Buying a home is generally not a once in a lifetime event. Some of the people who are considering buying a house from now on may feel uneasy about the specific flow of money when using a mortgage for the first time. Therefore, in this article, we will explain “when the loan is executed” and “when the repayment starts” when using a mortgage.
In general, the “mortgage loan execution date” = “home delivery date”
First of all, it is common for the timing of the mortgage loan to be executed on the “delivery date of the house”. This is because when the house is handed over, ownership preservation and mortgage setting registration are carried out. When using a home loan, the financial institution uses the property to be purchased as collateral to provide the loan, but in order to use the property as collateral, the owner of the home must publicly prove that it is the buyer (applicant for the home loan). Must be registered. In order to ensure that the financial institution can recover the lent funds more reliably, the loan is executed after the mortgage setting registration is completed.
Conversely, if the mortgage is set properly, there is no problem even if the loan timing is slightly delayed, so it is not impossible to set the loan execution timing after the delivery date. However, the buyer is obligated to pay the purchase price to the seller or construction company, etc. upon delivery, so if the loan is executed after the delivery date, the buyer must temporarily pay the full amount of the loan. However, in reality, there are almost no cases where individuals have the financial strength to pay for the loan amount, so it is common to set the loan execution date on the same day as the delivery.
Based on the above, basically, for newly built houses and newly built condominiums, loans are transferred from financial institutions on the day they are handed over from sellers such as developers and house builders. If you feel uneasy about handling a large amount of money, remember that if you ask a financial institution in advance, the money will be transferred directly to the seller instead of the buyer’s account.
However, in the case of buying a custom-built house, the land must be purchased before the house is built, so the flow of money is a little more complicated. There are two main types of loans that are used when purchasing a custom-built house: land advance financing and bridge financing.
A land advance loan is simply a loan that provides financing for land and building transactions. The first loan is made when the land is handed over after the sale and purchase agreement is concluded, and the second loan is made additionally when the construction of the house is completed.
On the other hand, a bridging loan is a loan that allows you to borrow part of the loan amount of a home loan as needed. Until the completion of a custom-built house, not only the land purchase fee but also the construction fee must be paid multiple times depending on the progress of the construction, and it is often used when the cost cannot be covered by the own funds. If you use a bridging loan, you only have to pay the interest amount until the repayment starts, so although the principal does not decrease, it is also attractive to reduce the burden on the household budget.
In this way, land advance loans and bridge loans are particularly useful loans when building custom homes, but it is important to note that not all financial institutions handle them. If you are considering using them when constructing a custom-built house, it is necessary to check in advance whether the financial institution you plan to use handles them. Also, regarding which one to use, compare the interest of the bridge loan and the cost of the advance loan for the land, and choose whichever is less.
