All about mortgages or how to solve the problem with housing

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The statistics of recent years clearly demonstrate the tendency of Russians to “relocate” to the suburbs, and more and more of our fellow citizens are thinking about building their own home. Of course, such construction requires not only financial, but also time costs, but these difficulties can be overcome by competently distributing your forces and investments..

The best option in a situation where you have long dreamed of living in a secluded home away from the noise of big cities is to obtain a mortgage loan for the construction of low-rise housing.

However, before rushing headlong into the “welcoming” embrace of Russian banks, we advise you to determine in advance the amount that you will need to purchase building materials and pay builders, as well as assess your ability to return borrowed funds and pay interest.

Below we examined the main conditions under which Russian banks issue mortgages for the purchase and construction of low-rise housing and apartments, gave a brief description of state programs and commercial proposals of banks to provide housing for young families, and also analyzed the features of loans issued for home renovation.

Mortgage for the purchase or construction of low-rise housing

As you know, it is much more difficult to obtain a mortgage for the purchase or construction of private housing in Russia than a loan for a standard city apartment – only 30% of those who wish are given such an opportunity, but even they have to overpay at least 1.5-2 percentage points.

However, Russians who dream of their own private house on credit have a real opportunity to save money – take a mortgage on a house under construction in tranches, and, accordingly, save on interest.

Borrowers wishing to obtain a mortgage for the purchase or construction of a country house must meet all the requirements of a credit institution.

All about mortgages or how to solve the problem with housing

First of all, banks are careful about the ownership of land directly from the borrower himself or from his family members. In addition, private housing should not be detached – it is necessary that the house is located in a settlement located no further than 50 km from the bank (or its nearest branch, if any).

It should be noted that the presence of all communications, good access to the house and the developed infrastructure of the village as a whole are welcomed. In addition, banks pay special attention to the material from which the foundation is made, as well as the load-bearing walls of the house. A house made of concrete blocks or bricks is considered more durable and reliable than a wooden structure. Consequently, the liquidity of such a house is higher.

At the moment, a mortgage for the purchase of a private house is provided on the following conditions:

  1. Down payment of about 40-60% of the assessed value of the land or house
  2. Interest rate – 15-20% per annum
  3. Maximum loan term – 30 years

Difficulties in obtaining a loan for suburban real estate or why the bank refused again

As mentioned above, the number of loans issued for the construction of housing in multi-storey buildings is dozens of times higher than the number of bank loans provided for the construction of private houses. This trend is directly related to the banks’ distrust of the private real estate segment..

All about mortgages or how to solve the problem with housing

A mortgage is primarily a pledge, so banks want it to have a minimum number of requirements for its implementation and be liquid. The complexity of issuing such a collateral determines the number of factors that must be taken into account when issuing a loan:

  1. Assessment of the liquidity of a residential property
  2. The presence of engineering infrastructure connected to the site of the house

It should be noted that assessing the liquidity of an individual house at the initial stage of construction is almost impossible.

At the time of contacting the bank, the borrower may not provide the relevant documents proving that the private housing under construction will be provided with communications.

It is not uncommon for a borrower to apply for a loan for the construction of low-rise housing, although at the same time he has neither a project, nor an estimate of calculations and expenses – in such conditions it is difficult for a credit institution to decide whether to issue a loan.

All about mortgages or how to solve the problem with housing

Moreover, in the event of bankruptcy of the borrower, the credit institution may have difficulties with the sale of the house, since its value may fall sharply and not even cover part of the remaining loan..

To date, the process of selling suburban property is about 2 times longer than that of urban real estate – it is difficult to implement, since everyone builds housing for themselves.

Finally, banks try not to get involved with private builders due to uncertainty about the proper operation and completion of the facility. Unlike a developer company, an individual is not responsible for his debts with all his turnover and property, he also does not have foremen and full-time engineers..

Several mortgage programs from the largest Russian banks

The main difference between a mortgage for low-rise housing and a loan for the purchase or construction of an apartment is, of course, higher interest rates, a high down payment and additional costs associated with obtaining a mortgage.

