Buying a new home is an expensive pleasure, so many families are forced to raise borrowed funds. Mortgage lending today is more profitable than conventional loans. At the same time, you can save additional money on it if you consider the option of purchasing an apartment on the secondary market. We will tell you in this article what pitfalls you may encounter when buying an apartment with a secondary mortgage and how to avoid them.
Advantages and disadvantages
Buying an apartment in a new building or at the construction stage is not always economically justified: the price per square meter is higher, the time frame for putting the house into operation is very conditional, and the opportunity to get a bank loan is not guaranteed. That is why in recent years the segment of secondary housing in the real estate market has grown significantly.
Buying an apartment with a mortgage: step-by-step instructions from an expert
The advantages of "secondary"
- price - for an old vest it is lower than for an apartment in a new building;
- the presence of developed infrastructure - schools, kindergartens, retail outlets, transport interchanges, etc.;
- the opportunity to move in immediately after purchase - in order for his offer to be competitive, the seller tries to make at least minimal cosmetic repairs. With some effort, there is a chance to find an apartment decorated in the latest fashion;
- the likelihood of getting a mortgage to purchase a secondary property is higher - banks are more favorable towards such applications due to the high liquidity of a finished apartment than to options for purchasing new buildings.
Disadvantages of buying second hand
- increased interest rate on a loan for the purchase of new housing;
- It is not always possible to find an apartment with the desired characteristics;
- the degree of wear may require additional investments for major repairs;
- risks associated with possible legal consequences from previous owners.
Nevertheless, buying an apartment on a secondary mortgage is invariably in demand: the main criterion is its more reasonable cost from an economic point of view.
What can and cannot be done with a mortgaged apartment?
The borrower has the right to live in the apartment and use the property. He can register there. However, there is no complete freedom of action.
What you can’t do without the bank’s consent:
- Sell real estate. The owner has the right to alienate property, but only with the permission of the bank. Thus, when selling a mortgaged apartment, the obligations under the mortgage must be transferred to the new owner. The bank must know who will make payments on the loan. If the buyer is cash, he must pay off the seller's mortgage for the deal to go through.
- Carry out large-scale repairs and redevelopment. This requires the consent of the bank. Significant changes affect the characteristics of the apartment. Therefore, they can reduce its cost. However, not all repair work is permitted by law. The borrower will have to obtain approval not only from the bank, but also from the insurance company.
- Damage real estate, influence the operating conditions of the property. As with the previous point, this changes the cost of the apartment.
The law does not prohibit bank representatives from visiting the borrower and checking the condition of the property. If violations are detected, the institution has the right to demand early repayment of the loan. If the owner does not have the required amount, the property may be sold to pay off the mortgage debt.
According to the law, the bank has the right to take away the apartment if the borrower:
- Does not make monthly payments. The bank can take the property, sell it and cover the balance of the loan. Although in practice it rarely comes to such radical actions. Citizens are protected by law: the bank’s actions must be proportionate to the offense of the offender. This means that a single late payment cannot be grounds for deprivation of property rights. The law does not say what amount of debt is considered sufficient for radical action. It is not recommended to exceed debt accumulation of more than 5% of the total cost of the apartment.
- Violates insurance obligations. The mortgaged apartment must be protected by law. If the borrower violates the terms of the contract with the insurance company, not only it, but also the bank will apply sanctions.
- Violates the terms of the mortgage agreement. For example, he hid the transfer of rights to third parties. This could be rent, sale or donation. This is considered a violation of the contract. The document on the basis of which the real estate was transferred becomes invalid.
- Used the mortgage for other purposes. Funds are issued only for the purchase of real estate approved by the bank. The law takes this situation as seriously as possible and quickly terminates the contractual relationship.
Expert opinion
Alexander Nikolaevich Grigoriev
Mortgage expert with 10 years of experience. He is the head of the mortgage department in a large bank, with more than 500 successfully approved mortgage loans.
Even the most advanced cases can be corrected and loss of housing can be prevented. For example, refinance. This program allows you to take out a new loan to pay off the old one. With the help of refinancing, you can reduce monthly payments, extend the mortgage term, and reduce the financial burden. You can refinance a loan either at the bank where the primary agreement was drawn up or at a third-party financial institution.
Selecting a program and calculating loan terms using a calculator
Banks are trying to speed up and simplify the conclusion of a transaction. They offer to use a loan calculator to reduce the time it takes to apply for a mortgage. With its help, you can independently calculate loan parameters online without visiting the bank on basic or preferential terms, as well as taking into account special programs.
The mortgage calculator form displays the following loan parameters:
- sum;
- the amount of the down payment;
- loan terms;
- cost of the object;
- interest rate.
