Loan and tax return

Yes he has. For example, did you know that you can reduce your personal income tax base by paying interest on your loan? You have thousands of crowns can be saved.

 

Which type of loan does it cover?

loan

Reducing the tax base by the amount of interest paid on the loan is one of the ways in which the state helps its citizens to solve their housing situation. This clearly implies that the loans covered by this option must be drawn for housing or, as the law says: to finance housing needs. In principle, the following loans are involved:

  • Mortgage loan
  • Building savings loan
  • Loan granted on the basis of any of the aforementioned loans, ie pre-mortgage loan, bridging loan and other similar credit products

The discount can be applied once a year when drawing up the tax return for the previous year. One household can deduct a maximum of $ 300,000. With a 15% income tax rate, you can save up to $ 45,000.

You can only deduct interest paid, not loan repayments. Your bank or building society will confirm how much you have paid in the interest for the previous year.

 

What belongs to housing needs?

home loan

All possible options are listed in the Income Tax Act, in particular:

  • Construction, purchase or alteration of an apartment, family house or apartment building
  • Purchase of land on which you intend to build a house (construction must start within four years of the conclusion of the contract)

 

Conditions for deduction of interest on the tax base

tax loan

However, to finance a housing loan is not the only condition for claiming a tax base reduction. To do this, it is essential:

  • To participate in a credit agreement
  • To own the property and at the same time
  • To use it for permanent living (if it is already habitable)

In the case of a permanent residence condition, it can be not only your own person but also your spouse, your descendants, parents or grandparents. It is also important that you actually use the property for housing, simply registering for permanent residence may not be enough. If you have to prove this, if necessary, it may result in electricity bills, neighbor testimonies, etc.

 

Employees can apply a discount through an employer

apply loan

If you have signed a tax declaration with your employer, it will also deduct interest paid from your income tax base. However, the payroll office will ask you to confirm the interest paid by the bank / building society.

If you go to the payroll office for the first time, you will need to bring with you the extract from the Land Register, proof of permanent residence in the place and usually also a copy of the credit agreement.

Christmas loan, where to look for it?

Christmas is a time of joy, but also of huge expenses. We need money not only for gifts for loved ones, but also for preparing favorite dishes. Some of us will also face expenses related to traveling to the family. So the question is how to deal with all these commitments and not worry about running out of funds. The loan turns out to be the solution.

 

To take or not to take – that is the question

christmas loan

A lot of people are involved in Christmas madness. Some even count the days remaining until Christmas. They are also looking forward to dressing the Christmas tree and, above all, gathering in a family circle at the Christmas Eve table. It all has its charm, but gifts, food and meetings with family or friends absorb a fortune. Provisions that this time we will not give up and spend too much money usually sputter like soap bubbles. After all, holidays are once a year, so it’s worth making every effort to create a truly unforgettable atmosphere and at the same time give each one a special gift.
However, if the funds are shrinking at a rapid pace, we must seek some help.The way out of this difficult situation is a holiday loan that you can get on preferential terms. Christmas loan offers are available both in banks and in the non-banking sector. It is worth emphasizing that the latter do not require many formalities from us, and above all they are faster available. So take or not take? I think everyone must answer this question, but let’s try to look at the advantages of such a solution.

 

Christmas loan – why is it a good solution?

Christmas loan - why is it a good solution?

It often happens that even people who watch over their household budget have a problem in two situations a year. The first relates to the holiday trip, and the second to the holiday season. Let’s be honest – you don’t have to go crazy with spending so that your holidays end with a loan. After all, it’s not just three holidays, but also New Year’s Eve. On the other hand, thanks to the holiday loan, we can make this special time look as we dream. At the moment it is worth turning off reason, because the Christmas period is associated with positive emotions, the warmth of a home and sometimes a bit carefree joy.
A holiday loan is certainly a good solution when your home budget does not allow you to organize perfect holidays.It is hard to regard as a whim the desire to create a unique atmosphere, treat your beloved people with delicious, traditional dishes or really unique gifts. Therefore, if a Christmas loan turns out to be necessary, you just have to use it. Only we should calculate all its costs and carefully analyze our financial situation in terms of repayment of the liability within the time agreed with the lender.

 

Christmas loan – where to find it?

Christmas loan - where to find it?

