Nine mistakes mortgage borrowers make

The bank approves a loan based on your income and its own risk — not on your comfort. The maximum approved often means a payment of 45–50% of income. A good rule of thumb: the payment should not exceed 30–35% of income, otherwise any surprise — illness, a pay cut — puts you in arrears.

The first bank to approve a loan is not necessarily the best. Spend a week submitting applications to 3–4 banks and compare them on total cost of credit. A difference of 1–2% on a 15-year loan is USD 8,000–20,000 of overpayment.

In Uzbekistan there are preferential mortgage programmes: for young families, public-sector workers and other categories. The rates can be 1.5–2 times below market. Check with the state housing-savings programmes or the Central Bank of Uzbekistan — you might be eligible.

After the down payment and transaction costs, many buyers are left with a zero financial reserve. That is critically dangerous: repairs, a sudden appliance breakdown, a medical bill — and you can no longer service the mortgage. Rule: by the time the loan is disbursed there must be at least 3–6 monthly payments left in the account.

A minimal down payment lowers the entry threshold but sharply increases the loan and overpayment. At a 10% down payment instead of 30% you take a 20% larger sum and pay interest on it for the whole term. On top of that, banks often raise the rate when the down payment is low.

A mortgage contract is a 30–60-page document. It is critical to find: the clause on rate changes, the late-payment penalties, the early-repayment terms, the grounds on which the bank can demand early repayment of the whole sum. If anything is unclear, ask for a break and read it at home.

When issuing the mortgage, banks actively push cards, insurance and settlement accounts. Some of these reduce the rate — they may be worth considering. The rest are unnecessary expense. Ask directly: 'which of these affects the rate?'

If your income is in soʻm but the loan is in dollars, you are taking on currency risk: when the exchange rate rises, your payment in soʻm rises automatically. The loan should always be in the currency of your income — that is a fundamental rule of risk management.

Every 10,000 soʻm put into early repayment in the first 3–5 years of a mortgage saves 3–4 times as much in interest as the same amount paid later. In the early years most of the payment goes on interest — which is why early repayment is so effective. Channel bonuses and one-off income into early repayment.