Mortgage with an initial payment of maternal capital

Mortgage against maternity capital - advantages, benefits, interest

Solving the housing issue is relevant for every family that has a second, third or subsequent child. Increasing current expenses significantly reduce the chances of purchasing or building a new home using personal savings.

Fortunately, there is an opportunity to correct the situation with the help of government subsidies. Pension Fund statistics show that from the first year of the maternity capital program, the most popular and relevant area in the use of funds was improving housing conditions.

Of the 3 million families who used maternity capital at the beginning of 2015 to improve the status of their housing, 70% of applicants implemented their projects using credit instruments (including mortgage agreements).

The popularity of loans against capital for the purchase or construction of housing can be explained simply - spending funds on other areas is less profitable and more problematic.

Mortgage interest rates for families who have used maternity capital do not exceed standard rates (9-14% per annum), and in some cases are even reduced. True, a positive decision on issuing a mortgage loan is not made in all cases.

Is it profitable to repay mortgage loans with maternity capital? The answer is yes, but in order not to be unfounded, we will give an example of calculations.

Example

Let’s say the size of the mortgage loan is 1,800,000 rubles. For this amount, the monthly payment is equal to 20,068 rubles. Contribution of maternity capital in full is considered an option for early repayment of the loan and affects the amount of the monthly contribution.

After signing the agreement, the final amount of the debt is reduced, and the interest on the loan is reduced accordingly. Now they are approximately 16,500 - 17,000 thousand per month.

To receive a mortgage using capital, the borrower’s family must meet the requirements of financial institutions.

Borrowers are required to:

• availability of permanent income confirmed by certificates;
• work experience in the current position for at least 6 months (in some banks - 3 years);
• impeccable credit history.

When applying, only the legal (“white”) income of the borrower is taken into account. The living space, which is purchased with a mortgage, is registered as the property of all family members.

The difficulty is that not all banks are ready to work with maternity capital, so those who want to use the certificate do not have much choice.

In all cases, the issue is resolved individually after a preliminary conversation between the potential borrower and representatives of the financial institution.

Read more about all types of loans for maternity capital in a separate article.

Important news on the topic:

Vladimir Putin took the initiative to extend the maternity capital program until 2022. In addition, he proposed introducing monthly payments for the first child in an amount that would be calculated based on the cost of living.

The reform will also affect the way matkapiatl is used. From 2018, it can be spent not only on improving housing conditions and education, but also on caring for preschool children.

As for supporting the mortgage program, parents will be able to take out loans secured by the housing they are purchasing with government support. If the average mortgage rate is 10%, then 4% will be paid by the state.

Watch a video on this topic:

Lending terms

Each financial organization puts forward its own requirements for candidates for a loan with capital as a down payment. They may include in the mandatory list of procedures before signing a contract a preliminary assessment of the characteristics of the property. The list of conditions for a mortgage with state support is practically no different from the list of conditions imposed on individuals receiving a housing loan on a general basis:

• Having a stable income. Most banks take into account the employee's total length of service along with their time at their last company. The potential loan recipient must have worked at his last place of employment for at least 6 months. The total work experience must be more than 1 year in 5 years.
• The client must not be the owner of residential real estate. If a citizen has registered an apartment or a plot of land for individual construction with an indefinite right of use and a house, he will not be able to obtain a mortgage.
• Good credit history. If there is arrears on any type of loan, the individual will not be issued a mortgage loan.
• Housing purchased with a mortgage with an initial payment from capital must be re-registered as shared ownership after repayment of the debt. This is a mandatory clause, the fulfillment of which can be stipulated by the lender in the contract.

