All about mortgage lending for young families in Russia through the eyes of a borrower

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

Foreword

It may not be disgusting, but mortgages are part of modern Russian reality. Of course, you can live in Russia without it, but sometimes it's difficult.

I am a mortgagee who walked to my two-room apartment for a long time, and I would like to share my experience of going this way.

What is a mortgage?

A mortgage is a loan with a mortgage on housing.

How does mortgage lending generally work?

A person who wants to buy a home goes to a bank and takes out a loan (usually a very large loan) and provides the bank with his home as collateral, which he buys with the loan money. Then he pays off this loan for a certain time and in the end he receives this housing in full ownership.

The first big minus of a mortgage is that it very financially restricts a young family … If you take a mortgage for a short term (5-15 years), then you usually have to give the bank about half of the family's income. Accordingly, one has to live in the other half. In this situation, you can forget about large purchases, trips to the sea and a free life.

If you take a mortgage for a long term (15-30 years), then financially it will become a little easier, but another appears. the second big disadvantage is that it is difficult to change the terms of the mortgage … Long-term mortgages are more difficult to repay early in small amounts. interest is paid off first. As a result, housing pledged for long-term mortgages is very difficult to change. That is, if, for example, a young family took out a 1-room apartment on a mortgage for 30 years, then, most likely, she will live in this 1-room apartment for the next 30 years and pay debts to the bank.

It would seem that it is better to take a mortgage for a shorter period, to exist for several years, tightening your belts, and then carefree living in your apartment. But here awaits us The biggest disadvantage of a mortgage is that it is difficult to get a mortgage with good conditions. The vast majority of young families do not even think about this minus.… They usually think like this: "banks are interested in giving mortgages - it is profitable for them, so they compete with each other for clients and it is easy to get a mortgage with good conditions." In fact, banks think not only about the benefits, but also about the risks. And in view of the fact that there are more than enough people who want to get a mortgage, the banks very severely limit the conditions for issuing a loan and those who do not fall under these conditions are "punished with a ruble." As a result, it turns out that in order to get a mortgage with good conditions, you need to be almost an ideal client.

If the mortgage has such big disadvantages, maybe a young family is better off without it?

It all depends on the situation. I will consider the average young family, where the husband and wife do not have rich parents and they are under 30 years old.

A young family can live with their parents or rent a house. It is cheaper than taking out a mortgage, but I will say right away that it is futile. In such a situation, the young family expects to either save money or borrow the parents' home. As a result, the young family does not accumulate money for their apartment, lives on bird rights until the death of their parents, after which they receive their parents' apartment and live in it until their own death. The problems of this alignment are obvious: a long life as a bird, the young family gets the old parental housing, and most importantly, that their children have nothing to leave.

Another option is to get an apartment from the state. Here, a young family usually faces a big bummer. The Soviet era is over, and the current president is still *****. There are several programs through which you can get housing.

First, there are federal subsidy programs. They can be used by people with disabilities, war veterans and victims of disasters. As you can imagine, a young family usually does not fall under this group of people.

Secondly, there is the federal program "Help for a Young Family", which provides housing for young families with difficult housing conditions. This group includes large families up to 35 years of age. But the president cut this program in the early 2000s. For example, in Volgograd now about 600 families are awaiting a certificate for housing, 30-40 certificates are issued a year. I think that it is already clear - this is not an option.

Third, municipal housing programs. Typically, these programs are aimed at supporting officials or for shenanigans with the land. You can find out what shenanigans there are on the Internet. That is, the young family has nothing to do here either.

As a result, we see that for most young families only the option with a mortgage is suitable.

Tips and points to help a young family with a mortgage

What to look for when taking out a mortgage

First, the interest rate. Even a difference in the rate of 0.5% percent for a large and long-term loan means an overpayment of tens and hundreds of thousands of rubles. Here the tactics are extremely simple - you need to look for the lowest rate.

Secondly, you need to pay attention to the amount of insurance. Very often it is removed from the calculations, although the amounts there are decent. Many banks designate insurance equal to 0.5-2% of the principal debt, break down the amount by years to make it seem small, but the total amount of insurance will be very large. Here's the advice: immediately calculate the amount of insurance for the entire period … Sometimes it is more profitable to take a loan with a higher rate and small insurance than a low rate and large insurance.

