A mortgage step by step

What does the mortgage process look like?

Applying for a mortgage is an orderly process in which each stage follows from the previous one. It pays to know the whole path so you can plan deadlines, especially when you have at the same time signed a preliminary purchase contract with a set completion deadline.

In the broadest terms, the stages look like this: assessing your own creditworthiness, comparing offers, submitting the application, the bank's analysis, the credit decision, signing the contract, and the disbursement of funds with the mortgage entry. We discuss each of them below.

How do you prepare before submitting an application?

Before you submit an application, estimate your creditworthiness and get your finances in order. Check your report at BIK, repay small liabilities and consider closing unused cards. Also establish what down payment you have available, because this affects the offers on the table.

Comparing offers

Banks' offers differ in margin, commission, required insurance and additional products. To compare them fairly, look at the APRC and the total cost of the loan, not just the interest rate itself. It is worth considering the support of a credit adviser who knows the requirements of different banks.

Which documents are needed for the application?

The scope of documents depends on the bank and the form of income, but it usually covers three groups.

• Identity documents: an ID card, sometimes a second document confirming identity.
• Income documents: certificates of employment and earnings, account statements, and for businesses the financial documents of the activity.
• Property documents: data from the land and mortgage register, the preliminary or developer contract, and information about the property needed for the valuation.

A complete and well-organised set of documents speeds up the analysis. Missing items or outdated certificates are the most common cause of the process dragging on.

What does the bank analyse before issuing a decision?

After the application is submitted, the bank carries out a credit analysis. It verifies your creditworthiness, checks your history at BIK, and assesses the property that is to be the collateral for the loan. The property's value is usually established on the basis of a valuation.

Property valuation

The bank wants to be sure that the property's value covers the loan being granted. The valuation may be carried out by an appraiser or based on the bank's internal tools. If the valuation turns out to be lower than the purchase price, the bank may reduce the loan amount, which requires a higher down payment.

How do you read the decision and the loan contract?

The credit decision sets out the terms on which the bank is ready to grant the loan: the amount, period, interest rate, required collateral and insurance, and any additional conditions. It pays to analyse it carefully before you move on to signing the contract.

In line with the rules of the mortgage market, you have the right to review the draft contract before it is concluded. Pay attention to how the interest rate is set, the rules on early repayment, the required insurance, and the consequences of any delays. If in doubt, ask the bank for clarification.

How does loan disbursement work?

After signing the contract, the bank disburses the funds, that is it pays them out as agreed - usually to the seller's account or, on the primary market, in tranches as construction progresses. Disbursement is often conditional on filing an application to enter the mortgage into the land and mortgage register.

Until the mortgage entry becomes final, the bank may charge bridging insurance, which raises the instalment at this initial stage. After the entry is made, this cost usually disappears and the instalment returns to its target level.

Summary: how to get through a mortgage smoothly

A mortgage is a multi-stage process in which good preparation genuinely shortens the time and increases the chances of success. Start by assessing your creditworthiness and getting your finances in order, then compare offers in terms of the APRC and total cost, not just the interest rate.

Assemble the documents carefully, because missing items most often extend the analysis. Read the decision and the draft contract attentively, paying attention to the interest rate, insurance and the rules on early repayment. Also keep in mind the disbursement stage and the mortgage entry, which affect the size of the first instalments.