Requirements for the borrower and mortgage housing

Families who decide to purchase an apartment with the help of loans must be prepared to meet certain conditions. Only solvent citizens can use maternity capital as a down payment on a mortgage. If an individual does not have a permanent official income, it is better for him not to contact banks, because his request for a loan will be refused. Lenders' requirements for the borrower and mortgage housing:

• The company's experts will first conduct an assessment inspection of the property. The apartment should not be located in a dilapidated building that is being prepared for demolition.
• The property must not be located on a site designated for commercial use.
• A family who decides to purchase a new building can choose an apartment in residential complexes of developers verified by the lender.
• The borrower is required to confirm his income with a 2-NDFL statement. If an individual draws up a certificate in the bank’s form, the loan rate will increase by 0.5–1.5%.
• Mandatory insurance of the borrower and real estate. Each bank puts forward its own requirements regarding this clause of the agreement. Some institutions require the borrower to take out disability insurance, while others require a comprehensive life and property insurance policy.

Options for using maternity capital in a mortgage

The general rule regulated by law is:

Funds under the family capital certificate can be spent NOT earlier than 3 years after the birth of the 2nd (third or subsequent) child.

There is an important exception to this rule: capital can be used without waiting for three years, if we are talking about repaying the applicant’s debt to a bank or other financial organization. The exception also applies to loans secured by a mortgage.

In general, family capital can be used both to repay an existing loan and to apply for a new one. True, these loans should be obtained exclusively for housing needs.

Repayment of the down payment

So, the child has reached the age of 3 years, and his parents decided to use government funds to improve living conditions. Now they can weigh the pros and cons and contact a bank that issues mortgage loans against maternity capital.

The right to use maternal capital as a down payment on a mortgage became available in May 2020, when the corresponding law was adopted.

New opportunities, according to representatives of the State Duma, will improve the living conditions of families who cannot get a positive decision on a mortgage due to the lack of the required amount of money to make a down payment.

Other benefits from the entry into force of the new law:

• increasing efficiency in the use of maternity capital;
• reduction of the monthly payment amount and interest rates on loans;
• support for the real estate market during the economic crisis.

Since the amount of family capital as of 2020 is 453,026 rubles, this money in many cases is quite enough to repay the down payment, usually amounting to 10-20% of the entire loan.

To complete this transaction, you need to submit an application to the local branch of the Pension Fund, and then enter into an agreement with a banking organization that provides the relevant services.

Repayment of principal

The principal debt can be repaid only on loans taken for the purpose of purchasing (constructing) housing. Any other loans, including those issued by microfinance organizations (MFOs), are prohibited from being repaid using maternity capital.

This ban is legally binding and is enshrined in the relevant article dated March 2020. The adoption of the ban is associated with a large number of abuses on the part of microfinance organizations and other companies using illegal schemes for cashing out MSK.

Fines, delays, commissions and penalties for late payments and failure to fulfill debt obligations cannot be repaid using family capital.

Is it possible to use maternity capital for a mortgage if the child is under 3 years old?

According to the law, for the legal use of maternity capital funds, the child must be 3 years old , however, this general rule can be circumvented if you pay off an existing mortgage using this money.

This is very convenient, since early payment of an open mortgage provides only minimal interest, or the bank refuses it altogether.

After the birth of a child and funds are credited to the account with the Pension Fund, if you already have an open mortgage on your own real estate or land, you can pay it off ahead of schedule at the expense of maternity capital, having received permission from the pension fund authorities.

Such payment does not deprive the right to re-register the mortgage agreement.

Useful video:

How to get a mortgage using maternity capital - 3 simple steps

The procedure for applying for a mortgage using maternity capital is standard:

1. The apartment (or other housing) is registered as ownership.
2. The bank transfers the money to the seller's account.
3. The apartment remains pledged (under a mortgage) until the entire amount of the debt is repaid along with interest.

Before you start buying an apartment with a mortgage, you need to reach an agreement with the Pension Fund and the bank. It may take 1-3 months or more to complete the transaction: to reduce the time, it is worth collecting all the documents and studying the algorithm of actions in advance.