If previously it could take a whole day to visit the bank and consult with a specialist, now you can pre-calculate a loan in a few minutes. For the calculation it is also necessary to indicate the type of property and the area of purchase. The result is displayed on the screen instantly. After choosing the optimal program and conditions, the application can be submitted online on the bank’s website.
Features of obtaining a mortgage for other types of real estate
In addition to a mortgage to buy an apartment, you can borrow from a bank for:
- Buying a country house;
- Townhouse purchases;
- For building a house.
The main difference when obtaining a mortgage for different types of housing is the amount of the down payment. The bank covers a certain percentage of the cost of housing with a loan. At the same time, the bank offers the highest percentage of coverage when purchasing an apartment - up to 85%. However, in the case of purchasing a country house or for its construction, only 50% of the required amount may be approved.
The borrower receives quite a few offers when choosing a mortgage in a house under construction. Developers often delay the delivery of a house, and there is also a risk that the house will never be put into operation. This is unprofitable not only for the buyer, but also for the bank. Such fraud can only be avoided through constant cooperation with reliable developers; accordingly, the bank can only approve an apartment in a house under construction if the house is being built by partner organizations.
Legal subtleties
After a two-level inspection of housing to ensure that its value is maintained throughout the entire lending period, it is time for a legal audit, which consists of:
- assessment of the market value of housing by an independent expert selected by the bank;
- checking the purity of a future transaction by identifying potential applicants for real estate, including minors, convicted or incompetent people who were discharged in violation of legal requirements;
- establishing compliance of the parameters of the property with passport data.
Interfering with the seller's machinations
There is a legal requirement that the amount from the sale of real estate owned for less than 3 years is subject to taxation in excess of 1 million rubles. As a result, many homeowners, especially those involved in repurchase, seek to reduce the sales price in the purchase and sale agreement, which, in a transaction involving a financial institution, is only possible if the buyer pays the remaining amount on his own. However, the bank prefers owners whose housing tenure period exceeds three years .
The inflated cost of the apartment, which the owner considers justified, will have to be reduced to a level determined by an expert during an independent audit. If the seller does not agree to the assignment, the bank will not approve the transaction for an amount exceeding that indicated in the examination report. The alternative is to reach an agreement with the buyer, if he is willing to bear additional costs.
Redevelopment must be legal
If, in the process of renovating an apartment sold with a mortgage, reconstruction or redevelopment was carried out that was not officially authorized and not reflected in the technical passport of the premises, then the deal may fall through.
The requirement for mandatory inspection of the layout by BTI specialists, which previously existed, has been canceled as of 2021, and an apartment with redevelopment can be easily sold if the buyer has no complaints. However, the bank's intervention in the procedure for legal support of the transaction makes this condition necessary, complicating the life of the seller who illegally moved the wall or did not receive approval for the permitted reconstruction.
Mortgage for military personnel
Residential properties that meet the requirements for which apartments are suitable for a military mortgage in addition to those located within the city limits may be:
- cottages;
- townhouses;
- private houses with a plot of land;
- communal apartments owned by one entity.
Methods for collecting overdue loans
Overdue loans negatively affect the activities of any financial organization, including its viability. In this regard, banks are improving the process of working with problem loans.
Work with debtors proceeds through constructive dialogue. If it is determined that the borrower’s financial difficulties are urgent, banks proceed to restructure the loan by:
- Changes to the payment schedule;
- Loan extensions;
- Changes in interest rate.
If loan underwriting reveals problems with the borrower’s solvency, the bank sends him notices about debt repayment, and negotiations begin. During the negotiations, the consequences of non-payment of the debt are explained, up to the possibility of transferring the case to the courts (forcibly collecting the debt).
It is worth noting that evasion of debt payment is a criminal offense. Therefore, it is necessary to use all opportunities to pay off the debt under the loan agreement, and preferably on a voluntary basis.
Total
By answering all of the above questions, any potential mortgage borrower will be able to independently determine which property is suitable for a mortgage and, by weeding out potentially hopeless options, reduce the time for inspecting apartments and choosing a suitable option by several times. Before checking the property for all the listed requirements, it is advisable to contact a financial institution and, having received prior approval for a loan, clarify the specific requirements, which may have their own specifics.
So how long does it take to buy an apartment with a mortgage, if you take the minimum terms?
If we take into account that the entire transaction procedure for the purchase and sale and registration of a mortgage apartment will go perfectly smoothly, then the calculation of the minimum period for registration of such an apartment will be as follows:
- Submission of an application and its approval by the bank – 1 day;
- search for housing and its approval by the bank – 2 weeks;
- insurance and real estate valuation – 2 days;
- registration of a purchase and sale transaction and a mortgage agreement – 1 day;
- registration of ownership of a new home – 3 days.
In total, it turns out that under favorable conditions, it takes at least 3 weeks to register a real estate mortgage.
