Building society loan is cheaper than mortgage.

Building savings, in addition to the possibility to create a financial reserve for the future, allows you to get a loan from building savings. This loan has always been characterized by very favorable conditions. Recently, the parameters of these loans have improved to such an extent that interest rates fluctuate at the same or lower level than mortgages.

Building societies focus primarily on providing ways to appreciate money – especially building savings.

Building societies focus primarily on providing ways to appreciate money - especially building savings.

Building savings are among the most advantageous safe ways to save. It is safe because the European Union requires banks and savings banks to insure a person’s deposit into a savings account up to $ 100,000, ie at a rate of USD 25 / $ up to two and a half million crowns.

Another advantage of building savings is the possibility to get a state contribution of up to 10%, but this contribution is capped at USD 2,000 per year. For many, however, the main advantage is access to a building savings loan.

Building savings loan is provided after certain conditions are met. These conditions include, for example:

  • savings for at least two years,
  • saving a certain amount from a predetermined target amount (usually half).

If the borrower does not meet these conditions, he / she can apply for a bridging loan. As the name suggests, this loan spans the period in which the applicant does not meet the above conditions and the loan money is provided to him immediately.

The building savings loan is characterized by very low interest. This loan is purpose-built – it must therefore be used for the aforementioned purposes, ie costs associated with the solution of housing needs.

Statistics of the Good Lender Bank show that loans from building societies have recently been several tenths of a percent less expensive than ordinary mortgages. Mortgages so far could boast one of the lowest interest rates, because of the loan coverage given by real estate – as banks get real estate pledged, the loan is less risky for them and so they do not have to insure against the possible loss by higher interest and fees.

People’s dream is to live in their own and mortgages are the main way to acquire real estate.

 In 2018, building societies provided loans totaling almost USD 70 billion, not more than in the last ten years.

Growing interest

Growing interest

One of the reasons why interest in building society loans is growing is that banks have been providing mortgage loans for up to 80% of the value of property for some time, based on ONH regulations. The client has to pay the remaining fifth of the price from his own resources and it is usually worth taking a loan from building savings, as the current housing loan has a higher interest rate today.

US mortgages provide even less value for real estate, but money can be used for anything, not just real estate and housing. Non-bank mortgages offer the lowest amount of credit to the value of real estate, but on the other hand they are much more affordable – the mortgage is usually concluded by people who have not reached a bank mortgage. In this way, people who should not be responsible for it receive credit as well as non-bank loans.

Interest on savings accounts also grows. In the future, it is possible to expect an increase in the benefits provided to both savings banks and banks as the struggle for new clients is becoming ever more and more tight. Banks are facing shortages of clients and sufficient funds, therefore, more favorable offers can be expected for refinancing loans and debt consolidation.

The data also shows that traditional large banks are losing clients who prefer to look for medium-sized, new and modern banks. 

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