It is very important to prepare for the holidays with your head. This means that at the beginning of December we have to make a shopping list and count exactly how much money we need. Thanks to this, we know how much we may miss. It is better not to decide on an excessive amount in relation to the needs and repayment possibilities. There are three loan sources to choose from:

  • Family or friends – theoretically, the easiest way to ask your loved ones for help, but they too can barely fasten their budget before Christmas;
  • Bank – in this case, we can use a personal account overdraft, credit card or cash loan. However, none of these options are available immediately and requires compliance with several requirements. Some people may find it difficult to meet the bank’s requirements (eg income criterion);
  • Non-bank sector – installment loan or payday loan offered by loan companies or private investors as part of social lending.

The quickest payout is available, but it has its limits. First, the loan amount is not high, especially if you want to take advantage of the promotional offer of the first free loan. Secondly, we pay off payday loans once, and usually after 30 days. We must therefore consider whether we will be able to collect the right amount almost immediately after the New Year. On the other hand, the advantage of payday loans is the speed of receipt of the amount requested and the minimum formalities to be met.

However, if we have concerns whether we can meet the short deadline for repayment of the entire loan amount, it is better to opt for an installment loan. It can be a private loan or offered by a loan company. The installment commitment pays off longer, but the monthly charges turn out to be much lower. In addition, higher loan amounts are available if required.
It is worth emphasizing that both payday loan and installment loan are available online, so the process of settling down does not consume much valuable time (which is usually even less before Christmas). Formal requirements are also not difficult to meet. Most often, it is enough to have an ID card, a bank account and some income to get a loan easily.

LTV indicator – what is it and how does it affect the loan?

When lending real estate with a mortgage – banks use many different tricks that will secure the given investment. One such indicator is LTV. It significantly affects the final cost of the loan. What about this enigmatic abbreviation?  

 

LTV, or Loan To Value  

Loan To Value

Banks providing mortgage clearly defines the methods of commitment. It is intended only to finance the purchase of real estate, which is also the main mortgage security. Therefore, the LTV indicator, ie Loan To Value is the main parameter that determines the interest rate on the loan. Simply put, it is a bank conversion factor that allows you to assess the credit risk of a particular investment.   

LTV is very often confused with an indicator that measures the level of own contribution. Unfortunately, these are two separate concepts! Yes, the amount of funds for the purchase of real estate is undoubtedly reflected in LTV – but it cannot be synonymous with it. By developing the abbreviation “Loan To Value”, we think literally: “Credit to Value”. Therefore, the indicator shows – how the amount of money borrowed from the bank looks like up to the real value of the credited property. The lower the LTV, the more attractive the loan price!

 

How to calculate LTV?  

loan calculator

Currently, on the financial market it is very difficult to equal 100% LTV – and so the sum of the loan equal to the value of the investment. Why? This is the result of the fact that banks have ceased to grant loans that fully cover the cost of buying a mortgage. And that means having to make your own contribution. Also read: 8 ideas on how to get your own contribution!  

In order to calculate LTV for a specific investment, it is necessary to know the amount of the loan – ie the amount borrowed from the bank, as well as the value of the mortgage, which will be used as collateral for the entire loan. It is best to understand how the indicator works on a specific example. Namely – if the property is worth 250 thousand dollars and the bank grants a loan for 250,000 dollars, LTV is 100%. However, if the loan amounts to 200 thousand. by calculating LTV – we divide the loan amount by the value of the property and multiply it by 100%:  

LTV ratio: 200 00: 250,000 = 0.8 x 100% = 80%  

To sum up: m and higher Loan To Value, the higher the cost of the loan and the more likely that the lender will require additional security, eg. In the form of insurance, a one-time commission or margin. Therefore, the customer with a higher own deposit has a much better negotiating situation and a better chance of obtaining an attractive credit offer. From January 2017, on the basis of the “Recommendation S” adopted by the Polish Financial Supervision Authority – the client applying for a mortgage must have at least a 20% contribution of real estate value. This is to confirm the credibility and stable financial position of the potential borrower.

 

LTV and loan costs  

money loan

Interestingly, during the mortgage LTV may change! It may be the result of repayment of a portion of capital, changes in the value of real estate, as well as in the case of foreign currency loans – exchange rate fluctuations. A decrease in the LTV ratio may occur when taking loans in dollars. Because repayment of some funds means a decrease in the level of debt. Paradoxically, with LTV currency loans and the amount of credit itself can increase. After all, it is burdened with additional currency risk, ie a change in the exchange rate.

