How to buy an apartment that has a mortgage: detailed instructions

Pledge and mortgage

With the advent of such a financial lending instrument as a mortgage, the opportunities for citizens have expanded significantly. Now they can have their own home, get additional real estate in order to make a profit, without having to invest large amounts of money for this. In this case, a pledge agreement is drawn up.

However, with a mortgage, citizens must transfer certain real estate to the bank as collateral. As a rule, banks only accept buildings, premises, and structures suitable for habitation as collateral.

Non-residential properties in rare cases can serve as collateral in this case mainly for the following reasons:

• the cost of non-residential properties is too low;
• frequent demolition and reconstruction of non-residential structures by decision of the administration of the relevant settlements;
• low profitability and volatility of non-residential properties, and so on.

Thus, without taking into account exceptional cases, it can be argued that only residential premises can be collateral in a mortgage. So, having a home, you can safely count on getting a mortgage from almost any bank.

Home equity mortgages, however, have their own characteristics and risks, making them not suitable for everyone.

Thus, the profitability of such a mortgage may be influenced by the following characteristic features of the housing being pledged as collateral:

• interest charges on loan funds;
• falling home values;
• recognition of a dwelling purchased with mortgage funds as unsafe and, accordingly, subject to demolition, and so on.

The general list of mortgage risks is quite large, and even experienced bankers do not undertake to list everything. For this reason, a mortgage is considered a profitable proposition with a certain degree of risk. The risk in this case falls entirely on the shoulders of the borrowers themselves, since the interests of the bank are protected by the borrower’s property provided as collateral.

Removal of the collateral is made only after full repayment of the debt and accrued interest for the entire period. Withdrawal is carried out in the same manner as pledging. So, when withdrawn, mortgages, agreements, and so on are transferred to the registry.

List of requested documents

The decision on the application is made based on the following package of documents:

1. Passport of the borrower and his wife.
2. A copy of the work book, certified by the personnel service of the enterprise.
3. Certificate 2-NDFL for the last six months.
4. Title documents for property.
5. Independent expert assessment.
6. Certificates confirming the absence of debt for utility services.
7. A certificate from the Housing Office, which indicates the persons registered in the apartment, which is being pledged.

When considering an application, much attention is paid to checking documents for legal purity. The financial institution must ensure that the borrower legally owns the property. The property must have high liquidity and be in a condition suitable for habitation. Only such an object will be considered as collateral.

A mandatory document is a certificate of income. It will be checked especially carefully. It is valid for two weeks, so there is no need to order a certificate from the accounting department in advance. It must indicate: official details of the employer, full name of the employee and his position, the amount of accrued and paid wages, all deductions. The certificate is certified by the signatures of the director and chief accountant and sealed. It must have the originating number and date of issue.

Citizens who do not have an official job should not turn to intermediaries who promise to issue a false certificate. The truth will definitely become known, and a negative decision will be made on the application. And there is also criminal liability for forgery of documents.

Mortgage secured by an existing apartment

Banks provide various options for obtaining a mortgage secured by property or secured by a share in an apartment. Thus, it is more preferable to register the housing already owned by the borrowers as collateral. Banks consider this option as safer for themselves, so they are more likely to receive approval for a loan on favorable terms. From the point of view of legislation, this type of lending not secured by the apartment being purchased, but, for example, secured by a room, is perceived as a non-targeted mortgage.

We recommend that you read:

Mortgage for the purchase of a share in an apartment

However, the benefit for the borrower from mortgaging his own home depends on many factors.

So:

1. The size of the loan issued directly depends on the value of the mortgaged home on the day the loan is issued.
2. The interest rate will directly depend on the share of loan funds in the cost of the mortgaged home.
3. Housing volatility directly affects the time it takes for a bank to approve a mortgage. So, the greater the volatility, the fewer hiccups there will be during the registration process.

The fact is that banks prefer to deal with mortgages taking into account not only the solvency of the borrower himself, but also taking into account the characteristics of the collateral, which will allow the borrowed funds to be received back in the shortest possible time if the borrower is unable to pay the loan. For example, a mortgage as collateral for a share in an apartment can only be granted if the funds are used to buy out the remaining shares.

However, borrowers need to take into account the main risk and conditions when pledging their own home to the bank. Banks will not stand on ceremony with them and at the first opportunity they will try to sell the mortgaged house or apartment in order to quickly close the loan. For this reason, it is better to apply for a loan, being confident that there will be no hitches or delays in payments in the future.

In addition, experts advise not to get involved in credit relationships with dubious financial institutions. So, when mortgaging a home in which the borrowers themselves currently live, it is better to deal with trusted banks who, if necessary, can provide a deferment.

