The final amount of overpayments depends on whether the borrower contributes the initial amount of the mortgage. This dependence consists of three components:
Overpayments due to a higher cost of credit with the same price of housing. Interest is calculated on the amount of debt - the larger it is, the more you pay. If part of the cost of housing is paid at the start, the borrower's costs are reduced.
Overpayments due to an extended loan term. To get your singapore mobile database application approved, you may have to take out a loan for 30 years instead of 20. This means you will be paying interest for 10 years longer.
Overpayments due to increased interest rates. In the previous section, we already described that the lack of start-up capital can increase the interest rate - therefore, overpayments will be greater.
Choice of housing
The maximum amount a bank can approve for a particular borrower is largely determined by their income. If your limit is ₽2 million, you need to look for an apartment at that price. It might make sense to save up first and then apply for a mortgage loan. That way, you'll have a wider choice of apartments.
We have described how much the start-up capital affects the terms of the mortgage loan. It becomes clear why you should save up for it. After all, it helps:
increase the chances of your application being approved;
get better lending terms;
reduce overpayments;
expand your options for choosing an apartment.
If you don’t have a down payment, you are also limited in your choice of lender – not every bank has a mortgage lending program without a down payment.
What is the optimal initial amount?
The more you pay at the stage of concluding the contract, the better. The table below shows how the size of the starting amount affects overpayments. Let's consider a mortgage loan on the following terms.