Mortgage for the purchase of land and construction of a house

Why is it difficult to get a mortgage secured by land?

The main criterion for banks is the liquidity of land plots. Many lands are not suitable for the strict selection of banks for mortgages. It is believed that the plots will be difficult to sell, and therefore the borrower is refused.

Financial institutions that offer not only a plot of land for a mortgage, but also the further construction of a country house, including for year-round use, are more willing to make a deal. It is registered as collateral by concluding an agreement with a construction company that will carry out all the work.

Many sites are located at a great distance from the city, which is why they are a priori considered low-liquidity. It is better that the land is located just a few kilometers from a large city, such as Moscow, St. Petersburg, or Yekaterinburg. Then lenders will be interested in the property, since the regions are constantly developing, there is an influx of population, even once-empty areas of the Moscow region are being built up, etc.

Pros and cons of a mortgage on land

pros

1. The loan is suitable for citizens who prefer city life to country life. Usually, the construction of real estate objects is carried out behind the land plot: the construction of a house, a bathhouse, and outbuildings.
2. In some cases, a country plot with a residential building is cheaper than buying an apartment in the city, especially in the central areas of the village.
3. The house is built on the site according to the owner's design: his wishes are taken into account.
4. The owner of the land plot has the opportunity to carry out subsidiary farming. Just remember that the purchased land must be intended for these purposes.

Minuses

1. The procedure for registering land for a mortgage loan is delayed when compared to buying an apartment.
2. There may be difficulties associated with the valuation of a land plot.
3. Not all banks are willing to approve a loan taken for the purposes in question.

Mandatory requirements for a land plot with and without a house

Basic requirements for pledging a plot and house in a bank:

1. The plot the borrower likes must belong to the territories of populated areas. The land should not belong to urban areas: parks, squares, forests adjacent to the reservoir, environmental protection zones, squares.
2. It is necessary to have permission to use the land for individual housing construction.
3. A short distance from the city, no more than 30 km. For Moscow, the maximum distance is 100 km.

If agricultural land is mortgaged, then the type of permitted construction must be - dacha construction. Previously, financial institutions did not work with this type of loan at all, but now large lenders have such programs.

A house subject to a mortgage must have access roads and a road. It is necessary to have communications for individual housing construction: water supply, sewerage, electricity, heating. Lenders do not accept dilapidated housing with more than 65% wear and tear.

Procedure for obtaining a mortgage

Banking institutions offer their own terms and conditions for processing loans. You need to decide on the choice of bank, and then move on to choosing a suitable site. This approach saves a lot of time and effort.

Package of documents required for obtaining a mortgage:

1. A certified copy of the document on state registration of rights.
2. Cadastral extract for a land plot.
3. Extract from the Unified State Register of Legal Entities.
4. A copy of the work record certified by the employer.
5. Confirmation of income, etc.

The documents are sent to the bank for verification. Additional documents may be required if necessary. After checking them, the bank issues a decision on issuing a loan, which is accepted within 5 days, the day of issue is set, when mortgage, sale and purchase and insurance agreements are signed. Next, ownership of the acquired land is formalized. The contract stipulates the client’s right to construct a building on the site at will, without coordinating the actions with the financial institution.

It is worth considering that the borrower must have a higher income than with an apartment loan. The bank may require additional real estate as collateral. This is due to the high risk of non-refund. Conducting such transactions is more difficult than selling an apartment, since it is difficult to adequately evaluate the land. The cost of a plot is determined by many factors. The favorable price of land at the moment may lose its value after a few years.

Bank mortgage programs with land as collateral

A mortgage secured by a house with a land plot or secured only by a land plot can be issued in the following banks:

• Sberbank;
• Rosselkhozbank;
• Zapsibkombank;
• Kuban credit;
• Kaluga.

Sberbank

There are few offers, but Sberbank alone is located in almost every city, excluding the Crimea Peninsula. Now, more about the conditions of lenders for programs with a pledge of land or land with a house/for its construction.

Sberbank offers mortgages under the following conditions:

1. Interest rate from 9.2%.
2. Advance from personal funds in the amount of at least 25% of the cost of housing.
3. The minimum loan size is 0.3 million rubles.
4. They give out no more than 75% of the cost.

The maximum mortgage repayment period is 30 years. There are no fees for processing the application, issuing funds, or supporting the loan.

Rosselkhozbank

RSHB has a program under which you can purchase a house with a plot or just a plot of land as collateral. You can pay off a loan not only in differentiated payments, but also in equal amounts.