The main risk - being left without housing - has not been canceled. For this reason, before applying for a loan, it is necessary to draw up a clear plan for using the capital available and planned as a result of the loan for several years in advance.

Secured loan from Sberbank

The country's largest financial institution, the leader in mortgage lending, the most reliable and stable bank - this is all Sberbank of Russia. This institution has the largest branch network. You can get a loan in any city.

A non-targeted loan secured by real estate is provided on the following terms:

• maximum limit – 10 million rubles, but not more than 60% of the assessed value of the property;
• loan term from 3 to 240 months;
• interest rate is 12.5% ​​per annum, for holders of Sberbank salary cards – 12%;
• The following are considered as collateral: housing, land plots, garages.

Employees, entrepreneurs and pensioners aged from 21 to 75 years can apply for a loan. Work experience at the last place of work – from six months. The decision is made within 6 days.

The Sberbank program has the following advantages:

• lack of purpose;
• low interest rate;
• there is no need to pay for personal insurance;
• issuance of a large sum for a long period of time;
• The institution is ready to lend to various categories of borrowers.

Among the disadvantages, two factors should be noted: the lengthy processing of the application and the need to insure the collateral throughout the entire loan term.

Mortgage secured by purchased housing

So, is it possible to take out a mortgage secured by the property you are buying and what are the conditions? This type of real estate mortgage is a standard option. So, in its original sense, a mortgage implies a pledge of a home, which is purchased with borrowed funds.

When a loan is secured by the purchased apartment, in the event of the borrower’s insolvency, the bank will pay the reimbursement of its own funds precisely to the apartment that was purchased by the borrower with mortgage funds.

Thus, the procedure for a mortgage secured by purchased real estate, the features of real estate collateral are as follows:

1. The borrower approaches the bank to receive credit funds.
2. If the borrower has already found an apartment that he plans to buy, he provides the bank with complete information about it. If not, then some banks have offers of apartments available for mortgage.
3. After receiving approval from the bank, a tripartite agreement is concluded, where the borrower receives an apartment, the bank receives collateral, and the seller of the apartment receives money from the bank.
4. Next, the borrower begins to pay the loan in accordance with the payment plan determined by the bank in agreement with the borrower himself.

But unlike the option where the collateral is the borrower’s home, in this case the following factors that have a direct impact on the terms of the agreement are of decisive importance:

• the amount of funds allocated depends on the cost of the purchased home;
• the interest rate and payment plan depend on the official earnings of the borrower;
• the likelihood of obtaining a loan depends on the volatility of the purchased home, and so on.

Even if the borrower has other real estate, the size and other characteristics of the mortgage loan are influenced solely by information about the borrower’s income, as well as the cost of the home being purchased. However, when it comes to removing the collateral from the apartment after paying off the mortgage, there are no differences between the mortgage options under consideration.

We recommend that you read:

How to buy an apartment with a mortgage and what documents are needed for this

Rosselkhozbank program

Rosselkhozbank issues cash secured by an apartment or residential building under the following conditions:

• the maximum limit is 10 million rubles;
• the debt must be repaid within 120 months;
• the rate is 13.5% per annum. In the absence of personal insurance, it increases by 1%. For public sector employees, mortgages are issued at 12.5%.

Employees aged 21-65 can take advantage of Rosselkhozbank's offer. The total work experience must be at least one year, and in the last position - at least six months. It will take the bank five days to make a decision.

The program of this financial institution has the following advantages:

1. The client independently chooses the repayment schedule - annuity or standard. The second option is more profitable, since the overpayment for it is much less.
2. High credit limit and long loan term.
3. Low interest rate.

Among the shortcomings, we note one factor - the bank imposes personal insurance on borrowers in order to get maximum profit.

Mortgage secured by land

Pledge of land plots is not a well-developed practice in mortgage lending. The main reason that banks do not take land plots as collateral is that the cost of land in the Russian Federation is quite low, and there are very few citizens who own sufficiently large land plots.

It’s another matter when the land is located within cities and is expensive. For example, in Moscow the cost of land is much higher than the cost of an apartment. So you can get a fairly large mortgage loan using land as collateral in Moscow.

Thus, when obtaining a mortgage on the condition of providing a land plot as collateral, the following factors are influenced:

• site location;
• cadastral value of the plot;
• presence of encumbrances from third parties;
• the presence of state plans for a specific land.

If the land is included in the urban development plan or for allocation for special facilities, which very often happens within large settlements, then the bank is unlikely to agree to issue money against such collateral. Indeed, at any time, as state plans are implemented, this land can be requisitioned at a relatively low cost.

In addition, if the land plot is subject to the rights of third parties, including easement powers, the bank will refuse to lend. After all, the presence of powers of third parties means potentially arising disputes regarding the loan, and therefore lengthy legal proceedings.

Types of mortgage loans

As a rule, the purchased property is pledged to the bank as collateral. It is also permitted to pledge liquid real estate already owned by the borrower.

It is necessary to understand that banking products are divided depending on the type of collateral.

Types of mortgage based on the type of security:

• mortgage on city real estate;
• mortgage loan for the purchase of an apartment;
• mortgage for a room (a loan for a room in an apartment is allowed, after which the entire apartment will become the property of the borrower);
• loan for a house or cottage;
• for a new building;
• for country real estate, etc.

The subject of the pledge may be:

1. A private house.
2. Apartment.
3. Land plot.
4. Other real estate.
5. Movable property of high value

In addition, mortgages can be divided into:

• Social mortgage;
• Commercial mortgage.

Social mortgage is designed to support socially vulnerable categories of the population.

The state thereby provides assistance to citizens who have the status of needing improved housing conditions.

Types of social mortgage:

1. Military mortgage.
2. For a young family.
3. For young professionals
4. For state employees, etc.

Ways to implement socially oriented mortgages:

You should be aware that in addition to the requirements of the credit institution, you must also meet the criteria of the selected banking program.

Citizens who do not belong to preferential categories can take advantage of standard mortgage programs, in which the interest rate will be slightly higher than for a social mortgage.

In addition, commercial mortgages are now being developed in banks.

Commercial mortgage is focused on providing mortgage loans to organizations and individual entrepreneurs.

Is mortgage life insurance legal in 2020, see here.

Mortgages secured by commercial real estate are provided on less favorable terms for borrowers, since there is a certain risk of doing business, and banks take them into account in the “price” of the loan, increasing interest rates and the size of the down payment.

Also, the term for such mortgage loans is shorter compared to a conventional mortgage. Banks, as a rule, do not issue loans to merchants for a period of more than 10 years.

Mortgage secured by existing property

Previously, in our country, loans were provided only as collateral for newly purchased real estate.

But in some cases, real estate is purchased for the purpose of not having any encumbrances on it. To satisfy this interest of borrowers, banks began to allow loans secured by existing real estate.

This option is necessary in the following cases:

Some banks can lend to borrowers not only on the security of real estate owned by the borrower himself, but also owned by members of his family or other persons.

At the same time, the bank also takes into account the borrower’s income, since he must repay the debt himself.

But if the borrower fails to fulfill contractual obligations to make payments, the mortgagor may lose his real estate. Therefore, relatives who provided collateral should take this into account.

Acquired housing

The most common mortgage is secured by the property being purchased.

Not everyone already owns any property that can be pledged to the bank.

In addition, in this case the procedure is simpler and will require less time for registration. Almost every bank is ready to provide this service.

Banks have a number of offers secured by existing real estate, from which the borrower can choose the one that is most profitable for him.

Available apartment

However, if the bank does not approve the home you like as collateral, the borrower can transfer an existing apartment as collateral.

But if you like the housing, which no bank accepts as collateral, then you will have to provide your own apartment as security.

This situation arises when, after checking the acquired real estate, the bank comes to the conclusion that this property is illiquid.

In these circumstances, the advantages for the borrower are as follows:

The borrower must understand the risks involved. In case of non-payment under the mortgage agreement, the bank has the right to sell the mortgaged apartment at auction, and the borrower will be evicted, even if this is the debtor’s only home.

Therefore, before signing a loan agreement, you should carefully weigh all the risks.

Land plot

Taking out a mortgage secured by a land plot is a more difficult task compared to other types of security.

The procedure for registering land as collateral is difficult and lengthy. Of course, approval of the subject of the mortgage is associated with an assessment of the liquidity of the land, the location of the plot, and the possibility of a quick sale in the event of loan default.

The key point is to assess the market value of the land. For such an assessment, a large number of factors are taken into account: area, configuration, landscape, data from engineering and survey work on the site, intended purpose, etc.

How to get a mortgage without a down payment: three legal ways

To get a classic mortgage secured by an apartment without having to look for money for a down payment, you need to try very hard. I offer 3 ways to do this.

Be interested in benefit programs

Unfortunately, as of the date of writing this article, the main benefit program was cancelled. Despite this, each bank aims to ease conditions for certain groups of borrowers. Such clients are offered lower rates and better service conditions. And for young families, the down payment can be covered with money from maternity capital.

Promotional programs

You should definitely take a closer look at such offers. Basically, such loans are typical for large banks, such as Sberbank, VTB or RSHB.

The essence of such a mortgage is that lenders, in cooperation with certain developers, offer low rates for apartments in the houses of their partners.

The disadvantage of such a mortgage is that there is no alternative for the borrower. He will not be able to choose a developer and a residential complex.

