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Comprehensive Guide to Home Loans: From Budget to Application Process

How Much Budget Do You Need to Prepare for Buying a House?

Preparing a budget for buying a house is the foundation for successful homeownership, mainly including the following parts:

Down Payment: Usually 20%-30% of the house price, you need to prepare sufficient own funds.
Taxes: Including deed tax, stamp tax and agent fees, etc., about 2%-5% of the house price.
Renovation and Furniture Costs: Depends on the condition of the house, you may need an additional budget.
Emergency Reserve Fund: Ensure that you still have enough living expenses after paying the mortgage.

What is a Mortgage (Home Purchase Loan)?

A mortgage is a financial support provided by a bank or financial institution to home buyers, allowing you to buy a house through installment repayment.

Installment Repayment: Usually divided into a repayment period of 10-30 years.
Interest Rate Type: Fixed interest rate, floating interest rate or mixed interest rate, can be selected according to market conditions.
Repayment Method: Including equal principal and interest amortization and equal principal amortization.

What is a New Youth Home Loan?

The 'Youth Home Purchase Loan with Peace of Mind' (Youth Loan) is a policy launched by the government in 2010, and further upgraded to the 'New Youth Loan' on August 1, 2023, providing more preferential terms.

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Differences Between the New and Old Youth Loan Systems

Loan Amount: Increased from 8 million NTD to a maximum of 10 million NTD.
Interest Subsidy: The government subsidizes 1.5 yards, and public banks cooperate to reduce by half a yard, for a total of 2 yards of preferential treatment.
Loan Term: Extended from 30 years to 40 years.
Grace Period: Extended from 3 years to 5 years.

What is a Grace Period?

A grace period is the period in the early stage of a mortgage when only interest is paid, temporarily relieving the pressure of principal repayment, which is suitable for the following situations:

Families who have just bought a house: Need time to adapt to new expenses.
Real estate investors: Waiting for stable rental income.

The general grace period is 1-3 years, but it should be noted that the monthly repayment amount may increase significantly after the grace period.

Documents and Procedures Required for a Home Loan Application

Identification Documents: Such as ID card, passport or residence permit.
Income Proof: Such as pay slips, bankbook copies or income tax returns.
Financial Proof: Such as deposit certificates or investment certificates.
Purchase Contract: Including the formal contract signed by the buyer and seller.

The application process usually includes:

Contact and submit an application to a bank or lending institution.
The bank conducts a credit assessment and house valuation.
After passing the review, sign a loan contract and disburse the loan.

How to Choose Mortgage Terms?

Interest Rate Type: Fixed interest rates provide stability, while floating interest rates may enjoy lower costs.
Loan Term: The longer the term, the lower the monthly repayment pressure, but the higher the total interest expense.
Grace Period: Whether you need an initial interest repayment period.
Repayment Method: Equal principal and interest amortization is suitable for those with stable income, while equal principal amortization can reduce the total interest.

Channels for Applying for a Home Loan

Bank: Provides stable and diverse loan programs.
Credit Union: Interest rates may be lower, but conditions may be stricter.
Mortgage Broker: Can help compare programs from multiple institutions and save time.

How to Strive for a Higher Loan-to-Value Ratio?

Improve Credit Score: Repay on time and avoid excessive debt.
Provide More Financial Proof: Such as time deposits, investments or other assets.
Choose Loan Programs Supported by Policies: Such as the New Youth Loan or specific preferential projects.