Abstract:

One of the key component of household financial decisions is taking out a mortgage loan, which, due to its long-term nature, high value, and uncertainty regarding future financial situation, carry a significant level of risk. Previous scientific studies on the risks associated with mortgage loans have, in most cases, treat this issue from the perspective of banks. Therefore, the risk related to a mortgage agreement is usually equate with the lender’s (bank’s) risk rather than the borrower’s. Nevertheless, financing purchase of a property on a credit also creates various risk for consumers – borrowers – and financial questions with the timely credit repayment can arise at every moment of loan repayment.
This article fills an existing research gap and draw the important issue of protection against risk out from the direction of non-professional participants. In the article, risk is understood as the consumer’s inability to repay the loan. Thereby the risk of loan repayment is similar to credit risk, with the proviso that the consequences of this risk are presented from the borrower’s perspective.