Mortgages in Russia are associated with lifelong bondage, the reason for which are high housing prices compared to average incomes and a high interest rate (from 10% and higher). As a result, the payment schedule for the average family stretches almost to retirement. The average mortgage loan term is 17 years. During this time, the borrower overpays the two or three times the cost of the apartment.
Despite its “predatory” rates, mortgages in our country are in demand and justified. In the dilemma of “renting or mortgages,” mortgages look more advantageous, because monthly payments are sent to buy your own home, and do not disappear without a trace in fixed costs.
Often, the borrower has difficulties with the down payment, but rather with its absence. What to do if you haven’t accumulated your first installment for a mortgage and don’t want to rent a house? Yes, and how to accumulate if renting an apartment "eats up" an impressive part of the income !? Taking a mortgage without a down payment often seems to be the only housing solution for many borrowers, but is it real? What are the features and pitfalls of such a loan?
An important point - to take a mortgage without an initial payment is possible only in the secondary real estate market, since lending in the primary housing sector is fraught with high risks (double sales, long-term construction and others). If we add to these risks the probability of non-repayment of a long-term loan issued without a down payment, the bank’s risks increase many times over. Naturally, under such conditions, credit organizations are not ready and will not work.
A mortgage with a zero down payment is only suitable for those who have a stable and high salary, because monthly payments will be large. Age also matters: it is necessary that the loan be closed before the retirement age of the borrower and its guarantors.
As banks rightly believe , a mortgage without a down payment is a rather risky business, so the interest rate in this case will be higher than for an advance mortgage.
Also keep in mind that when applying for a pledge of housing, you will need the services of an appraiser and insurance of the property itself.
There are two ways to get a mortgage without down payment. The first option is to get a consumer loan for a down payment and a mortgage in one bank. At the same time, income should allow repayment of both loans, therefore, this option is suitable for borrowers with high solvency. According to the requirements of banks, no more than 30% of the borrower's net monthly income should go to repay the mortgage. Net income - all documented income (salaries, pensions, benefits, etc.) less liabilities (loans, child support).
The second option is to pledge other available housing. It should be borne in mind that the bank will issue a loan in the amount of not more than 90% of the price of the apartment, thereby reducing the risk of its losses when property prices fall. Some banks even offer as an initial contribution to lay the apartment of the borrower's close people (for example, parents). This area of mortgage lending is in great demand, because parents seek to help their older children, but the pre-retirement and retirement age does not allow them to get a long-term loan. Making a second apartment as a guarantee, you need to understand that in case of delays in the mortgage, you put your loved ones at risk of being left without housing and yourself will lose the cherished square meters. Therefore, it is important to assess your capabilities soundly, to be confident in your solvency, in the future, to preserve and grow your income (wages).
So, young able-bodied people with a high official salary, with a positive credit history, who want to buy housing in the secondary market, and ideally have free liquid real estate (their own or third parties) for a second mortgage, can take a mortgage without an initial payment.