the table below).
The two analyzed banks (ABC and Miles) check whether protection measures are required as part of the investment under examination, which are required by the developer act.
This category includes:
• closed housing trust account
• open housing trust account and insurance guarantee
• an open housing escrow account and bank guarantee
• open housing trust account
The presence of one of these forms of collateral is of greater importance to future customers of Bank Miles. They must accept the higher requirements as to the minimum progress of work (20% instead of 0%) if the developer does not offer statutory protection measures as part of the investment.
More expensive bridging insurance is a problem
As a supplement, it is worth recalling that buyers of built flats have to wait longer for the mortgage collateral to be established. The risk associated with the temporary absence of a mortgage must be compensated by the bank due to the so-called bridging insurance. Its premium is usually calculated by increasing the credit margin by 0.50 – 1.50 percentage points.
Persons interested in the emerging flats should estimate the cost of the policy in question before making the final decision. In this context, it is worth remembering that establishing a mortgage often takes place 3-4 months from the date of completion of construction.