Critical mistakes to avoid when applying for a mortgage and how to prevent them.
1. Sticking to a Single Bank
Getting an offer only from your current bank without considering other banks is a big mistake. Interest rates can differ by 0.3–0.8% between banks.
2. Not Calculating the Total Cost
The interest rate alone is not enough; side costs such as the arrangement fee, mortgage registration, appraisal, life insurance and compulsory earthquake insurance (DASK) should be included.
3. Choosing Too Long a Term
A 240-month (20-year) term lowers the monthly instalment, but at a monthly interest rate of 2.5–3% the total repayment can reach about 6–7 times the amount borrowed. Choosing the shortest term whose instalments you can comfortably afford reduces the total cost considerably.
4. Stretching Your Income Limit
You should not take on instalments exceeding 35% of your monthly income. Life events (unemployment, health) can trigger a crisis.
5. Not Checking the Appraisal Report
Failing to question the value set by the bank-appointed appraiser can lead to the property losing value.
6. Overlooking the Early Repayment Penalty
For home loans, the early repayment fee is capped: if the remaining term is longer than 36 months it may be at most 2%, and if it is 36 months or less, at most 1%. Check the contract before signing.
7. Missing Refinancing Opportunities
When interest rates fall, you can make significant savings by moving your existing loan to another bank (restructuring).