Mortgage loan terms:

• loan amount from 100 thousand rubles;
• maximum amount 20 million rubles;
• initial payment of at least 10% of the value of the property;
• repayment up to 30 years.

No commissions are taken. The application is processed in 5 working days or less. Bank rates differ by customer category and loan amount. The higher the amount, the lower the rate.

Zapsimcombank

At Zapsibkombank, a person can purchase only a plot of land or the right to lease it as collateral. The bank even insures a plot of land against earthquakes, floods, and rising groundwater levels.

Other mortgage terms:

1. The minimum loan amount is unlimited.
2. The maximum loan amount is no more than 85% of the land value.
3. Mortgage repayment up to 30 years.
4. Repayment scheme - equal payments.

Kuban credit

The program at Kuban Credit Bank is intended for the purchase of a house with a land plot as collateral or the acquisition of a plot for building a house on it. A plot of land can be purchased in the city of Krasnodar if the borrower intends to build.

What the lender offers:

• loan rate from 8.99% per annum;
• Advance from own funds from 20%;
• the loan amount has no restrictions and depends on the client’s solvency;
• repayment from one to thirty years.

If the client makes an advance payment on the mortgage of more than 30%, he will be able to apply for a loan with only two documents: a passport and a second identity card.

Bank Kaluga

Kaluga Bank offers loans for the purchase of country houses and land plots. The loan amount is calculated by the company individually depending on the solvency and credit history of the client.

What is included in the mortgage program:

1. Debt payment up to 20 years.
2. The minimum loan rate is 10.5%, the maximum rate is 16.5% per annum.
3. An initial payment of at least 25% of the value of the real estate.

The bank may take additional collateral instead of the initial payment. Its cost must be no less than the minimum amount of the initial payment.

There is early repayment of the mortgage at any time. The loan is issued without commissions. The repayment scheme to choose from is an annuity or a differentiated system.

What are the dangers of a land mortgage loan?

Mortgages have an increased risk when compared to consumer loans. It is important for the borrower to assess his own solvency. At the stage of preparation and verification of documents, the bank reserves the right to require additional certificates and other documents for a full assessment of the risks of non-repayment of borrowed funds. In a mortgage, they are given in large amounts and for many years. Collecting additional documents delays the loan issuance process. The borrower should also be aware of this and be prepared.

For a bank, a land plot as collateral is not always a profitable deal. Despite the valuation regulations prescribed in the law, land plots are the most risky objects in terms of changes in value. It is much easier to evaluate an apartment and keep it as collateral. Therefore, not all banks work with land plots that serve as collateral for mortgage lending.

Why can banks refuse a mortgage even with land as collateral?

There are several reasons why banks refuse loans with collateral. The land and house may be liquid, but the lender will still refuse.

The list of reasons includes:

• non-compliance with the creditor's requirements;
• insolvency of collateral;
• low client income;
• damaged credit history;
• high percentage of loan defaults in the industry in which the borrower is employed;
• False information was provided: inflated salary, non-existent employing organization, etc.

Now more about each reason. Non-compliance with the lender's requirements may be expressed in age, citizenship, or work experience. If the bank requires six months of work experience, and the borrower has 5 months of experience in the last place, you should just wait and re-apply.

A collateral failure means that the property is worth less than the amount the borrower is asking to borrow from the bank. The bank will not be able to approve the loan and will offer a smaller loan.

Low income is not only the size of the salary, but also the loan burden, the number of dependents that the borrower provides financially. In addition to the listed factors, the financial institution takes into account obligations to pay alimony, the limit of credit cards, even if they are not used.

A damaged credit history also includes a set of parameters: the presence of debts, the number of overdue payments, whether there are signs of default, how many loans are in service, how many applications the person has submitted. The CI reflects the credit rating. If it is not enough, the bank will refuse.

The high percentage of refusals in the industry may not be disclosed by the bank in any way. Lenders keep their own statistics and have the right not to disclose the reasons for refusals. If there is a decline in income or a collapse in some industry, then borrowers may be denied a loan, since they will also suffer financial losses in the future, may lose their jobs, and the lender does not want to take risks.

Providing false information results in the person being blacklisted. In the future, other banks may refuse the borrower.

Today, lenders carefully check the identity of the applicant - his employment, criminal record, fines, payment of utilities. There is no need to deceive the lender. If an error is found in the loan application, the borrower will simply return the application and be asked to correct the inaccuracies. Once corrected, you can apply for a mortgage again.

