It doesn’t matter which reason prompts you to consider whether or not to take a mortgage. You may be planning to get married, but still do not have your own home. Or replenishment is expected in the family, and the future offspring needs a separate room. Make a decision to take a loan, you need to be careful. It is important to calculate your ability to repay debt as accurately as bank experts do.
What expenses will be associated with the mortgage?
Formulate the question in this way, because the cost of a loan includes not only the interest rate, but also a number of obligatory payments:
- fee for real estate appraisal (if necessary)
- insurance premiums
- state fee in the registration chamber.
Before you get a mortgage, it is best to make a forecast of what costs will be incurred and from which sources you will pay off obligations. This will help you decide whether to take a mortgage now.
How much money is needed to pay the down payment
Banks, as a rule, do not give housing loans on the terms of payment of the full price of real estate only by credit. Part of the cost of a house or apartment will need to be paid from your pocket.
The minimum amount of the down payment varies depending on which bank you apply for a mortgage and for which loan program. For example, in Sberbank, when receiving a loan, you will need to pay at least 20% of the cost of a house or apartment on your own. The required initial contribution to PJSC VTB Bank when paying for finished housing is 15%, and when registering state-supported mortgages for the purchase of construction space - 20%. In anticipation of a loan from Otkritie Bank, prepare at least 30% of the price of a house or apartment. At Alfa Bank, the down payment for the purchase of finished real estate is 15%, and for purchases of square meters under construction, from 30%. At Rosselkhozbank it will be necessary to pay between 15% of the price for finished housing and at least 20% for construction under construction.
Think about whether you have that amount right now. Perhaps it is worth postponing the deal for several months to raise money? If you plan to borrow the funds necessary for the down payment from individuals, think about how realistic it is to pay off two debts at the same time.
When there is money in reserve
If the amount “significantly warms up” in the family wallet is much higher than the minimum down payment that banks require, do not rush to give it immediately to pay for future housing. First, check with the loan manager how the interest rate and the amount of monthly obligations will depend on the share in the price of real estate that you pay yourself. The larger the down payment, the lower the cost of the loan as a percentage per annum. But this proportion stops working when your own share exceeds 50% of the price of a house or apartment. If the down payment is 80 or even 90%, the rate is set exactly the same as in the case of paying 50% of the price of real estate.
Consider also that if you immediately send all available funds to purchase a home, then a little later there may be no free money for repairs. Therefore, it is sometimes more profitable to make a minimum contribution and “put in a piggy bank” a larger amount of rubles, thus dividing the cost of acquiring housing into small monthly shares.
When the acquired property can be paid in full by the bank
A mortgage without a contribution may be issued in the following cases:
- You get a loan for the purchase of housing secured by existing property. Such a program, in particular, is offered by Rosselkhozbank JSC. A loan is granted in the amount of not more than 70% of the market value of real estate transferred as collateral. The term of financing is up to 30 years. Interest rates - from 14 to 16% per annum, depending on the term. A discount of 0.5 percentage points is provided to salary clients. A premium of 3.5% is set for borrowers who have refused life and health insurance. There is no commission for issuing a loan.
- You own liquid assets, such as a car, which in excess of its value covers the amount of the loan. In this case, the value is pledged.
- You have become a happy parent of two or more children, own a certificate of maternity capital. In this case, the down payment will not be paid in cash, but with a government subsidy.
- You do not get a classic mortgage, but a loan for the purpose of refinancing a previously taken housing loan.
Monthly payment
This expense item will become mandatory for the family for the entire loan period, which is usually from 15 to 30 years. Most of the monthly payment, which is insulting, does not go to reduce the amount of the principal debt, but to close interest obligations.
When consulting with a credit manager, be interested no longer in the rate, but in particular the amount of the monthly payment. A mortgage calculator is available on the website of each bank. It will help determine the approximate amount that you will pay to the lender’s cash desk on a monthly basis. The program will also show the approximate amount of the overpayment on the loan.
However, do not expect accuracy from the calculator. Firstly, it will not show the amount of all commission payments. Secondly, it will not reflect the costs of real estate appraisal, fees at the registration chamber, insurance payments. Thirdly, you yourself, without consulting a loan manager, will not know in advance the exact interest rate.
However, a mortgage calculator will help you figure out what approximately amount of personal funds you will have to part with every 30 days. This information will help determine whether to take a mortgage now.
Insurance costs
When studying bank lending offers, check if mortgage insurance is mandatory and, if so, which policies you will need to apply for.
