Thinking of buying a home for you in Norway? That’s a pretty big step, and it is a good thing that you are taking it. It show you are being responsible about your future and that you are investing your money wisely, which is undeniably great. Once you make the decision to do this, though, you will still have a long way to go before you finally buy the home you think could be right for you and before you get everything done the right way. If unsure how to choose the right home for you, this may help.
In addition to choosing the right property to buy, you will also need to think about how you are going to pay for it. Considering specific financing options is undeniably quite important, as that will help you understand what you can do in order to pay for the property, and what kinds of financing opportunities you can use. Speaking of those, there are, naturally, mortgages to consider, and that is the option that people most commonly use when aiming at buying a property.
It is basically the option of taking out a loan from a lender and providing the newly bought home as collateral in case you default. Different lenders offer different mortgage opportunities, which is why you have to carefully consider those various offers, aiming at ultimately deciding which one could be best for you. Naturally, the interest rates offered play one of the biggest roles in the quality of the loan you will be getting, so remember to check those out when trying to choose, together with checking out any other fees and all the other borrowing terms.
One thing you will find out when you start exploring the mortgage options, though, is that the lenders will require you to provide some equity before borrowing the rest of the money necessary. A lot of them require around 15% equity, but this is a percentage that can change from one lender to another, so make sure to always inquire about it before going any further. And, while the equity is not the only criterion that the lenders will look at when deciding whether to approve you for a mortgage or not, it does play a role. You are now most likely wondering how to get the equity.
Should You Use a Personal Loan for Equity?
To be more precise, you are wondering if using a personal loan to get the equity is a good idea. That was probably the first thing that crossed your mind, especially if you have realized that you don’t really have enough money to deposit before taking out the mortgage. Yet, as you will see at billigeforbrukslån.no/lån-til-egenkapital/ and at other useful sources, this really isn’t such a great idea.
So, if you are looking for a short answer, then it is this – no. No, you shouldn’t use a personal loan for equity. It is not a smart decision and it certainly doesn’t put you in a favorable situation. Quite on the contrary, it may even harm your intentions of getting a mortgage and make the process more difficult. The bottom line, though, is that this isn’t the wisest move and that you should avoid doing it if you can.
Why?
If the short answer is not enough for you, then you are most likely wondering one specific thing. Why? Why is it that you shouldn’t use a personal loan for equity? What is it that makes this idea not such a great one? That is precisely what we are here to find out right now, so let me quickly explain why doing this isn’t the smartest move for you and why you should search for other ways to get equity.
There are a few different reasons why you shouldn’t be doing this. For starters, the amount of the personal loan you will get will ultimately affect the amount you will be able to get through a mortgage. Put differently, the amount you’ll be able to get in a mortgage will be reduced for the amount you will get through your consumer loan in order to cover the equity. This certainly doesn’t put you in a favorable situation.
Furthermore, we cannot fail to mention that consumer loans tend to be more expensive when compared to mortgages. Meaning, therefore, not only that you will put yourself in more debt, but also that you may wind up struggling to make the necessary payments. Since that is not what you want, it would be best for you to give up on the idea of getting equity through a personal loan.
Additionally, you should also be aware of the effects that the personal loan will have on your credit score. In some instances, this effect can be negative, and you can wind up rejected for the mortgage you have applied to. So, your goal was to get equity through a loan, so that you can then get a mortgage, but you may have wound up not being eligible for a mortgage anymore after you’ve taken out the loan. A pretty ironic situation, isn’t it? And one that you don’t want to find yourself into.
What Should You Do Instead?
So, when buying property in Norway, what is it that you should actually do in order to get the equity, but without getting a personal loan? Are there any other methods of getting the amount you need for down payment, or do you really have to stick to the idea of borrowing money from the lenders, and thus potentially ruining your credit score and affecting your whole possibility of getting a mortgage? Sure there are!
First off, you can try and save as much as you can and take a few months to do that if you don’t really have any savings at all. Then, you can consider selling your vehicle, or other types of objects that you may not really need at the moment. Of course, there is also the option of borrowing a part of the equity from your employer if they are willing to help you out. So, consider your options and don’t jump right towards getting a personal loan if you can get the money in a different way.