Consider the most relevant offers of the largest banks in Russia for this type of lending.

All about mortgages or how to solve the problem with housing

Sberbank of Russia offers to issue a mortgage for Country Property on the following terms:

  1. Loan term – 30 years
  2. Down payment – from 30 to 50%
  3. Interest rate – 14.75%

Moreover, both the maximum and minimum loan amount is unlimited..

VTB 24 Bank with the Country House mortgage program (fixed rate for the first 3 years):

  1. Proof of solvency – up to 50 years
  2. Down payment – from 30 to 40%
  3. Interest rate 13.25%

The minimum loan amount is 500 thousand rubles, the maximum amount is not limited.

Bank of Moscow offers to get a mortgage on the same terms as VTB 24 bank, however, the initial payment is from 25%.

All about mortgages or how to solve the problem with housing

It is possible to obtain a mortgage for the construction and acquisition of suburban real estate in Gazprombank on the following conditions:

  1. Loan term – up to 20 years
  2. Down payment – from 20 to 30%
  3. Interest rate – 12.2-12.7%

Conditions for obtaining a mortgage in Alfa-Bank:

  1. Loan term – 20 years
  2. Interest rate – 16.55%
  3. Down payment – 40%

Maximum loan amount – 15 million rubles.

Loan for an apartment: conditions, procedure and terms of registration

Having understood a little with the peculiarities of obtaining a mortgage for the construction or purchase of a country house, we will move on to the next type of mortgage lending – long-term mortgage loans or so-called “loans for an apartment”.

Let’s start with the fact that the provision of long-term mortgage loans is carried out by banks for a period of three or more years, while the optimal loan term is 10-15 years. The amount of monthly payments by the borrower here directly depends on the duration of the loan repayment period.

As a general rule, the amount of a home mortgage loan is 60-70% of the market value of the property being purchased, which in turn is the subject of collateral.

The main obligation of the borrower is to make an initial payment to pay for part of the purchased housing. This amount is paid at the expense of the borrower’s own funds and is about 30-40% of the value of the acquired property.

All about mortgages or how to solve the problem with housing

Meanwhile, the repayment of the loan and the payment of interest on it is carried out by making equal monthly payments not exceeding 30-35% of the borrower’s total income for the corresponding settlement period.

When passing the procedure for assessing the likelihood of loan repayment, the lender is obliged to use officially certified information about the borrower’s current income.

The real estate object purchased on credit is a kind of collateral, and acts as a guarantee of the subsequent payment of the debt to the creditor.

The borrower and all adult members of his family are required to provide a notarized consent to the release of a residential property purchased using credit funds, in the event of foreclosure.

Housing transferred into a mortgage must be released from any encumbrances (restrictions), that is, it must not be in securing another obligation.

The residential property purchased by the borrower with a long-term home mortgage must be used directly for living. Renting out of such housing is possible only with the appropriate consent of the lender.

Compliance with the requirements and standards for the procedures for the provision and servicing of long-term residential mortgage loans is the basis for the reliable functioning of the secondary mortgage market, as well as a means of attracting private investors to this sector, in particular through bonds and equity mortgage securities.

Home renovation loan

When it comes to repairing an apartment, we are not always talking about small amounts – you can save up for wallpaper and paint in a couple of months, but for overhaul, as a rule, an amount of at least a million rubles.

The best solution to this problem can be a mortgage loan. In a number of cases, banks go to meet those borrowers who can officially confirm their solvency and provide property as collateral, since objects that cannot be easily “moved” were at all times considered an excellent investment.

However, this option is optimal for both parties: the borrower receives the required amount and, in turn, undertakes to fulfill the bank’s requirements, otherwise, he risks losing the mortgaged residential property.

You can take out a mortgage for home renovation in any currency and in almost any bank, but be prepared for additional expenses, for example, to pay for the services of an appraiser, which will be necessary to draw up a document certifying the market value of your home.

All about mortgages or how to solve the problem with housing

As for the amount that the borrower can count on, it is usually 50-70% of the appraised value of the residential property provided as collateral.

