Who does not know the famous English saying “Home, sweet home”. Many of us dream of having our own home. But it takes a lot of hard work to make it come true. Along the way, there are many procedures and even pitfalls. Careful preparation will help you realise your plan. Because there is only one answer to the question “how to buy a flat on the primary market?”: sensibly!
Bankruptcy of a developer and credit: a wise Pole after the event
Mary and Karol’s attempt to buy a flat is over. It was not without its nerves. They are both working, have been married for two years and all they need to be happy is their desired M4. Karol took care of the formal matters concerning the loan, while Baśka looked for offers to buy a flat. In the end, they found a flat that met all their expectations. They decided to buy it directly from the developer. The loan was granted, the pre-contract signed, the deposit paid. They could only wait for the date when the flat would be collected. One day Baśka read in the newspaper about the bankruptcy of a well-known property developer. Only then did she think that she and Karol had failed to check whether the owner of their investment was really reliable. She looked through internet forums, where she found information that worried her. She started digging into the subject and, as it turned out, their developer was paying off his debts by taking on more debts by taking down payments from potential property buyers. She made an attempt to contact the developer, but his phone was unanswered… Baśka and Karol decided to recover their deposit and a legal battle began. In the meantime, the developer declared bankruptcy. The couple had to take up the search for a flat once again to finally fulfil the dream of having their own place. However, this time they were richer in experience. Not very pleasant, but helpful.
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Step 1 – initial search for properties
The housing market offers many possibilities for choosing the property you are interested in. It is enough to take a look at the number of offers on the Internet on advertising portals, sites belonging to developers, as well as in the press or directly in the catalogues of real estate companies. How do you choose? To begin with, it is worth asking yourself: what do I want? It is up to you what criteria you choose to evaluate the offers. It is a good idea to be more specific in order to know which elements you care most about. What is worth checking to make sure that the flat you choose is really the one you dream of? Here is a helpful list:
Type of development. Flat in a block of flats or terraced houses? Multi-storey or low-rise development?
Location. Not only the price of the flat depends on it, but also the cost and time of the commute from home to work. City centre or periphery? Any particular neighbourhood? How important are the green spaces nearby? Do you want it to be a quiet, peaceful place? Do you mind the noise of the street? Is there a clinic, kindergarten or school for your child nearby? What will the view from the window be like? And most importantly, and often overlooked – the development plan. If you don’t check it, you may find in a moment that someone decides to build a factory next door, for example.
Housing. Here it is worth considering your preferences in terms of: area, number of rooms, floors, layout of the flat, its positioning and sunlight, standard of finish. Also consider additional rooms such as a cellar or garage. Check the average cost of living beforehand.
Match your preferences with the price per square metre expected by the seller. Check all promotions and discounts. If you already have a full understanding of the offers, it’s time to calculate the costs and estimate your budget for purchasing the flat.
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Step 2 – the cost estimate and your finances
What are your needs and what are your possibilities? Analyse exactly what you will be able to afford. Do you have any savings? Do you have funds that you can put towards your own contribution? Buying a home is a long-term and expensive investment. In addition to the obvious expenses, such as the loan instalment and interest, or furnishing the flat, consider all the additional costs, such as the notary’s fee. If your account balance does not allow you to buy in cash, take a look at mortgage offers. Remember that banks will check your creditworthiness to make sure you can afford to make regular repayments. A number of factors will determine whether a bank will grant you a mortgage, including: your earnings, type of employment, additional sources of income, length of service, financial burdens (loans, credits, credit cards), or monthly household costs. Remember that banks will verify not only the information contained in the BIK, but they will also check your credibility in economic information offices, such as the ERIF BIG S.A. Debtor Register. Haste is not a good counsellor; before you go to the bank to get a loan, find out what information about you is available in the BIG database. In Poland, there is legislation in force that once every six months gives you the right to have the data about yourself verified free of charge in BIG (www.infoKonsument.pl). It is worth putting your financial situation in order to avoid being refused a loan at the very beginning of your journey towards fulfilling your dream of owning your own home.
