A mortgage loan is a phenomenon inalienable to the life of public and individual households in need of land, housing, and better living conditions. The concept of mortgages has existed in the world since ancient times, when the personality of the debtor, who was made a slave, was pledged for debts. In the 6th century BC, the laying of a person was replaced by a mortgage of all property that the debtor had, in particular, land. While the property of the debtor was mortgaged by the creditor, a mortgage post was established on the territory of his land ownership - evidence of the mortgaged property. A debt record was recorded on the post.
Historical facts of the origin of the mortgage
During the reign of Elizabeth Petrovna (250 years ago), the Russian nobility was subsidized by mortgage loans. At the same time, the same estate was re-mortgaged several times not only in the noble banks, but also among private money lenders. The lack of feedback control of the debtor-creditor, the delay and refinancing (re-mortgage) of the 18th-century mortgages led to a huge debt to the state treasury and the natural bankruptcy of banks.
The impetus for a new round of mortgage loan development was the reform of the abolition of serfdom, when millions of peasants needed a loan to buy land. A mortgage loan was issued for 49 years at 6 percent per annum. It was then that the charter of urban credit societies was formed, in which the rules of a mortgage loan were prescribed. The reform of private ownership of land contributed to the spread of credit relations in agriculture throughout Russia. Loans secured by land at that time were called land. Mortgage bonds were strictly notarized, and securities on the stock exchange were issued under them, 35% of which by 1913 was foreign capital. The system of bank loans has developed thanks to the formation of a new economy.
After the October Revolution, during which banks were nationalized and credit relations were centralized, the concept of mortgages was forgotten for 70 years.
Mortgages in Russia began to revive only in the 1990s, and received legislative support in 1998. After a wave of crises, mortgage lending has undergone a number of changes - tightening credit conditions, compulsory mortgage insurance, compulsory down payment and a system of fines - pitfalls of mortgages.
Mortgage statistics today
Today, about 400 credit organizations operate in the Russian mortgage lending market. After the CBR established strict rules governing the activities of credit organizations, only reliable, tested and efficient mortgage lenders remained in the mortgage market. According to the Central Bank, the average mortgage loan term is 15 years, and the average mortgage interest rate in Russia is 9.8% per annum. The percentage of Russians wishing to purchase housing in the next 5 years is 70%. In fact, only 33% of the working population is available at present, for comparison - until 2000 - only 5% of the working population. The most popular banks among the population for obtaining a mortgage are Sberbank and VTB, with which buying a mortgage apartment with pitfalls can also be complicated if you do not know about them.
Features of the provision of documents for a mortgage
Before concluding a mortgage agreement, it is recommended that you familiarize yourself not only with the proposed interest rate and payment period, but also with a number of conditions and possible shortcomings in the banking system, the so-called pitfalls of a mortgage.
It is important to remember that the more convincingly the documents on the borrower's reliability are presented, the more stable the relationship with the bank will be. Before going to the bank, it is necessary to prepare standard documents: a Russian passport with registration at the bank's location, as well as a statement of income.
The bank may agree to issue a loan without a statement of income, but the scoring questionnaire must indicate the place of work and the amount of monthly wages. The State Security Officer will certainly verify all this and, if the applicant lied about the place of work or salary, he will be denied a mortgage.
Based on the income statement, the bank calculates the mortgage loan term. According to the rules, the average loan payment should not exceed 40% of the borrower's monthly earnings, or the loan term will be extended in accordance with this rule. And the longer the loan term, the more the borrower overpays for the entire mortgage period.
Bank fees
When drawing up a mortgage agreement, the following additional fees are possible:
- For the execution of the contract, opening an account.
- Payment is provided by an independent real estate appraiser.
- Compulsory insurance of mortgages, as well as the health and life of the borrower, property rights to collateral.
- The bank may put forward additional requirements to the borrower in case of distrust of the developer when registering a mortgage in a new building. This may lead to an increase in the interest rate on the mortgage.
- The bank can oblige the borrower to choose a collateral apartment only through a reliable realtor, who can turn out to be a partner of the bank (realtor services usually are not less than 5% of the cost of housing).
Fines and penalties
Penalties for late payments on a mortgage can significantly increase the total loan amount, so you need to find out before signing the contract - by which date you need to pay, what is the best way to pay: cash, ATMs, electronic payments. It is useful to know how long the funds are credited to the bank account, for example, from account to account 1-3 banking days.
Due to queues at bank offices or ATMs, situations may arise that impede timely monthly payments. It is necessary to find out exactly what penalties will be applied in case of one or two delays, and which ones in cases of systematic non-payments (due to a reduction in work or illness) and what can be done in advance about this. In extreme cases, the bank may unilaterally terminate the contract, sell the collateral and pay off the mortgage debt, and return the rest to the borrower.
Nuances and risks of a mortgage loan
Before signing the contract, you must carefully read, and if possible, consult with a lawyer on controversial and obscure points. So, what kind of pitfalls when working out a mortgage need to be worked out?
- To study the size of all commissions and the procedure for making them.
- View the list of penalties, their size and the reasons for their imputation. The contract should not be fined for early repayment of a mortgage.
- Examine the payment schedule: installments and due dates.
- It is important to familiarize yourself with the list of situations involving an increase in the interest rate on a mortgage. Discuss with the bank manager all incomprehensible wordings like “interest rate increase as a result of changes in market conditions”.
- Find out how much insurance is needed and whether it is possible to do without it. The bank does not have the right to force insurance of the borrower or the life of the borrower in case of a mortgage, but he has the right to raise the interest rate for canceling insurance by 1-1.5%.
A mortgage agreement is signed by both equal parties, so the borrower has the right to disagree unconditionally with the terms of the bank, taking on the pitfalls of mortgages and risks. In case of contentious issues, it is necessary to resolve them before signing the contract. The client can apply for a clause on the right to refinance mortgages in the contract, which will greatly facilitate possible force majeure circumstances in the future.
The subtleties of concluding a mortgage agreement
When studying the pitfalls of mortgages, it is important to keep in mind some of the nuances of credit and mortgage relations with the bank. For example, throughout the duration of the contract, the property is owned by the borrower, but he cannot dispose of it fully until the end of the contract. Also, the borrower cannot:
- To rent collateral real estate for rent without prior approval from the bank. Typically, credit institutions are reluctant to allow such transactions with real estate as collateral, as the condition of the property may deteriorate, which will lead to a decrease in its market price if necessary. Nevertheless, the lender does not have the right to prevent the lease of collateral for a period of not more than one year.
- To carry out repair work, including illegal redevelopment of the apartment. To implement the necessary repair and construction changes, you will need to prepare a project, then obtain permission from the housing inspection, and then notify the lender.
- Throughout the duration of the mortgage agreement, it is prohibited by law to re-arrange collateral real estate into non-residential premises.
- It is impossible to make exchange or gift transactions with collateral real estate, as well as to sell without the permission of the creditor. Sale will be possible only in case of debt of the borrower to the creditor bank and the proceeds from the sale will be used to repay the debt and close liabilities to the bank.
Pitfalls of mortgages in Sberbank
Sberbank has a standard mortgage loan agreement; a sample of it can be found on the website for preliminary review.
The main pitfalls when concluding a mortgage agreement with Sberbank are the additional costs for the appraiser of the collateral, the rent of a bank cell, the services of a realtor or lawyer, insurance and, of course, the payment of state fees.
Under the terms of the mortgage agreement, the possibility of an independent choice by the borrower of the appraiser is stipulated, but it must comply with the requirements of Sberbank. Therefore, it is not worth risking and pre-evaluating collateral, Sberbank may refuse to provide the assessment documents, explaining the refusal by non-compliance with the established process rules, and the money will be wasted.
Fines for delinquency in Sberbank
The most unpleasant for discussion part of the pitfalls of mortgages in Sberbank is interest and fines. But it is important to understand the following clauses of the contract.
Item regarding late fees. The size of the penalty directly depends on the Central Bank refinancing rate at the date of the fine. This can significantly increase the amount of the current fine. Therefore, it is useful to know in advance about the conditions of possible penalties for late payments.
Conditions for termination of the mortgage agreement. Sberbank has the right to cancel the contract in certain illegal situations, for example, in case of systematic delays, when using the collateral property for other purposes, in cases of refusal to the creditor bank to check the condition of the property, as well as upon termination of the insurance policy agreement.
During the term of the mortgage loan agreement, the borrower does not have the right to sell collateralized housing, register other persons in it, lease it, make redevelopment without the approval of the lender.
Mortgage at VTB: Pitfalls
Of the sharp pitfalls when concluding a contract, you should pay attention to the following.
VTB Bank strongly recommends that you take out an insurance policy on the right of ownership (title), health, and life only with your partner VTB Insurance. If you refuse insurance, the mortgage rate will necessarily increase by 1%.
The minimum amount of a mortgage loan is from 2 million rubles. A smaller amount implies restrictions on the down payment or additional costs when applying for a loan. It is not profitable for a bank to give small loans for long periods.
In the event of delinquency, the bank does not take the initiative to restructure the debt or arrange credit holidays. It is more profitable for the bank to keep the terms of the previous agreement and return the borrowed money on time. To solve problems on late payments, the borrower submits an application to the bank.
VTB Bank is a reliable effective credit institution and therefore requires a clear fulfillment of contractual obligations. Therefore, in case of doubt about the financial strength of your budget, it is better to postpone the decision to take a mortgage.
Legal advice and advice
Practicing lawyers recommend concluding mortgage pitfalls before entering into a loan agreement.
- Calculate mortgage payments in such a way that they do not exceed 30% of family income.
- Take a mortgage only in the currency in which the monthly income goes. Even if it makes sense to save money, there is no need to take risks. A mortgage loan is a long-term one, and you will have to overpay many times during exchange rate fluctuations on the exchange of rubles for the contract currency.
- For a mortgage, choose a lender only from large banks with many years of experience and good reputation, providing the most favorable conditions.
- Do not rush to choose a mortgage program. It is necessary to carefully find the most suitable one with possible favorable, favorable conditions.
- No need to take a mortgage immediately to a large living space. It is recommended that you gradually improve your living conditions. For example, after odnushki do not aim at three- or four-room apartments. First, buy a two-room apartment, and after paying the full amount you can already think of a more comfortable three-room apartment.
- Carefully study the contract, paying attention to additional fees and expenses when registering an apartment for a mortgage. They are the pitfalls of the mortgage agreement.
- The longer the mortgage, the higher the rate. It is advisable to take a mortgage for a shorter period. After all, the longer the mortgage, the greater the total overpayment.
- Choose a fixed rate, preferring it to a floating rate, which, in essence, is more profitable, but not in conditions of high market volatility, which can drive a borrower into huge debts. A fixed rate does not allow saving, but also does not allow to lose.
- Turn only to independent appraisers when choosing a mortgage property, as realtors always embellish the condition of real estate in order to sell more profitably.
- It is advisable to create a financial reserve before signing the contract. This is the so-called financial safety cushion, consisting of 3 monthly mortgage payments, in order to feel confident during the entire period of the contract.
Mortgage in the secondary market
Mortgages in the secondary market are easier to arrange due to the fact that the house has been commissioned and there are no construction risks.
When buying a resale for a mortgage, pitfalls must be checked: who is the owner and who is registered in the chosen housing area. A situation may arise when one of the owners of parts of the housing does not agree to the sale.
Further, it is mandatory to check whether all existing redevelopments in the apartment are legal, whether there are any debts on the accounts and make sure that the apartment is already a guarantee in another credit institution.
Check the condition of communications, whether repairs were carried out and at what level, to verify the serviceability of windows, ceilings and other elements of housing.
Mortgage Refinancing
Refinancing is a refinancing of an existing mortgage loan in another bank. Such a capacious procedure for refinancing a mortgage with pitfalls makes sense if you need to pay off a mortgage with a term of more than two years.
It should be borne in mind that during the period of transferring collateral from bank to bank, the interest rate will be slightly overstated, since the collateral will be temporarily absent in the new bank, which is a big risk.
When refinancing, there will be compulsory expenses for the assessment of collateral, notary public, etc.