Step 1. Collection of necessary documents

The following documents are required to be provided to the bank:

• passport of a citizen of the Russian Federation;
• maternity capital certificate;
• pension insurance certificate;
• documents confirming solvency (certificate of basic income with the employer’s stamp, certificate of additional income);
• certificate of absence of debt on utility bills.

You also need documents confirming the purchase/sale transaction of an apartment or house, certificates from the BTI and other technical papers.

Step 2. Submitting an application to the Pension Fund

If the bank agrees to issue a mortgage, the decision to transfer funds is made by the Pension Fund. The organization has the right to consider the application and carry out verification for several months (2-3), after which it agrees to the procedure or refuses the borrower.

The Fund must be provided with copies of personal documents, data on the residential premises purchased under the contract, and bank statements. All loan documents from the bank must meet the established requirements, otherwise the application will be denied.

Step 3. Execution of the contract

An agreement to obtain a mortgage using maternity capital presupposes the consent of the parents to a full or partial transfer of family capital to the bank to repay the down payment or current debt.

After the transfer from the Pension Fund, the bank changes the loan repayment schedule and reduces the amount of monthly contributions.

In the agreement, the spouses are registered as co-borrowers. The Bank and the Pension Fund jointly control the legal purity of the transaction.

If you have already used maternity capital for any purposes (for example, to educate a child), you will not be able to get a mortgage from scratch. In this case, you can use the certificate only to pay off an existing debt.

Bank offers

Many banks that allow the use of maternity capital funds offer the opening of a mortgage using a down payment or repaying the balance of the debt.

The type of housing and the development market do not matter.

Video on the topic:

VTB 24

VTB 24 Bank has been opening mortgage agreements using maternity capital since 2013.

During this time, the terms of the program became more flexible, meeting customer requirements.

Interest rates are set at 11.9% to 14.45% per annum .

The size of the down payment and the loan term are taken into account.

The minimum loan amount is at least 900,000 rubles , and the down payment is from 10% .

A mortgage loan can be issued for a term of up to 50 years for an apartment, house or cottage in all development markets.

You can learn more about the step-by-step instructions for applying for a mortgage for an apartment here.

If the borrower is not a bank client, then you will need to additionally provide information about bank accounts in other institutions.

It will also be useful to familiarize yourself with mortgages for maternity capital in VTB 24 in this article.

Sberbank

Sberbank supports the conditions of government programs and willingly issues mortgages at attractive interest rates using maternity capital as a down payment or to pay off the balance of debt and interest.

Housing is purchased both on the primary and secondary markets, but buying an apartment in a new building is more profitable if the developer also uses the services of Sberbank.

Interest rates range from 11% to 13% , the down payment is set at no less than 20% .

The larger the down payment, the lower the mortgage interest.

The minimum term for issuing a mortgage is 1 year , and the maximum should not exceed 30 years .

Special conditions are offered for salary clients, and the advantage is the possibility of early repayment of the mortgage with maternity capital without additional fees.

How to avoid fraud when applying for a mortgage under mat capital

The first rule that will help you avoid fraud: work only with official organizations - large banks and the Pension Fund directly.

Scammers may introduce themselves to you as employees of well-known companies: it is worth checking their documents or asking banks and the Pension Fund whether such employees work for them.

MSC fraud schemes are quite numerous:

• concluding fictitious loan agreements and withdrawing commissions for intermediation from certificate holders;
• obtaining consent to cash the certificate and withdraw it from the owners;
• purchase of housing under construction using maternal capital with subsequent resale of rights.

We will not mention the options when the holders of the certificates themselves turn out to be scammers who purchase housing for the purpose of its further sale.

And a few more important points:

1. If you plan to use maternity capital in a mortgage, you must notify the Pension Fund about this 6 months or earlier , since all payments in this organization are planned once every six months.
2. Decide in advance what kind of housing you want to purchase - ready-made or under construction . In the second case, you will benefit in price, but the timing of obtaining housing will be more uncertain.
3. The apartment is registered to all members of the family in equal shares.
4. The right to dispose of an apartment (sale, exchange, donation) appears only after fulfillment of payment obligations.

