Loan

More Lithuanians are taking advantage of the modern financing opportunities now being offered by banks to purchase real estate, renovate existing structures, build their dream homes, or to satisfy other consumer needs. Banks’ rates may look similar, but actual costs of loans can vary dramatically.

There are various types of loans:

• Housing loans
• Credit for other purposes with real estate mortgage
• Consumer credit
• Reverse repurchase transaction (RE-REPO)
• Credit line

Housing loans

If you are thinking of purchasing an apartment or a house, banks can provide the money you need, based your income and other equity, the age, location, and condition of the property. If you meet the bank’s requirements for a mortgage, loans may be granted for a period of up to 40 years. Your mortgage broker can assist you in choosing the repayment schedule that’s best for you, and explain the differences between fixed and variable interest rates, and the other repayment options offered by the bank. There is a lot of “fine print” involved in loan contracts, and your mortgage broker will help you understand what it means and to discover costs that might not be obvious. Also, there are a number of options and protections you can consider, such as those listed below.

Some examples are provided below:

1. Safe housing credit

This credit line means that if your financial situation worsens, your family expenses rise unexpectedly, or interest rates increase, you will be able to retain your home and repay the credit safely and in time. Several means of protection against repayment risks are offered, including changing the repayment currency, deferring the beginning of the repayment schedule for up to 3 years, and changing the repayment schedule are available.

2. Flexible housing credit

Flexible housing credit allows you to reduce repayment amounts by up to 30% for the first five or ten years of your loan while you complete or furnish your new home. There are other provisions for changing your repayment schedule you may want to consider, but flexibility comes at a cost. Your mortgage broker can assist you in balancing repayment convenience with associated costs. 

3. Accumulative housing credit

Under the terms of this creative financial package, borrowers repay the entire amount of the loan at a point in the future, but in the meantime, pay monthly charges for interest and insurance that protects against defaulting. There are also some tax benefits associated with this plan, but it is not for everyone, and your mortgage broker can explain the benefits and the disadvantages of such financing.

4. Housing credits with accumulation

Using you existing mortgage for credit to meet other needs

Consumer credit

Reverse repurchase transaction (RE-REPO)

Credit line

A credit line allows you to exceed the limits of your credit card, providing an easy way to borrow money quickly without mortgaging anything to the bank. Of course, your credit-worthiness needs to be established with the bank.

A Re-Repo transaction involves selling your securities to a bank with an agreement to repurchase them later. Interest is included in the repurchase price and is paid on the day of repurchase. “Securities” is a term with a variety of meanings, and your mortgage broker can assist you in determining the loan value of stocks, bonds, other financial instruments, and mortgages you own.

Consumer credit loans allow access to funds without a mortgage. Such credit lines are used to pay for vacations, home appliances, tuition, medical expenses, or to handle unexpected expenses that exceed your available cash. Your mortgage broker can assist you with the paperwork to qualify for the credit you need – or want to have as a “just in case” emergency fund.

If you want to make a purchase or investment that exceeds your credit card limits, there are circumstances under which you can borrow money against the value of your home or land mortgage. A variety of repayment options are available, but all with associated costs. Your mortgage broker can help you with the computations so you know in advance the costs and fees you will be required to pay.