 

The higher the loan, the higher the LTV!  

money loan

The times when banks shaped the LTV ratio at a level exceeding 100% and granted loans without own contribution have gone forever … This means that we will no longer receive such an obligation that will cover 100% the costs of buying a given property. We will not find a loan with a rate higher than 80%. An exception may only be the proposals of some banking institutions, which, in exchange for a minimum 20% own contribution, offer redemption, so-called a safe ceiling, additional insurance for the missing amount. However, due to many threats resulting from the mismatch of the credit amount to the client’s financial situation – we can expect a tightening of lenders policy.  

That is why it is also worth remembering that not only additional cash will contribute to the improvement of credit conditions. Equally important is the property that we own, as well as the property in which we currently live, a construction plot or a family home. The only condition that must be met is no charge and acceptance by the bank. After all – each time it is necessary to thoroughly analyze and examine all the pros and cons. After all, a flat or house made available as part of a loan will provide its security for several long years!

Who can apply for a loan?

A loan , or loan, is a sum of money that a bank or financial agency grants as a loan. The sum will be repaid in monthly installments, with the application of an interest or, in the case of loans at rate 0, with the payment of the necessary costs of practice and investigation.

The various types of loan

loans

There are various types of loans that a subject can ask for, to face a costly expense or to raise his finances in a time of difficulty:

  • mortgages: they are paid only on important figures and with a specific reason, for example the purchase or renovation of a house or the purchase of real estate to start a professional or commercial activity
  • credit card loans: these are particular credit cards, called revolving, which instead of paying the entire amount of monthly expenditure to the following month, spreads the sum of the purchases over different months, applying a percentage of interest
  • financing: it is the possibility of making a purchase and paying it in installments. Usually, it is the same shops that deal with making the request for the file, directly at the moment of the payment of the purchased good
  • personal loans : they are the most sought after and most useful solution in case of need for small sums, which are not used to purchase a specific object or service, but to obtain liquidity

How do you apply for a loan?

How do you apply for a loan?

For each type of loan there is a particular procedure to follow:

  • for mortgages, you must contact the bank where you are a current account holder or, at the limit, a banking institution where you will necessarily have to open a current account. To obtain a mortgage, all the documents relating to the property that is being purchased or to the activity that is being started must be delivered at the time of signing the contract.
  • the financing for the purchase of a specific good is requested, on behalf of the customer, directly from the shop that sells that good or that service
  • revolving credit cards or personal loans , however, are requested from financial agencies that deal with loans or credit to private individuals

For what reasons can a loan be requested?

For what reasons can a loan be requested?

We have already seen that, in the case of mortgages or loans, the money requested on loan must correspond to the exact cost of a property, an asset or a service that is being purchased, of which all commercial and legal documentation must be presented. As for personal loans , however, there is no obligation to specify to the lending agency what it is used for, how it will be used, spent or invested the sum loaned. The reasons why a person can choose to apply for a personal loan are many and can have several causes:

  • a moment of economic difficulty and the consequent need for liquids to be able to reach the end of the month, pay the bills, the installments of the rent or another asset that is being paid in installments, for example the car
  • the need to do small jobs for the home which, however, do not have a cost that justifies taking out a demanding mortgage
  • in the event of a wedding, to have the cash to face the preparation of the new house, the purchase of furniture or to enjoy the honeymoon
  • to go on vacation without having to affect the capital
  • to finance the studies of the children, in the absence of liquid, to face the school expenses and the first installments of the rent, if they go to stay away from home

What are the requirements for applying for a loan?

Financial agencies, of course, evaluate the application and the person before lending money. First of all, they verify that the applicant is not registered in the Register of Bad Payers. It is a register which includes the names of those who, in the past, have not honored mortgages, rents, loans. Anyone who has been included in this database, however, is aware of it, because it is a legal act that is done after communicating it to the Bad Payer. The other basic requirements to have access to a personal loan are:

  • an age between 18 and 70, although some financials are elastic in their age and agree to lend money even to older people
  • an income: as an employee, as a freelancer or as a pensioner. According to your situation, you will have to submit to the agency: the last paycheck, the last tax return or the last credit of the pension.
  • some financial companies consider income obtained from annuities such as houses, properties or land for rent to be valid, if they can be demonstrated with a regular contract
  • in the case of employees, the employment contract must be open-ended. Alternatively, the term of the contract must cover the entire term of the loan. An employee with a 12-month contract that has just started, therefore, can access a 6-month or 12-month loan, but not a 24-month loan
  • be resident in Italy or have a residence permit that covers the entire duration of the loan
  • have a bank account, in any bank, for which the bank statement of the last 4 months must be presented