Insurance of the subject of pledge is mandatory by law. If you disagree to draw up a policy, you will be denied a loan. If you do not extend the insurance in a timely manner while the loan agreement is in effect, the creditor bank may request a fine. Much less often, but there have been cases when financial institutions have judicially sought early repayment of a loan due to non-fulfillment by the borrower of the terms of the contract.
The situation is somewhat different with life and health insurance. Banks do not require mandatory compliance with this condition. However, interest rates without a policy are higher as the risks of the bank increase.
Rosselkhozbank JSC sets a premium of 3.5 percentage points for non-life and health insurance. Sberbank of the Russian Federation and PJSC VTB-24 spare the customers: a rise in price for the lack of a policy is only 1 percentage point.
Otkritie Bank offers borrowers to insure not only life (health), but also title, that is, the risk of loss of ownership of the purchased property. For the absence of each of the policies, the premium is 2 percentage points.
When a little bit is missing
Our country is characterized by a situation where the whole world is saving money for a young couple with a child. The parents of the husband and wife, grandparents, aunts, uncles participate in the folding. Together, often enough money is collected to fully pay the cost of a house or apartment. However, you can still decide to take a home loan, as in the near future money will be needed for repairs, and consumer loans are issued at higher rates.
Many people think that in this case the mortgage will be the cheapest for a year. But this is not entirely true. It is more profitable to take the same amount needed to repair the apartment for a longer period of 5 or 10 years. The interest rate will not change, and the monthly payment will decrease due to a more gentle distribution of payments. In the Sberbank of the Russian Federation, for example, the basic interest rates are the same for any loan terms within 10 years. However, when applying for a mortgage, be sure to make sure that you are allowed early repayment.
How to calculate the allowable loan amount for yourself
Determine how much of your monthly payment is in your family’s total income. It should not exceed 30-35% of the amount of “net” salaries of all its members. If the mortgage payment is 40 percent or more of family income, then you risk ruining your credit history and guarantors.
You can not take a close end to end so that all available funds are spent on it. Unforeseen expenses can always arise, for example, the need to pay for the costs of treatment or repair. Think about whether you can pay off your mortgage if someone in the family loses a permanent source of income.
If you are afraid of being dismissed from work, then, when applying for a loan, try to postpone for a rainy day an amount equal to three to four monthly payments. Thanks to this precautionary measure, you will have enough time in a critical situation to find a new place of service and at the same time maintain a perfect credit history. So that there is no temptation to squander the financial “airbag” in other directions, put money on a deposit.
Also think about whether you have any property that can be quickly sold if necessary, so that the proceeds are paid to pay the loan debt. It can be, for example, a personal car.
What documents to prepare for a housing loan
It happens that because of obstacles to the execution of any act or certificate, the bank does not provide a home loan. Therefore, sometimes an important argument in deciding whether to take a mortgage is the opportunity to collect the necessary package of documents. Check if you have all the papers you need and how easy it is to get those that are missing.
The list of documents for a mortgage includes:
- Passport.
- Inquiries about where you work and what income you receive monthly.
- Documents on the composition of the family, the presence of children.
- Passports, certificates of ownership of the subject of the pledge.
- Real estate paper that you intend to purchase on credit. This package of documents will have to be provided to you by the seller of the house or apartment. It includes, as a rule, a certificate of ownership, ground documents, an extract from the register of rights to real estate, a cadastral passport or a data sheet for the premises, an extract from the house book.
When not to take a mortgage
It is better to defer obtaining a housing loan in cases where:
- Changes in family composition are planned. You are going to get married, a birth is planned.
- One of the family members (who account for a significant part of the income) plans to change jobs. The new service has a trial period, relations with the employer may not work out. Salaries may be significantly lower than declared, and working conditions worse.
Conclusion: if you take a mortgage, then where?
When deciding whether to take a mortgage, consider the offers of several banks. As a rule, housing loans from credit organizations with state participation turn out to be the most convenient and economical. Private banks are more likely to meet customers. Interest rates and commissions on loan agreements there are slightly higher, and there are lower.
However, when contacting a small mortgage center, be careful.In banks of the “mini” category, many additional payments are added to interest rates, which customers are not informed about in advance. This may be a commission for issuing mandatory certificates, renting safe deposit boxes.
But small private banks that hold on to clients usually provide a lot of services for a moderate fee, greatly facilitating the transaction (advising, drafting purchase and sale documents or legal due diligence, checking the counterparty for trustworthiness, assistance in interacting with the registration service).
If you decide to take a mortgage, first of all contact the bank where you get your salary. Most likely, it is there that you will receive the most benefits and privileges.
