How to get a loan secured by real estate – bank conditions and necessary documents

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If a person urgently needs money, and there is nowhere to take it from, then banks offer a service such as a loan secured by real estate, which provides an opportunity for a borrower to receive a large amount for a variety of purposes, from acquiring an apartment to an opportunity to make repairs at home or relax. Such products are popular in the banking environment, because the bank will protect itself from risks by giving out money – if a loan secured by real estate ceases to be paid, then the property is simply rejected by the applicant.

What is a loan secured by real estate

In connection with the expansion of the private housing construction market, banks became more and more willing to give money on the security of real estate, offering them to their clients when the latter do not have the funds to buy a new home, or there is an uncovered difference between the price of old housing and new. Even if the clients ’goals do not relate to mortgages, banks still go on lending, if as a security a person provides housing or any other goods a priori in demand on the market.

Mortgages secured by existing housing

For the law, a target loan secured by real estate is equivalent to a mortgage, because anyway, you purchase new housing, taking money for this purpose, or take funds for other purposes, mortgaging real estate – such a loan is considered targeted. There are options when a person, wanting to improve their living conditions, wants to borrow money from a credit institution by laying down real estate that he already has. The contract specifically prescribes conditions that suggest that a person will spend the funds received solely on the purchase of housing.

Inappropriate loan secured by an apartment

Many large banks, for example, Sberbank, offer an inappropriate loan secured by an apartment, which provides that the money provided to the applicant can be spent at any time, and he will not need to provide reports on this. Such products of Sberbank should be popular among customers, however, the need to collect a lot of documents, one listing of which takes two sheets, and the likelihood of not getting the money, scare away potential applicants.

Loan secured by land

If a person does not have an apartment, which, according to documents, is his property, then many banks, for example, Russian Agricultural Bank, offer to take a loan against the security of a land plot, if it belongs to a potential borrower. It is advisable that the site be in a good area, there are some buildings on it, so that the bank has the opportunity, in case of delay in payments on borrowed funds, to easily and profitably sell it.

Credit companies can take any property as collateral for loans, issuing consumer loans for it — it can be cars, trucks, special vehicles, truck cranes, excavators, even antiques, although in this case banks are reluctant to consider such collateral, since antique items require independent evaluation, and then selling them is not so easy.

House of notes

Loan benefits

Unlike other bank loan products, the advantages of a loan secured by real estate are obvious:

  • consideration of the application takes a minimum of time;
  • competition for customers encourages banks to lower interest rates;
  • the loan term can be very long, up to 25 years;
  • some organizations provide potential borrowers with the option not to indicate the size of their income;
  • if a person is a client of the bank, then the contract can be signed on more favorable terms of provision, which may relate to the amount of interest, as well as the period of receipt of the loan and its repayment;
  • to calculate the interest rate on a loan, you can use the mortgage calculator, which is on the website of any commercial company engaged in lending.

Minimum percentage

Each bank has its own interest rate for a loan secured by a house or apartment. There is one general unwritten condition – the less documents a client provides to a credit institution, the higher the interest on borrowed funds. So, in Sberbank it reaches 14% per annum in rubles, the Moscow branch of Alfa Bank offers loan seekers in Moscow 12.5 – 12.9%, the rate at Rosselkhozbank depends on how long the client takes the money – the longer the repayment period the higher the payment amount will be.

Loan secured by an apartment without proof of income

Each person wants to get borrowed funds as quickly as possible without collecting a lot of information. You can take out a loan on bail without information from Sberbank only by receiving regular salaries on the card of this bank, or exclusively for educational purposes, for which Sberbank has a special “Educational” product. Sovcombank, Vostochny Express Bank and Russian Agricultural Bank can provide loans without salary certificates, offering the most suitable conditions for borrowers.

Loan conditions secured by real estate

Each bank has its own conditions for obtaining a loan secured by real estate, however, the most important requirement is the provision of reliable information on the available housing, which is supposed to be mortgaged. Assessment of its value is carried out by experts. Based on this, a decision is made to issue the required amount of money, which amounts to a certain share – from 60 to 85% – of the market price of an apartment or house. Banks may set other conditions, for example, consent to a loan for people living with a loan applicant.

Man signs papers

How to get a loan secured by an apartment

To simplify the issuance of funds and quickly take out a loan secured by real estate, you must first evaluate and insure your home so that bank employees do not have to carry out this procedure. In this case, it is necessary to use the services of reputable firms whose documents will carry weight for bank employees. Filling out the form for the issuance of a particular type of loan, you need to be aware that you will not be given an amount that will be more than stated in the evaluation sheet.

All expenses at the same time fall on the shoulders of the potential borrower and are not compensated in any way. The client submits an application for the type of credit burden he needs in a single form, then waits until the bank employees check the documents provided by him for truth and compliance with reality. All this takes some time – in some cases, the application takes several hours, sometimes a few days.

Documents for a loan

Turning to this or that organization, the client should know what documents he will need to apply for a loan secured by an apartment. In each individual case, the situation depends on the banking structure and what product the potential borrower wants to use. When mortgaging housing or any other liquid real estate, the following papers are required:

  • documents confirming the applicant’s right to housing;
  • passport, personal account number of the applicant in PF;
  • form confirming officially the income of the applicant with tax deductions from them;
  • the basis on which the applicant owns the property (gift agreement, purchase, inheritance);
  • a certificate from the MFC that the applicant is registered in the house book;
  • notarized consent of relatives registered in housing for the issuance of funds.

Bank requirements for the borrower

On the territory of Russia, there are almost identical requirements of a bank to a potential borrower who wants to receive money by mortgaging a house or apartment:

  • age from 21 to 65-70 years (at Sovcombank the age of the recipient of funds can reach 85 years);
  • the applicant must be a citizen of Russia;
  • officially work for at least six months with the same employer;
  • not to attract joint borrowers if they are private entrepreneurs, owners of private equity farms or chief accountants of the private equity company, and not individuals.

Man and woman in the office

Getting and servicing a loan

After the banking structure has approved the application for a loan secured by real estate, the borrower is given the required amount in cash or by transfer to the specified account. The applicant must carefully study all the clauses of the agreement relating to the repayment of the loan body and interest, because if he at least three times overdues or repays the current debt, the collateral can go to the lender without any legal proceedings.

Loan repayment procedure

For simplicity and convenience of tracking payments, banking structures provide for the repayment of a loan secured by an apartment in equal shares, calculating the monthly required amount for repayment and attaching this calculation to the main contract. The contract indicates the deadline for making the required amount, after which penalties for late payment will be calculated. Sometimes it is possible to repay all debts once, in one payment at once, however, this method of quick repayment of a loan may be subject to commission.

Which banks give loans secured by real estate

All credit and banking organizations are interested in their money being in circulation and profitable with the least risk. The most popular banks providing mortgage loans are Sberbank, VTB 24, Alfa-Bank, Raffeisenbank, Russian Agricultural Bank (which prefers lending to farmers and private household owners), Sovcombank, Gazprombank, IIB, and Vostochny Express Bank. Each of them has their own products offering different types of loans with a pledge of real estate..

Pros and cons of a loan

Like any loan burden, there are pros and cons to a loan secured by real estate. The pluses include the fact that credit companies quickly and positively respond to the application of the applicant, if it is correctly executed and all the necessary documents are attached to it. The downside is that you have to collect and execute a lot of papers, and then sometimes wait a whole week, whether they approve the application or not.

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