A mandatory condition for executing an agreement with a bank is insurance. Some lending financial institutions provide sufficient insurance in case of disability or dismissal of the borrower.

Other firms require the client to provide life insurance and insurance against damage to real estate. In case of early repayment of the debt, it will not be possible to return the paid part of the insurance.

Which banks issue mortgages using maternity capital - TOP 7 most reliable banks

In 2020, several dozen Russian banks work with maternity capital. We have selected seven of the most reliable financial organizations and present them to the attention of readers.

Sberbank

Previously, this financial organization issued mortgages against mat capital only for ready-made properties. However, now Sberbank provides support to families wishing to purchase housing under construction, and even helps to find funds for the reconstruction and repair of houses and apartments.

DeltaCredit Bank

The bank issues loans to improve housing conditions with a minimum down payment (5%). Family capital funds are accepted as the primary amount for debt payment and as repayment of the main mortgage loan.

VTB 24

Directions for investing public funds are standard: covering the down payment, reducing the amount of the contribution, repaying the principal debt. The loan is issued for the purchase of primary, secondary or under construction housing.

Bank of Moscow

This financial institution does not accept maternity capital as a down payment, but repays the principal debt on the mortgage loan and interest on it.

Nomos Bank

Relatively recently, it has been working with maternity capital, but offers its clients several high-quality financial products designed to improve the living conditions of families with 2 or more children.

UniCredit Bank

The company has been working with family capital since 2009. The scheme for providing services has long been worked out - all possible options for using the state certificate for maternal capital are available to borrowers and are issued as quickly as possible.

Primsotsbank

It works according to two programs “MK” and “MK plus”. Those wishing to purchase a home on credit can cover part of the debt or make a down payment. Decisions on issuing a mortgage loan are made within 1 day.

Summary table for all banks:

Advantages and disadvantages of obtaining a mortgage with a down payment using maternal capital funds

Thanks to the state support program, many young families have a chance to improve their living conditions. A mortgage using maternity capital is beneficial for citizens who do not have the funds to buy an apartment or invest in individual housing construction. A family can choose an apartment in a ready-made building and move in after signing a loan agreement. The advantages of lending with a down payment from maternity capital include:

• increasing the amount of mortgage lending using family certificate funds;
• the right to receive an additional subsidy for a young family and a tax deduction;
• reducing the amount of debt thanks to gratuitous assistance from the state.

Using maternity capital to pay off a mortgage has one significant disadvantage, which is the time frame. If a citizen is investing in a new building, then there will be no problems with waiting for funds from the state budget. But when purchasing housing on the secondary market, rarely will any of the legal property owners agree to wait up to 4-6 months for the transfer of funds to the account for the purchase and sale transaction.

For some citizens, the disadvantage is that after the encumbrance is removed, the property is divided into equal shares. If the family decides to sell or exchange the apartment in the future, they will have to obtain a notarized consent of all shareholders. At the same time, the guardianship services will definitely check the transaction to make sure that children's rights will not be infringed during the sale of property.

Help for those wishing to take out or pay off a mortgage using maternity capital

In addition to banks, there are other companies and financial organizations that offer their assistance (of course, not free of charge) to holders of government certificates. We have already talked about the possibility of running into scammers, here we will talk about honest companies operating legally.

Sometimes these are representatives of specific construction companies who want to sell real estate quickly and for its intended purpose. Such companies offer families to provide their certificates as a down payment and receive a discount on the cost of housing.

The decision to take advantage of the offer of intermediary companies is made only by the certificate owner, after weighing all the pros and cons. It is unlikely that you can get great benefits based on credit conditions, but sometimes there are really interesting options.

In addition to banks, such organizations as “Group”, Group of Companies “Metro”, Urban Group and some others have the right to work with maternity capital.

We recommend watching a useful video on the topic of the article: