To buy a second home for cash is affordable for a few, but the desire to have their own apartment is inherent in every young family. To realize their dream, almost everyone has to arrange a mortgage for many years. Its most popular variety today is a loan secured by purchased housing. To date, this transaction can be completed at various financial institutions, but you just need to decide on a suitable bank that will offer the most favorable conditions for you.
Lending terms
In any case, renting someone else’s housing always translates into a more impressive amount than buying your own, so even the possibility of losing the apartment in the future with a loss of solvency does not scare the citizens.
It is important to know also that mortgage registration is possible only if the client satisfies all the conditions of the lender, that is:
- age from 21 to 45;
- spotless credit history;
- solvency.
The last point includes not only the availability of well-paid work, but also the stability of income.
Mortgage Features
Most banks offer their customers a wide selection of credit programs, a good speed for receiving funds and a profitable investment.
Among the distinguishing features of each program there are also common features, such as:
- long-term loan issuance;
- purposeful use of funds received;
- lack of the right to dispose of property.
It turns out that registration of a mortgage is possible only for certain needs - mainly for the purchase of secondary housing and, in some cases, for shared construction or the construction of your own home. It is important that according to the documents the borrower will be considered the owner of the home, but at the same time he will not be able to dispose of the apartment without the consent of the bank until he has completely paid off the debt.
Search for the best option
Favorable mortgage terms are offered to their customers by word of mouth all financial institutions, but in fact there are many nuances in finding the perfect option. For example, a reduced interest rate is not always an indicator of benefits, because the bank may well collect the same money from the borrower to pay insurance premiums or commission payments.
A similar situation can be seen in terms of the lack of down payment, because the bank does not forgive the borrower this amount, but only postpones the payment with the ability to charge an even higher percentage on it.
In reality, most often the really favorable mortgage terms are in those offers that, at first glance, do not attract any attention.
Currency traps
It has already become clear to many that in the current conditions of the economy, one should not pay attention to foreign currency lending. The situation is unlikely to improve in the near future, but to increase an already huge annual percentage is quite possible. The ruble offers remain on the same terms, therefore, even taking into account the unstable situation, they will help young families to purchase their own housing, of course, subject to careful selection of the program.
Advertising slogans
In addition to finding the bank with the lowest interest rate on mortgages, borrowers should pay attention to the additional slogans of financial institutions with which they attract customers. Among them:
- the possibility of lowering rates in the future;
- loan refinancing;
- floating rates.
What benefits each of the items contains, we will consider in more detail.
Payment reduction
Today, some banks offer their customers favorable conditions to further reduce their mortgage rates. How to do it? To do this, they only need to pre-pay a certain amount of money, which will not go towards paying the debt, but will only ensure that a smaller percentage of the loan is received. It depends on the amount of the loan and ranges from 2% to 7%. In fact, such conditions will be beneficial only if the loan is paid on time. If the client can repay the debt ahead of schedule, and all borrowers strive for this, then the meaning of such a transaction disappears. Previously paid funds will be irrevocably transferred to the bank without providing savings to the payer.
Revision of conditions
The lowest mortgage rates are offered to customers during the first years, subject to further refinancing. Banks motivate this action by improving lending conditions in connection with changes in the economic situation, but in reality only the bank is waiting for improvement. Often, instead of converting to the average rate, customers switch to floating rates. In addition, it turns out that the entire grace period, payments went only for the interest on the loan, while the body of the debt remained untouched.
Floating rates
Employees of financial institutions assure that these are the lowest mortgage rates for certain periods of time. In fact, all payments in this case depend on the economic situation of the country, which is not up to the mark now, and no improvement is expected. All this, most likely, will lead to a regular rate increase, which has no limits. At some point, it may turn out that the client is simply not able to pay this amount of the monthly fee.
A short loan term also does not guarantee benefits in this situation, because the situation can radically change in just a couple of years, and a mortgage is issued for at least five years.
Soft loans
Really beneficial loan terms are offered to certain categories of citizens, including:
- young families;
- families with the right to capital;
- Young professionals;
- military personnel.
The latter do not pay loans out of pocket at all; the Ministry of Defense does it for them, but also on certain conditions. For the rest, good credit conditions are offered under the state program, while the mortgage rate at Sberbank is 13%.
The listed categories have the right to receive not only the lowest mortgage rates, but also:
- the possibility of obtaining a credit vacation;
- lack of down payment.
Moreover, most often they are only imposed on a specific developer, buying a house in a fixed area or participating in shared construction.
All conditions
To choose the best program among the many offers, you should consider all the conditions of lending. To do this, you must analyze the totality of all the requirements:
- an initial fee;
- interest rate;
- additional payments;
- conditions for early repayment.
Consider all the items in order.
An initial fee
The further overpayment on the loan depends on its size, because the more the client pays immediately and without interest, the less opportunities the bank will have to take an overpayment from it. As a rule, the size of the down payment ranges from 10-30%, but can reach half of the total amount. Most potential borrowers mistakenly select options with minimal down payments.
Loan rate
All customers turn their attention to it in the first place, but in fact, the annual rate has long been no longer an indicator of profitability. The sophistication of financial institutions in obtaining the maximum benefit from customers is constantly being improved, and the size of the real overpayment has long been independent of what the mortgage rate has been announced at banks. All this thanks to additional commission and insurance payments.
Additional payments
Banks compensate for low interest rates by removing commissions from customers for issuing mortgages and for servicing them. The first option is determined by several percent, and the lower the interest rate, the greater the commission. In general, all the money will go to the bank and will result in a noticeably different amount from the declared amount.
Service fees are usually determined by fractions of a percent, but it is important to consider that they are charged on a monthly basis, which means that a few more full percent of the overpayment can run over the year. So, having issued a profitable mortgage at 11% per annum, the client can overpay the commission for the issuance of 4%, which will result in a full 15%. A similar situation with serving commissions is only 0.4%, which for the year will be the same 4.8%.
Insurance premiums are also imposed on customers under the obligation to lower interest rates, although they are voluntary under the law.
Prepayment
The lowest interest rates cannot be compared in importance with this item. To reduce the overpayment, many seek to repay the debt as soon as possible, since less interest will be charged on the remaining smaller amount. Banks often impede such actions by limiting the maximum monthly payments.
Professional help
Which bank gives a home mortgage, and which specializes only in housing matters, a loan broker knows. The help of this specialist will certainly demonstrate the speed of searching for the most favorable conditions. In large cities, there are even professional offices on these issues. Today, a 13% mortgage rate at Sberbank is attractive, but not the most profitable, as they will be surely told to clients with a full consultation.
Conclusion
Despite the fact that today there are a huge number of financial organizations, the search for a really better option for choosing a loan program is very difficult. That is why advising a particular bank does not make sense. Only the totality of all indicators of savings can put together a picture of favorable mortgage conditions. The main thing - when choosing a program to remember the sophistication of financial institutions in obtaining benefits and not fall for their competent tricks. To get the lowest mortgage rates and guaranteed the best loan conditions for a short period, you should seek help from a professional credit broker. Even taking into account payment for its services, the result will surely please the borrower.