Thirdly, pay attention to the early repayment scheme … Rate how it suits you. Absolutely all adequate families sooner or later begin to repay the loan ahead of schedule.

Sale of housing pledged for mortgage

Many people think that this is impossible. In fact, this is not the case. Banks allow you to sell / change mortgaged housing. The young family either repays the loan in full after the sale, or mortgages a new living space. Thus, you can get rid of the mortgage quite easily, though having lost your home.

Mortgages and debts

Very often there are stories about how the bank took the apartment for mortgage debts. Yes, it happens, but it is extremely rare.

Banks become interested in debtors in case of non-payment of debts within 3 months - calls from managers begin. If the debtor continues not to pay interest and penalties, then the bank sends an application to the court and the apartment is arrested. The debtor is prosecuted.

Only complete idiots fall under this scenario. After all, you can always sell an apartment and get rid of a mortgage loan. So don't be afraid of such bad stories.

Mortgage and child

In the beginning it is worth mentioning the maternity capital. In order to support the birth rate among the population, the state gives a little more than 400 thousand rubles for the 2nd child + regional subsidies up to 100 thousand rubles. For the first, third, fourth and further children, only a regional subsidy is given. This money can be spent to pay off the current mortgage or used as a down payment. Of course, not an apartment, as was the case with the Soviets, but better than nothing.

If a young family has a child before receiving a mortgage (this is what most do), then they find themselves in a very difficult situation. For banks, a child is a dependent, which sharply lowers the credit attractiveness of a young family. The family's income is simply not enough to get the loan they need. This usually leads to the family living in a rented apartment or with their parents for several years, until the maternity leave ends and the mother goes to work.

Having a second child for the sake of maternity capital is an even worse idea, because Then you will definitely not see a mortgage.

If a young family has a child after receiving a mortgage, then on the contrary, it turns out to be in favorable conditions. All municipal and federal subsidies can be used to pay off the current mortgage. The birth of a second child and the receipt of maternity capital in this case is a very tangible impetus to pay off the debt.

Mortgage and sharing

It is impossible to get a mortgage for sharing (according to the law, it is possible, but banks do not give such loans). But you can buy a room with a regular consumer loan. Pay off this loan in a few years. Then he sold the house, take out a mortgage and buy a full-fledged apartment. In financial terms, this is a very profitable scheme, much better than saving money for several years (even in deposits). The disadvantages of this scheme are living in a subset and additional running around with buying / selling.

Federal program "Affordable Housing"

Many mortgagees remember black calendar day 2011-04-04when the new Affordable Housing program was launched. In the six months since that day, mortgage rates have risen by 2% and house prices have increased by 15%. But, paradoxically, this program is a loophole to get a mortgage on good terms with government support. The conditions are really tempting - the rate is about 10%.

To get such a rate, you need to buy an apartment in a new building, take out a mortgage for a short period and have a high down payment. Only those families that have large savings or used a shared scheme can be eligible for such conditions.

Pledge of parents' housing

You can use your parents' home as collateral for the mortgage. This is a risky move as there is the possibility of losing your parental home. This technique should be used in two cases.

Firstly, to buy a new room. A mortgage loan is more profitable than a consumer loan and it will provide a good start for a family without savings.

Secondly, to reduce the required down payment. The down payment is determined from the ratio of the loan and the collateral. By increasing the deposit, we reduce the required down payment.

Early repayment

Early repayments are most effective at the very beginning. The earlier you start to repay the loan ahead of schedule, the less interest you will have to pay.

Here is the most effective trick to pay less money for a mortgage … If you paid off the next loan payment and threw some amount for early repayment, then this amount will go completely to pay off the principal debt. That is, no interest will be charged on this early repayment amount.

For example, a loan of 1,000,000 rubles for 15 years at 14% will have a monthly payment of 13,300 rubles. If we repay the loan at 15,000 monthly (1,700 rubles, as early repayment), then we will repay the entire loan in about 8 years. This is due to the fact that the entire amount of early repayment goes to pay off the principal debt.

Afterword

In this article I have tried to show the main points of mortgage and mortgage related issues for young families. Of course, it is not possible to cover everything, so do not throw tomatoes.

Finally, I want to ask the readers - if you have a young family acquaintance who wants to have a place to live, let them read this article. Perhaps for this they will thank you very much.