Step 3 – key word: CHECK
Flat selected? Remember the importance of common sense. Before you start the formalities of applying for a loan and signing the agreement, verify the developer and the development you are interested in.
It is worth checking:
– a current excerpt from the National Court Register or a certificate from the Central Register and Information on Business Activity, in the event that the developer operates as a sole proprietor or in the form of a partnership;
– the information prospectus of the development, which is a document required by law, therefore the developer may not refuse to present it. This document contains the developer’s identification data, a description of the experience from the implementation of previous investments, or information about the necessary permits. From the prospectus, you will find out, among other things, what the zoning plans are, mortgage charges contained in the land and mortgage register, trust accounts, bank or insurance guarantees or the conditions for withdrawal from the agreement. It will enable you to find out the technical specifications of the property: number of storeys, units, standard of finishing, available utilities, price per square metre, as well as the date of completion and transfer of ownership rights;
– land and mortgage register consisting of four sections, which will provide you with knowledge not only about the property itself, its location or area, but also about its owner and perpetual usufruct. In the register, you will find entries concerning limited rights in rem, preliminary agreements, pre-emption rights, as well as information about mortgages on the property;
– the credibility of the developer, which is particularly important if you want to protect yourself against a risky transaction. Check the developer – whether it is financially stable and not in danger of bankruptcy. You can obtain information about not being in arrears with taxes and contributions from the Tax Office and the Social Insurance Institution.At your request, the developer should show you financial statements for the last two years. Verify the developer in the business information office need to know his/her VAT number. Make sure the company has an escrow account where customers’ money goes. Do some research on the internet and check the reviews of previous customers. Find out whether the developer has commissioned other developments, whether they have met deadlines, whether the residents are satisfied with the quality of the finish.
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Step 4 – the formalities are time to start
You are halfway there and the nervous moment has arrived. You submit your loan application documents. Now you have nothing left to do but wait for the bank’s decision. This is also the time to sign the developer’s agreement in the form of a notarial deed. In this way, you commit yourself to the purchase of the chosen flat, which the developer undertakes to build. Signing the contract involves paying a deposit, which will be forfeited if the contract is withdrawn through your fault. If the developer is the party terminating the contract, he is obliged to return the deposit in double amount. You can finance the deposit from your own resources if you have sufficient funds. You will pay the remaining part after you receive the loan, in accordance with the payment terms set out in the developer’s agreement, e.g. upon completion of the construction or in tranches after further stages of the development. If you do not have an own contribution and the loan covers the entire amount of the purchase of the flat, make sure that the contract with the developer specifies payment dates adapted to the mortgage loan formalities. It is worth reading with particular meticulousness the Act on the Protection of the Rights of the Buyer of a Dwelling or Single-Family House of 16 September 2011, which came into force in April 2012. In it, you will find, inter alia, a list of elements that a development agreement must contain. Be sure to check whether the one you have received has the obligatory provisions The final agreement in the form of a notarial deed, under which the transfer of ownership will take place, will be concluded when the flat is ready for handover. In order to be able to sell the flat as a separate property, the developer establishes separate ownership of the flat, usually when signing the notarial contract. The establishment of separate ownership of an apartment is effective when the land and mortgage register is established and then, once ownership is transferred, you formally become the owner. The developer will apply to the County Building Supervision Inspector for an occupancy permit, under which the building is inspected. Only a positive opinion issued by the Inspector, entitles you to legally use the flat. Acceptance of a flat is a procedure that is also not worth doing in a hurry. Remember that by signing the acceptance document, you accept the condition in which the flat will be handed over to you.
And finally, an equally time-consuming task. Because if you haven’t opted for the turnkey flat option, you still have a lot of work ahead of you in terms of finishing and furnishing. But now, it’s probably just a pleasure.