Buying with a mortgage: what to sort out before the first viewing

The wrong order costs you the apartment

A typical story: someone spends a month going to viewings, finally finds the right one and tells the seller they want to buy — but they have to go to the bank first. In the meantime the seller accepts another offer from someone who already has a loan decision in their pocket.

Good properties do not wait. If you go to the market without financing, you are always competing with someone who is ready to decide faster. That is why the first step is the bank, not the portal.

1. A loan decision before anything else

A positive loan decision tells you exactly what your budget is — and that number is almost always different from the one you had in mind. The decision is valid for a while, usually a couple of months, and it can be extended.

Ask for an offer from several banks. The differences in margin and terms are real, and over ten or twenty years they are large. Your current bank is not automatically the best option.

2. The down payment and the side costs

Banks generally ask for close to a fifth as your own contribution — the exact requirement depends on the bank and on your profile. A state guarantee can cover part of it if you belong to a target group, for example as a young family or a serving member of the defence forces. Ask the bank about it separately, because it is not always offered to you.

The purchase price is not the only cost. Count on these as well:

• The notary fee and the state fee
• The bank's contract fee and the valuation report
• Home insurance, which the bank requires
• Moving, the first furniture, renovation
• A buffer you tell nobody about — the one that covers the first surprise

If all your money goes into the down payment and no buffer is left, every problem in the first year is immediately a big problem.

3. Put your borrowing capacity in order first

The bank looks at your monthly obligations and your payment behaviour. Before you apply:

• Close unused credit card limits and overdrafts. Even an unused limit reduces how much you can borrow.
• Pay off small instalment plans and payday loans. They count against you out of all proportion.
• Do not change jobs right before you apply. A probation period is a risk in the bank's eyes.
• Check that you have no forgotten payment default on record. They turn up surprisingly often.
• If you run your own business, prepare a longer income history — you will be asked for more than an employee is.

And most important of all: do not buy a car on finance while your mortgage application is being processed. It happens, and it ends badly.

4. Know which properties a bank will not finance

Even a buyer with a good loan decision cannot borrow against just anything. The security has to suit the bank. Trouble typically starts when:

• the building has no occupancy permit, or the building register data does not match reality,
• the building is registered for a different use than the one it will actually be lived in for,
• the property is in very poor condition or in an area with a very small market,
• it is a notional share in co-ownership with no clear agreement on use.

This gets checked before the offer is made, not after. Otherwise you pay for the reservation agreement and do not get the loan.

5. Put a financing condition in the reservation agreement

If you pay a reservation fee and the loan does not come through, that money can stay with the seller. It is a question of the contract, not a question of fairness.

That is why the reservation agreement has to state what happens if the bank says no — whether and on what terms the money is returned, and how long you have to arrange the financing. It is the most important sentence in the whole document and it must not be left verbal.

6. The valuation report and the surprise it can bring

The bank orders a report from a qualified valuer. If the valuer's figure comes in below the agreed purchase price, the bank calculates the loan from the lower number and you have to cover the difference from your own money.

That leaves three options: you put in more of your own money, you renegotiate the price with the seller, or the deal falls through. This is why it makes sense to make an offer at a number the market can justify — not simply the one the seller finally gives in to.

7. What happens on the day of the deal

In a mortgage deal, the sales contract and the mortgage in favour of the bank are signed at the notary at the same time. A representative of the bank does not have to be present. The money usually moves through the notary's escrow account, or from the bank directly once the entry has been made.

Your job is to be sure, before that day, that you have read the loan agreement through and that you know exactly what the first year's payment is and how it changes if interest rates move.

In short

The right order is: bank, budget, criteria, and only then viewings. Once that is done, you are the buyer a seller prefers on the market — and no amount of negotiating skill replaces that.

If you are buying your first home and want someone to walk that road with you, write to me. The first conversation is free, and if it turns out you can manage on your own, I will say that too.