How to increase your chances of getting a mortgage with a plot of land or a house as collateral

First of all, you need to disclose the maximum number of sources of income or attract guarantors. But if the borrower wants to apply for a loan as profitably as possible without the help of guarantors, he can turn to ]dom-bydet.ru.[/anchor]

What does a mortgage broker offer:

• you can apply for a loan even if you have a damaged credit history, but there should be no open arrears;
• interest rate from 7.5% per annum on shares, base rate from 8.7% per annum;
• no down payment;
• minimum loan size 0.5 million rubles;
• maximum loan size 120 million rubles;
• mortgage repayment from one to thirty years;
• You can apply for a loan for those who have unofficial income or work experience of just one month.

To apply for a mortgage, the borrower must have Russian citizenship, permanent or temporary registration in the Russian Federation. You can make maternity capital as a down payment.

Important! Land or a house with land must be located in Moscow, Moscow region, St. Petersburg or Leningrad region.

Loan approval can be obtained on the day of application. Early repayment of the loan without penalties is provided. The company can consider the total income of a family, up to 3 co-borrowers.

List of necessary documents for a land mortgage

The main documents required by the bank for a mortgage on a plot include:

• cadastral plan of the site;
• BTI certificate confirming the absence of buildings on the site;
• title documents for the site;
• certificate of state registration of land ownership;
• appraiser's report;
• consent of the second spouse or guardianship authorities, if the co-owner of the plot is a spouse who is incapacitated or a minor.

If the mortgage loan is not repaid, the land plot or property of the debtor, which serves as security for the agreement, is subject to sale at public auction.

What will be required from the borrower

Requirements for a mortgage loan secured by land:

1. Having Russian citizenship.
2. Must be at least 21 years of age and not more than 75 years of age at maturity. In a number of banks up to 65-70 years, and the minimum age is from 20-25 years.
3. Work experience in the last place from 3-6 months.
4. General work experience, for the last 5-6 years, at least one year.

When attracting co-borrowers to a transaction, similar requirements are put forward to them. Among the large banks there are companies that provide loans to foreign citizens. These are Rosbank, VTB, Raiffeisenbank. But VTB does not have a program for purchasing a plot of land on collateral.

To obtain a mortgage, you must have permanent or temporary registration in the Russian Federation. Co-borrowers can participate in the transaction up to 65 years of age at the time of loan repayment. Some banks require registration in the region where the application is submitted, as well as residence in this region. The requirement applies to regional banks that do not have offices throughout Russia.

Sequence of actions when applying for a mortgage. Its types

A mortgage can be provided to build a house and purchase land. There are two types of mortgage loans:

1. Targeted. In this case, the borrower spends the funds for the purposes that were specified in the agreement concluded between him and the bank.
2. Non-targeted. These include spending money on the initiative of the borrower. At the same time, he is not obliged to notify the purpose of his waste. The exception is for items specified in advance in the agreement.

A mortgage for the purchase of land most often belongs to the second type. In addition, this type of collateral has the following features:

1. The borrower has the right to develop his site without notifying the bank.
2. All buildings and changes on the land plot made by the borrowers belong to the bank until the mortgage is repaid.
3. A mortgage involves the transfer of any property as collateral.
4. The deposit is issued for a long period.

A mortgage can be issued at any bank. In order for the deal to be perfect, some conditions must be met:

1. Find out bank requirements for mortgages. Most often, these include: distance from the bank; the site must be developed; it should be close to the road.
2. Carry out the insurance procedure. In the insurance, the borrower can agree to all points or refuse some of them.
3. Assess your site.
4. Sign the contract.

In the next article we will tell you how to calculate a mortgage yourself.

Land plots that can be purchased through a mortgage

In total, the organization's assets include more than 32,000 hectares of land for sale. This makes it possible to select the required area for:

1. individual housing construction;
2. gardening;
3. dachas;
4. agricultural needs;
5. production needs.

The cost of the site will depend on the distance from the Moscow Ring Road, the purpose of the land and the development of infrastructure. Thus, the most affordable prices in the price segment for 1 hundred square meters start from 4,500 rubles. This type of land is intended for industrial and agricultural needs.

The plots offered for choice for individual housing construction are also available without a contract. This allows future buyers to independently choose the type of development and arrangement of the acquired territory.

A mortgage for the purchase of a plot of land will be the same and beneficial both to future residents of cottage and holiday villages, as well as to entrepreneurs and companies.

A mortgage for the purchase of a plot is provided on equal terms to any category of citizens. The current conditions help to obtain the necessary land quickly enough. Experienced company managers will help you decide on the required territories.

If necessary, they will advise on all objects of interest, and will also help prepare and submit all documents required for registration.

A mortgage for the purchase of a land plot is issued quite quickly and soon it will be possible to begin work on the acquired territory.