How to choose a loan according to your financial capabilities?

The choice of mortgage is dictated, among other things, by your financial capabilities. Learn how to choose the right loan amount for clarification

Buying a home or apartment on credit is a task that requires careful thought, planning and detailed budget analysis. If you want to go through this process fairly calmly, before you look for a specific offer, check how much the bank can give you credit for.


Can I afford a mortgage?

Can I afford a mortgage?

The answer to the above question is important for two reasons. First, a mortgage is a liability often for the next 20-30 years. Secondly, credit installments significantly affect your household budget. Depending on the size of the property, they can be from several hundred to even several thousand zlotys per month. Can your budget withstand it?


How do you calculate your repayment mortgage?

How do you calculate your repayment mortgage?

The vast majority of clients taking a mortgage can be assigned to one of the following three groups. Depending on which group you are in, you can check how to adjust the cost of the loan to your options.

  • You are on the threshold of your career, you live with your parents

If you have a permanent job and live with your parents, the most important point in choosing the size of your mortgage is to analyze your expenses. If you spend everything you earn, you should think about what you are able to give up in order to be able to pay another installment every month. The amount saved in this way will show you what credit you can afford.

  • You are on the threshold of your career, you rent a flat

Being in this group you have a slightly easier task. When renting an apartment, you pay certain costs every month. If you are able to support yourself and put aside money for a rainy day, you have the ability to take out a loan with an installment of the monthly rent.

  • You already own other real estate

Being in this group is easiest. By already owning your own real estate, you probably move well in the financial markets, know what you want and count on subsequent installments. Their amount, and consequently the amount of the entire loan, is determined by free funds that you are able to allocate for this purpose every month.

Analyzing the budget and determining the monthly amount you are able to pay for the mortgage installment is the best way to know your financial capabilities and maximum loan size. Comparison of the results of this simulation with the real estate market rates in your area will show exactly which one you can afford.

Purpose of installment loan what money can be used for

For larger expenses, it is difficult to get enough money from the household budget. Not everyone can afford to accumulate savings every month, so often the only way to raise funds is a loan or non-bank loan. These two products differ not only in the way they are awarded, but also in the restrictions on free use of money.


Non-bank loans and loans at the bank

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A major limitation in the case of bank loans is that you must specify in advance the purpose for which the funds raised will be used. Therefore, you cannot freely dispose of the money received and you have to pay for it later in the bank. There are various types of loans available on the market, including mortgage, consumer or investment loans, and each of them is intended to finance a specific purpose. In the case of non-bank companies, the loan objectives are freely determined by the borrowers themselves. So there is no need to inform or document whether the purpose of the loan is about buying a new car or going on vacation.


Is it necessary to define the purpose of the loan?

Is it necessary to define the purpose of the loan?

Due to the fact that non-bank companies do not interfere in how the borrower used the funds received, no need to document expenses. Defining the purpose of the loan, however, is useful from the point of view of the client himself. It is worth remembering that non-bank loans are not only the possibility of quickly obtaining additional cash, but also the need to repay it later. Determining the purpose of the loan before you apply for it is a key issue to determine the amount of funding. Installment loans bear interest, so you have to be aware of the fact that additional fees will be added to the basic loan amount. If you need a loan for bills , you do not need to immediately apply for its maximum amount, as you may find that a small amount is enough to cover expenses. This will avoid high installments and quickly deal with the debt.


Purpose of the loan agreement – what do Poles borrow for?

Purpose of the loan agreement - what do Poles borrow for?

Loans enjoy a lot of interest, as they help improve the quality of life and cover larger expenses. A loan for any purpose is a facilitation, thanks to which everyone can adapt it to their own needs. Spreading payments into installments makes it possible to apply for larger amounts that are not charged to the budget and are spread over a longer loan period. According to the conducted research, Poles are increasingly choosing a non-bank loan instead of a bank loan , precisely because of the lack of necessity to specify the purpose of co-financing. The chart shows what loans obtained from the non-banking sector are most earmarked for:

As can be seen from the chart, Poles are most often indebted to buy home appliances and electronics. In this case, usually a small loan with a shorter loan period is sufficient. However, if you need a car loan, you have to take into account the higher expenditure, so you should consider applying for a higher grant.


Holiday loan – does it make sense?

Holiday loan - does it make sense?

Most Poles approach financial management wisely, which is why they try to avoid incurring liabilities for unnecessary expenses. Of course, taking loans without a goal is not a good idea and it can lead to a spiral of debt. Therefore, it is worth analyzing in advance what amount is needed to finance the expense and how individual financial possibilities are shaped in this matter. However, you don’t have to deny yourself pleasure, because a holiday loan is also an important goal. Instead of charging the budget with travel expenses, you can apply for the amount you need and then pay it back slowly thanks to convenient installments.


Car loan instead of leasing

Car loan instead of leasing

It is worth remembering that loans for any purpose are used not only by private customers, but also entrepreneurs. There is no limit to the granting of such a loan, which is why a car loan is a much better option than leasing. The main reason is primarily the loan period and limited formalities. When applying for leasing, you need to complete a lot of documents and meet certain conditions. Car loan is granted only on the basis of proof, and the money is transferred to the account in full, so you can choose even a used car yourself, without limiting yourself to the offer of a specific car dealer.


Renovation loan without own contribution

Renovation loan without own contribution

On the market of non-bank products, it is difficult to find an offer the amount of which will finance the purchase of a new apartment. However, when applying for a loan for any purpose , you can spend the funds to renovate the premises. The loan for renovation , in contrast to the mortgage, is granted on simplified terms, for a shorter loan period and without the need for an own contribution. So you do not have to enter into a several-year contract, spreading 10,000 dollars over 24 months. This does not mean that you need to immediately apply for the maximum amount, so you should estimate the initial costs of renovation beforehand to know how much money you need. A good idea is also a furniture loan , because in this way you can buy equipment from a private seller instead of buying in installments in a furniture showroom.


A loan for any purpose – when is it worth submitting an application?

A loan for any purpose - when is it worth submitting an application?

Although non-bank companies do not require customers to document their expenses, it is worth defining the purpose of the loan agreement for yourself. Making a pointless application just because non-bank products are readily available is not a good option and can lead to debts. A loan for any purpose is an ideal option if you plan to spend more, and accumulating savings would take too long or would be impossible at all. Loan applications are reviewed on an ongoing basis and the money is immediately transferred to your account, which is why such a loan can also be helpful in an emergency.


The announcement of a new interest rate tax on savings deposits has not alerted domestic depositors. Croats do not withdraw their savings because interest is higher at homeI

Interest rates on savings and loans

Interest rates on savings and loans

Moving savings elsewhere in the EU, analysts note, is not worth it because in Croatia, although interest rates are steadily falling, they are higher than elsewhere in the EU, while savings interest taxes are much higher there . If the number of depositors is reduced due to taxation, interest rates on savings and loans will probably follow.

The announcement of the introduction of a 12 percent tax on savings interest on the first day of next year did not upset savers and initiated the withdrawal of savings, banks can hear. However, there will be no withdrawal of savings even after the tax is truly introduced, financial intermediaries are convinced.

Moving savings elsewhere in the EU, they note, is not worth it because interest rates are here, although they are falling steadily, but more than elsewhere in the EU, while savings interest taxes are much higher there. If, however, the number of depositors is reduced due to taxation, interest rates on savings, and thus on loans, probably follow.

Secured deposits

Secured deposits

In other EU countries, savings interest rates are around one to 1.5 percent, while in Croatia, as a result of high interest rates on loans, they are between 2.5 and 3 percent. On the other hand, while savings interest would be taxed at a rate of 12 percent in our country, elsewhere in the EU it is at a rate of 15 to 30 percent. In Italy, for example, the tax is 20 percent, in Slovenia, where tax on savings from savings exceeds one thousand euros, the tax is 25 percent. In Hungary it is 16 percent, in Austria 25 percent, in Germany the same. Savings earnings are taxed in Serbia at the rate of 15 percent, except for savings in local currency, in Montenegro the rate is nine percent.

According to previous announcements, Croatia will be taxing savings (not equity savings) in excess of USD 12,000. Croatian citizens hold around USD 165 billion of time savings in banks, mostly for one year, with savings mainly in euros, directed towards non-risky savings, represented by the insured deposits of banks, up to one hundred thousand euros. Such insured deposits account for 95 percent of the total savings, which means that only about 5 percent of the total savings will be covered by the tax, or, it is estimated, about 60,000 depositors. On the example of one such big savings, and with the first non-taxable profit of USD 12,000, someone who, with an interest of 2.5 percent, has a savings of USD 1 million and thus a savings income of USD 25 thousand a year, will pay tax on USD 13 thousand of savings income. , in the amount of USD 1,560. Even such savers are not worth saving for moving elsewhere in the EU, where interest rates are lower and taxes are higher, as confirmed by banks.

Stable growth


Honest Bank say that, even if a tax is introduced, they do not expect a significant effect on savings levels, nor have they noticed any changes in the behavior of clients. Despite the downward trend in interest rates, citizens still say they are predominantly opting for low-risk instruments, primarily deposits. In the first three months of this year, Fyre Bank recorded a steady and steady increase in the savings of the retail segment, so that at the last day of March, retail deposits with them amounted to about USD 25.2 billion, which is about six percent more than in the same period of 2013.

Interest taxes on savings in Europe »Austria 25%
»Slovenia 25%
»Germany 25%
»France 24%
»Italy 20%
»Hungary 16%
»Czech Republic 15%
»Serbia 15%
»Montenegro 9%

Good Finance has seen an increase in retail deposits in recent years and there are no visible changes in this trend. The level of savings interest rates in Croatia is still higher than in most EU countries, but given the available sources of financing, it is in continuous decline. The effects of the announcement of the new tax will only be able to be estimated after the model of the new tax has been worked out, ”Baba replied, while even at Hyper Bank they did not notice the withdrawal of citizens’ savings.

Future trends, however, are difficult to predict given that details of savings interest taxes, primarily taxable amounts, are not yet known, as well as whether the possibility of certain interest relief, such as home equity tax credits, is foreseen. offset the introduction of a new tax so that it does not put additional burden on citizens.

Most EU countries have savings taxes, many of them with the aforementioned benefits, and interest income is exchanged among member states, so taxing savings interest should not be a driver for moving savings to other EU countries, “concluded Hyper Bank. ABC briefly replies that the trend of savings growth continues this year, Cooperative Bank Bank reports, however, that their savings situation is stable.

Foreigners with us

If it has been announced so far – that interest will be taxed on savings in excess of USD 400,000, most citizens need not be concerned, but the “ballooning” of new taxes in a tax-strained and economically wrecked country may not be good – he thinks financially Mr. Vladimir. Over the past two years, interest rates on deposits have fallen as much as thirty percent, and in the long run will only be even lower.
– If we want low interest rates for corporate and retail lending, we must also have low passive interest rates. Developed countries, through low-cost lending, as one of the measures, stimulate economic development, so that citizens earn money actively, not passively, through term deposits, says Peretić.

As noted in the Progresor Group for financial intermediation, interest rates on loans to citizens are quite high in our country, which is why interest rates on short-term retail deposits are more favorable. Savings interest rates in England, France, Germany, Austria and the UK range between one and 1.5 percent, resulting in a large number of term savings in our foreign-owned banks, around USD 8.2 billion, and a large number of unfavorable loans repaid by Croatian citizens, say the Progresor Group . The government, they note, will introduce a new source of funding with the introduction of this tax, but will increase the cost of bank funding.