Help from financial brokers

These companies know their stuff and will help you choose any loan, even a secured loan without a down payment. The main thing in this matter is to find a reliable partner.

By the way! A non-targeted loan with collateral is a good alternative to a simple mortgage and does not require a down payment.

Specialized financial companies can also provide assistance in obtaining such a loan. For example, ➥ “With Collateral” is ready to lend with a maximum amount limit, while the mortgage program provides rates from 9.5% per annum. There is also a preferential program, and it provides for borrowing funds at an annual rate of 6.5%.

What should be the collateral for a mortgage?

Compliance with the bank's established requirements is one of the most important components of obtaining a mortgage on favorable terms (and obtaining, in general).
In order for the lender to be confident that the transaction is minimally risky on its part, the apartment provided as collateral must first of all be liquid. That is, such property must have demand in the market. As many people know, the “hot” apartments on the market are one-room or two-room apartments with a standard layout. That is, overly expensive mansions with designer renovations are not welcome.

Important! The apartment must be located in a multi-storey urban residential building.

It is important to have all utilities and their functionality.

By the way! An apartment on the first or last floor may not be approved as a deposit or a smaller amount may be given for such real estate. This is due to the risk of housing flooding.

The condition of the apartment must be satisfactory, with at least minimal repairs. Besides:

• Unplanned layouts in the apartment are not welcome;
• apartments in wooden houses are not considered;
• housing must be privatized, otherwise the owner of the apartment is the state, not the borrower.

Any additional criteria should be clarified with the lender. Although we have considered, basically, all the requirements for collateral.

Which banks give secured loans?

Almost every bank is engaged in targeted mortgage lending. The users of such services are often young and large families.

Non-target mortgages with an apartment as collateral are only gaining popularity among the population. But already at this stage, the purposeless program is in high demand among clients, because many even manage to make money from it. For this reason, similar offers are increasingly appearing on the market, and for existing ones, rates are reduced and possible credit limits are increased.

Mortgage with an apartment as security in Sberbank

A non-target offer also includes other collateral objects, but the most profitable offer, both in terms of borrowing terms and service conditions, would be an offer with an apartment as collateral. For such security they will give:

• credit money up to 60% of the collateral price;
• 60% should not be more than 10 million rubles. (this is the credit limit);
• loan cost from 12.5%;
• repayment of the debt is carried out over a period comparable to the issued loan, but will not exceed 20 years.

At the same time, it is quite possible to get a loan without proof of income, but only for those who have a salary account at the bank.

No-purpose mortgage with an apartment as collateral in VTB

The program from VTB Bank does not provide for other collateral objects. With such security they will give:

• loan funds in an amount not exceeding half the value of the collateral;
• half cannot exceed the credit limit of 15 million rubles;
• loan cost from 11.1%;
• the period for repayment of the debt cannot exceed a period of 20 years.

Without proof of income, mortgages will be issued only to salary clients, but before registration, the bank will carefully check the receipts on the card.

Mortgage from Raiffeisenbank

You can get both a designated and non-purposed apartment using the security of an apartment.

If the borrower intends to buy real estate or carry out renovation work, you can inquire about the terms of the target program. But you need to understand that the bank will necessarily require confirmation of the use of loan funds.

In this sense, a goalless program is better, with the provision of an apartment they will offer:

• credit limit up to 9 million rubles;
• loan costs start at 11.99%;
• the established debt repayment period cannot exceed 15 years.

Proof of income is required for everyone.

Credit from Orient Express

The purposeless program is aimed at issuing a maximum limit of up to 30 million rubles. In this case, not only apartments can act as collateral.

The following will be secured against real estate:

• cost from 9.9% (the value is almost the same as discounts in supermarkets);
• the bank reports a maximum cost of 26%;
• the return period can reach 30 years.

Confirmation of income for individuals who are not participants in the program with an open salary account is mandatory.

Conditions

Most banks provide mortgage loans under similar conditions:

However, credit institutions have other requirements, depending on the borrower.

For example, if the borrower is in a registered marriage, the written consent of the spouse will be required to enter into a mortgage loan agreement, who is jointly and severally liable in the event of its violation.

In accordance with civil law, banks do not have the right to demand a commission for issuing a mortgage or servicing a loan account.

A mortgage application is usually reviewed by the bank within 5 days after the borrower submits a set of necessary documents.

When making a negative decision on an application, the bank most likely will not indicate specific reasons for the refusal.

When defining the concept and features of a mortgage secured by real estate, it becomes clear that its registration is an important step.

For refund of mortgage interest, see the article: refund of mortgage interest.

Thus, before going for it, you need to adequately assess your own capabilities.

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