Given the extremely high prices for new private property, it is not surprising that many people prefer to look for cooperative flats. These are usually offered at more affordable prices. But it has a catch. The classic mortgage for the purchase of a cooperative apartment can not be taken. Why? So what are the financing options for a cooperative apartment?
The reason why it is not possible to take a classic mortgage when buying a cooperative apartment is the inability to stop the apartment. This is because of the transfer of membership, respectively. cooperative interest, not for the transfer of ownership. This does not mean, however, that the acquisition of a cooperative apartment only affects those who have their own finances. There are several solutions.
Pledge of other real estates
At the moment the bank provides a mortgage loan, it requires a pledge. It is not dogma, however, that the mortgaged property must be the one bought. The bank does not really care what the property is. It is important that it covers the required amount of the loan.
A mortgage for a cooperative apartment can be any other property, even a cottage or cottage.
The mortgaged property does not even have to be in the applicant’s personal possession (although of course, it would be the best option). For example, anyone in the family who has a property in their personal possession and is willing to charge it with a lien can help with the guarantee. The only thing a bank will need for the purpose of establishing a lien on a “foreign” property is the owner ‘s consent.
When applying this procedure you can take a mortgage for a cooperative apartment. The bank will negotiate a classic mortgage with completely standard parameters. In addition to paying the entire price from its own resources, this is the easiest way to finance a cooperative apartment.
The pre-mortgage loan offers a solution for all those interested in a co-operative apartment who know that it will be transferred to private ownership within one to two years. In such cases, some banks provide a special financial product, the so-called pre-mortgage.
No collateral is required to obtain a pre-mortgage loan. The Bank will provide interested parties for a period of one to two years of funding that after the transfer to private ownership of the apartment to flip on the classic pre-mortgage loan mortgage. And it will also establish a lien in this apartment. The disadvantage of this option is higher costs because the interest rate of the over-mortgage loan is not as advantageous as for a mortgage.
During the pre-mortgage loan, the client pays only interest, the principal is not repaid at all. The pre-mortgage approval process is very similar to a classic mortgage – the bank is interested in the client’s creditworthiness and information about the purchased apartment.
Which bank offers the most advantageous mortgage for a cooperative apartment cannot be clearly determined. It depends on the assessment of the applicant’s creditworthiness, the value of the mortgaged property and possibly other individual criteria.
Building savings loans and other alternatives
The last option of financing a co-operative apartment may be using a regular building savings loan or a bridging building savings loan in combination with other special-purpose loans. Thanks to these financial products it is possible to obtain up to 1 million crowns.
Some people also use an American mortgage for a cooperative apartment, respectively. for its acquisition.
When combining different types of loans, one has to count on the fact that it will be not only a relatively demanding administrative process but also expensive. The more loans used for the acquisition of a cooperative apartment, the higher the costs will be, not only with regard to the related fees associated with the individual loans.
What to watch out for “buying” a cooperative apartment
Although it is people ‘s dream to live in their own homes, the low price of cooperative flats can entice people. In addition to the lower price, the acquisition of a cooperative apartment has another advantage. There is no real estate acquisition tax because it is not a transfer of ownership but only a transfer of a share in a cooperative. But this is virtually the end of the benefits, rather the negative.
Cooperative housing has its advantages and disadvantages. It may be problematic to acquire a cooperative apartment for rent because the tenant has to approve the cooperative and if he is not satisfied with it, he may ask for his replacement.
One of the less pleasant aspects of a cooperative apartment with regard to the acquisition process is the fact that there is no 100% information about it. The cooperative can promise to transfer individual flats to private ownership, but it is practically impossible to force it. It is enough that some team members disagree with the transfer and there may be a problem right away.
Similarly, there are no registers to indicate whether a particular apartment is free of debt. Applicants for a cooperative apartment will have to suffice a statement from the cooperative.