Mortgage is a form of collateral that guarantees the lender the return of borrowed funds. For the owner of the property, the security means the right to use the mortgaged property reserved for him. If the borrower fails to fulfill its obligations for any reason, the credit organization will have the right to realize the mortgaged property to cover the debt.
The term mortgage and mortgage lending have different meanings. The concept of mortgage implies ownership. In case of mortgage lending for the purchase of real estate, the purchased property becomes a mortgage (pledge) for the lender.
In Russia, loans are issued for consumer, housing and commercial needs. And in each case, the beneficiary wants to receive a guarantee not only to return the money in full, but also a guarantee of receiving interest income as a payment for the service of issuing money. Since the mortgage is in the sector of large loans, one stable average income of the client will be small. What is the easiest thing to do here? And the easiest way to put a condition – the client bought the property with the money immediately lays the bank.
How does the mortgage work
In case of violation of the contract by the client, the bank takes the mortgaged property into its full ownership, thereby returning its money. If we consider that real estate only becomes more expensive over time, the losses are more than compensated. This is the “backbone” around which the entire mortgage business in Russia is being built (there are several special moments abroad that we don’t have to talk about here).
The main branches of the mortgage business
Further there are two large branches – housing and commercial mortgage. In terms of the number of requests and the range of clients, housing mortgages far outpaced those issued for the purchase of industrial, retail and other non-residential areas. But also because the schemes for issuing such a loan have now been worked out, standardized and have many variations (mortgage programs) in Russia. The housing loan, in turn, can be divided into four major branches:
- standard mortgage programs;
- social mortgage programs;
- special segment of housing loans – “Young Family”;
- mortgage for military personnel;
- ordinary housing loan.
Standard mortgages most. They are designed for a wide range of people who, by their material position, are at the lowest level of the middle class. That is, have a stable average income. And, most likely, a small and good credit history (several successfully repaid consumer loans). Despite the variety of conditions offered, ordinary housing loans are united by a number of features.
- The cost per square meter of housing, and hence the size of the mortgage, is determined from an objective analysis of the local real estate market at the moment.
- Interest rates are set with an eye to competing organizations. Higher rates will provide greater profits and, consequently, greater survival.
- Works pretty hard selection of potential borrowers. The client must meet the requirements of the bank according to his financial status.
- You can select the average, the so-called. A typical set of criteria for a typical mortgage: 14-15% per annum, a down payment of 30%, a term of 10 years, the borrower’s income is at least twice the monthly payment.
This type of housing loan was created with the aim of providing housing for the unprotected, most vulnerable segments of the population. Not all people are able to pull the requirements of a standard apartment loan. This means that not everyone can take advantage of such a preferential mortgage. Firstly, not all banks support the social mortgage lending program. Although the largest and most famous financial organizations in Russia support. Secondly, the living space on which the borrower is officially registered must be less than the housing minimum.
According to Art. Number 50 of the Housing Code of Russia, the common minimum for all Russians in the long term permanent residence is the figure of 12 square meters. meters per person. A family of two people has the right to rely on the minimum 42 square meters. meters of living space. If it turns out less, then it is necessary to register with the administration at the place of residence. Then the borrower can officially be recognized as in need of additional housing, which will allow him to take a social mortgage with its preferential terms – 7% per annum, no down payment, up to 28 years.
Mortgage for a young family
In fact, it is a subprogram of social mortgage aimed specifically at providing apartments for young families with and without children. But here the main forms of assistance are state subsidies and maternity capital, and not preferential conditions for the mortgage itself for young families. Maternal capital is most often used to pay down the initial payment. That allows many young families to take even the usual mortgage. Government subsidy may occur if there is a shortage of minimum footage. Thus, a family of two people, with a registration at 42 meters, is legally able to receive a subsidy of 35% of the cost of housing purchased on credit. After the birth of at least one child, the minimum footage is increased to 18 “squares” per person, and the subsidy is up to 40%.
The name speaks for itself. Contract servicemen can take care of enrolling their person in the military mortgage lending program. Then a personal account will be opened in the name of the applicant, where during the entire service life under the contract, the state will regularly receive indexed monetary amounts. After the expiration of the contract, the military has the right to use the accumulated funds to make it easier to buy an apartment in the mortgage. For example, to repay the down payment.
Collection of necessary and desirable documents
As they say, there is plenty to choose from. But before choosing anything at all, it is recommended to get rid of the main headache as soon as possible – document collection. In fact, until a direct visit to the selected bank and communication with local specialists, no one will say absolutely exactly what documents will be needed. But one thing must be said: there are not many of them in the matter of obtaining a favorable loan offer. Therefore, here is a fairly comprehensive list of those papers, on the existence and content of which depends the fate of the borrower.