Why is it important to have a personal loan advisor when purchasing a property?

Many financial challenges in life become significantly easier and faster to overcome when you have a professionally trained financial expert by your side. Just as you rely on a real estate consultant to find and acquire the property that fits your vision, it is equally important to have a financial expert to help establish the necessary financial background! When purchasing real estate, particularly when taking out a loan, the need arises to find the most ideal financial options for the client. Without a personal loan advisor, this can become a time-consuming, complex, and exhausting task that is not financially worthwhile to undertake on your own.

We spoke with Péter Dióssy, a loan advisor, about the benefits of loan mediation through a personal advisor.

Why is it important to have a personal loan advisor?

Everyone has financial matters to handle. The financial field requires serious professional knowledge and up-to-date expertise, which allows us to find the best options tailored to the client’s needs, life situation, and financial goals, and guide the client through the entire process. No matter how excellent someone is in their own profession, it is unrealistic to expect them to be fully knowledgeable in the field of loans. That is why it is advisable for anyone considering a loan or real estate investment to consult with a specialist. Real estate purchases and loan applications go hand in hand. The only exception to this rule is when a full cash purchase is made; otherwise, it is essential to find the best option for the client to achieve their financial goals and purchase the desired property.

What are the advantages of having a professional loan advisor help with purchasing real estate?

Everyone’s time is valuable, and it is limited. A personal loan advisor will discuss with the client the goal they wish to achieve, their household finances, their current life situation, and their future plans.

• The client can ask questions and receive satisfactory answers, ensuring that everything is thoroughly discussed. There will be no unexpected surprises later on.
• There is no need to visit multiple banks to explore their loan offers. For mortgage processing, one visit is sufficient when signing the contract. During consultations, we are flexible and adapt to the client’s schedule.
• Personal financial advisors have excellent relationships with bank branches, allowing them to quickly and effectively find solutions to any problems that may arise.
• We offer comprehensive solutions, often providing advice not only on property purchases and loan financing but also on insurance.
• A personal loan advisor is easily accessible via phone or online platforms, with high-quality service being a top priority.
• We find the best financing options for our clients, and thanks to close cooperation with financial institutions, we may even secure special interest rates or other benefits (e.g., free early repayment).
• A well-prepared, experienced loan advisor knows which banks accept which types of collateral and in what proportions, and may even know which bank is willing to offer a loan for a property that others might not.

What financing options are available for homebuyers?

One challenge for those purchasing real estate with a loan is coming up with the required down payment. In Hungary, banks typically lend up to 80% of the property’s market value, but since this is the legal maximum, it is more realistic to consider 50-70%. Some people have the required down payment, while others may supplement it with loans like the “babaváró” loan.

“The dominant goal behind taking out a “babaváró” loan is housing: three-quarters of respondents used the loan amount for property purchases and/or renovations (multiple answers were possible). The third most common goal was debt consolidation, which includes repaying bank loans as well as family debts.” (Source: MNB)

However, the Central Bank considers loans where the down payment is covered by personal loans to be risky, which is why, for example, with “babaváró” loans, three-quarters of the loan amount, as well as all non-refundable state support, are considered acceptable as down payments to ensure the safety of consumers and responsible lending behavior.

Clients come to us with specific financial goals, most commonly a real estate purchase. During consultations, we assess whether the client is eligible for state-supported financing options, as these loans and supports are clearly better for them and should be included in the financing. Notably, these include the CSOK (Family Home Allowance), the rural CSOK, state-supported loans, and VAT refund options still available. If someone is purchasing a new property with energy-efficient standards required by law, they can also participate in the Green Home Program, which offers very favorable interest rates. There is no need for a family policy requirement (such as childbearing), but the borrower must live in the property purchased, meaning only housing purchases can be financed under this program.

“Banks’ current average market mortgage rates are around 4-5%, so the NHP ZOP loan is much cheaper in comparison. For example, if we purchase a 60 million HUF property in Budapest with 20% down payment, the monthly installment will be 210,000 HUF over 25 years, compared to the previous market rate of 250,000 HUF. If we were building a 30 million HUF house in the countryside with the same down payment and loan term, our monthly installment would be 100,000 HUF instead of 120,000 HUF.” (Source: MNB)

What does the expert advise if the homebuyer is not eligible for these loans or support?

This is also a common problem. Many clients wish to purchase property for investment purposes but do not have the down payment, although they already own a property in which they live. In this case, they can take out a market-based loan, which can cover the entire purchase price of the new property, using their existing property as additional collateral.

As a personal loan advisor, what would you draw attention to for those about to purchase real estate?

What I would emphasize right now is that some state supports and favorable loans will expire by the end of 2022, and the Green Home Program has a budget limit that is likely to run out before the end of the year due to high demand. Therefore, anyone thinking about purchasing property should visit a real estate agency as soon as possible to find a property that fits their vision. During the process, professional real estate agencies can not only help find the right property and manage the transaction but also provide personal loan advice with their professionally trained staff.

Many people may worry that having a loan advisor assist them in purchasing a home will increase the cost of the loan. Is this true?

No. Loan intermediaries are paid a commission by the banks, and this does not appear in the client’s installment or other costs. The personal advisor’s interest is to ensure that the client obtains the most advantageous loan and support, and they are fully aware of the conditions that must be met and the documentation that must be submitted. As a result, delays due to missing documents are unlikely, and everything proceeds smoothly, leading to a successful transaction. The buyer will secure the best loan and, if applicable, any available support, while also becoming the owner of their desired property.

Kenway Real Estate’s philosophy is to provide our clients with high-quality services, taking into account their individual needs, whether they are purchasing, renting, selling, or leasing a premium property. Our team has remarkable professional experience, allowing us to offer complex and exclusive services to our clients.

See for yourself! Get in touch with us, and at Kenway, you’ll find a professional partner.