The conditions for obtaining a mortgage for repairs differ significantly from the conditions for a mortgage for the purchase of housing: short maturities, high interest rates, additional costs. In various credit institutions, the interest rate on mortgages for repairs varies from 14 to 20%. Meanwhile, the terms are significantly reduced – the loan is issued for 1-7 years, so try to pre-calculate your real possibilities.

For many Russians, the word “mortgage” is associated with thousands of queues and a voluminous bundle of documents necessary to obtain a loan. The mortgage for repairs does not in any way correspond to such ideas – to obtain this mortgage loan, a passport, a document confirming the assessed value of the property, a certificate of your income and a copy of the completed pages of the work book will be enough.

In a credit institution, you will be asked to fill out an application form, as well as to undergo an appropriate interview. After 3-6 days, the bank will inform you of its decision.

Mortgages for young families

The primary problem of almost every young family is the construction of their own home – any person dreams of his own home and is not particularly eager to share an apartment with numerous relatives.

Of course, in today’s real estate market, to acquire even an ordinary “kopeck piece” requires a considerable amount of money, and housing prices are growing every day.

All about mortgages or how to solve the problem with housing

What to do if it is not possible to save up the necessary amount for the purchase of real estate and in the near future a will from a wealthy American grandmother is definitely not expected? It’s simple – a social mortgage for a young family will help you!

This type of lending is quite profitable and quite realistic, since the borrower can move in and live in his apartment almost immediately after the mortgage is issued.

Despite the advantages of mortgages for young families, many Russian citizens are confused by the fact that the new apartment also acts as a subject of mortgage. However, as a rule, no problems with payment of the loan arise if you comply with all the requirements of the bank and pay the installments on time. Agree, it is much more pleasant to live in your apartment than to pay a monthly rent, which, by the way, is also quite high today..

Who can get this type of mortgage? The following socially unprotected groups are among the citizens eligible for social mortgage and state financial support:

  1. “Queens”
  2. Public sector employees
  3. Military personnel
  4. Young families

The aforementioned persons have the right to improve their living conditions within the social norms established by the state. Today this norm is 18 m2 per person.

All about mortgages or how to solve the problem with housing

In accordance with Russian legislation, there are several types of social mortgage:

  1. Granting a subsidy for a certain part of the cost of mortgage housing
  2. Subsidizing the mortgage interest rate
  3. Sale of state-owned residential real estate on credit at a preferential price

The social mortgage program allows you to purchase residential real estate at a price 3 times less than its market value, moreover, with a discount on the percentage of the mortgage loan.

It is possible to get a mortgage for a young family both thanks to government subsidies, for example, under the program “Provision of housing for young families” (here you will face the problem of “waiting lists”, filling out and submitting a significant amount of the necessary documentation), and directly in banks, according to commercial offers – The “famous” mortgage of this type is the “Young Family” program from Sberbank, which has a small down payment, as well as a significant plus in that the bank takes into account not only the income of young spouses, but also their parents.

What to do if there is not enough money to pay off the loan

As a rule, the bank is interested in the borrower fulfilling his obligations in full and in a proper manner. In the event of any financial problems affecting the borrower’s solvency, the credit organization meets him halfway and offers various ways of resolving the issue until the client’s full solvency is restored. The main thing in such a situation is not to postpone its decision, but to contact the credit institution in time and inform them about the difficulties that have arisen..

All about mortgages or how to solve the problem with housing

In turn, the bank can offer the following ways to resolve the situation:

  1. Deferral of annuity payment
  2. Loan restructuring
  3. Other individual solution

If it comes to the fact that the borrower can no longer repay the mortgage loan, the sale of the mortgaged apartment can be carried out out of court. In this case, the amount from the sale of the apartment, which will remain after the repayment of the debt to the bank, is returned directly to the borrower. However, if after the sale of the mortgaged real estate part of the loan remains unpaid, the bank is not entitled to collect it from the client, respectively, the debt will be considered repaid.

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