Such a banking concept as a mortgage has firmly entered our lives. Today, the vast majority of young families cannot afford to buy their own housing without borrowed funds. Meanwhile, some do not want to buy a cramped box in the gray walls of the city. Building your own home is a more attractive option. But a mortgage for the construction of a private house is an incomprehensible phenomenon that causes a lot of questions. Let's try to figure them out.
Build a house or buy ready-made reinforced concrete meters in the city?
Changing city housing to your own house in the suburbs is a great way to save on the notorious squares and get rid of annoying neighbors with a drill behind the wall. And this is not all the advantages of a private home. Let's consider them in order:
- It's no secret to anyone how things are with the environment in the city. It is doubly disappointing to use mortgage lending to buy an apartment, and then to pay for daily poisoning with poisonous air and endless tobacco smoke from the stairwell. Fresh air outside the city is the main plus for those who care about the health of the growing generation.
- Before entering the housing market, the apartment passes an extra charge from 2-3 intermediaries. This makes the cost prohibitive. The price per square of a country house is 2 times lower, even if you take a mortgage for construction.
- When planning a house, there is a place to go for a fantasy. In addition to the house itself, you can build a gazebo, organize a pond or pool. In the apartment, it’s only to experiment with repairs and the interior.
What to do if there is not enough own funds?
If a young family planned to relocate from urban concrete square meters to their own home, they should be prepared for significant costs. Construction is not cheap. And not every average family in our country can afford such a pleasure. How can I find money for my own home?
There are several ways:
- take a mortgage for the construction of a private house;
- get a non-target loan secured by existing real estate and use the money for construction;
- get a consumer loan.
Let's consider the first method in more detail. What are the nuances and difficulties of mortgages for construction? What conditions do lenders set for borrowers?
Bank Requirements
A mortgage for the construction of a private house is a risky event for the bank. If the object is unfinished, it will hardly be considered liquid. In case of unsuccessful circumstances, if suddenly the borrower fails to repay the loan in full and the sale of the collateral is required to pay off the debts, the bank will not be able to sell the site with the construction started.
Therefore, credit organizations are distrustful of such a mortgage. They issue it only on special conditions and with additional security in the form of a pledge and / or guarantee. Banks also set fairly stringent requirements for future borrowers. As well as collateral. Most of them have similar prescriptions. There are only some fluctuations in one direction or another with respect to age restrictions or other characteristics of the client. What parameters are relevant for banks? Here are a few of these factors:
- For the borrower and its guarantors - age, type of employment and length of service, citizenship and place of residence.
- For the subject of pledge - the cost, type of use, physical characteristics, legal cleanliness, the absence of encumbrances and other restrictions on full use for its intended purpose.
Also, the bank will require documentation on the availability of the down payment and a report on the intended use of funds provided on credit.
Amount and loan term
Each credit institution has restrictions on the amount of the loan. It depends not only on the total income of the borrower and his family members, but also on the value of collateral. As a rule, the bank finances construction costs in the amount of 20-85% of the total. A mortgage for the construction of a private house is issued for a period of 5 to 30 years. Some banks may offer a longer term. Then the borrower can get a very comfortable monthly payment. True, it is worth considering that the amount of overpayment will increase decently in the end.
Interest rate
It is difficult to determine the size of the interest rate in advance, even if we are talking about any particular bank. This value depends on a number of conditions - the term, the size of the down payment. Some credit organizations are ready to give a discount to a client who was once a borrower or is currently a borrower. Of course, if we are talking about a conscientious person who does not allow delays.
Interest rate reductions can be expected by those who receive wages on the card of the selected bank, as well as public sector employees. After the construction is completed, when the house is put into operation and becomes a guarantee, the lender will also be ready to lower the rate. Why do banks make such concessions? The thing is that compliance with the above conditions indicates the reliability of the client and reduces the risks of the bank.
To get an approximate calculation, you must go to the website of the credit institution. And in the "Mortgage" section, select the loan program you need, try out the so-called mortgage calculator for construction. He will tell you the approximate interest rate, the amount of monthly payment and overpayment.
Required documents
Do not be surprised at an immodest set of documents, much larger than a regular consumer loan requires. Mortgage involves the issuance of a large amount by the bank for a long period. And this is always a greater risk for a financial institution. Even the more risky is the very goal of such a mortgage - construction. Indeed, in case of unfinished bank can be left with nothing. Therefore, it is worth collecting the will into a fist, getting all the papers and certificates in order to get what you want.
First of all, you need the following documents:
- Papers concerning the borrower and its guarantors / co-borrowers - proof of identity, income, documents on education and social status. The task of the bank is to determine the solvency and responsibility of the client, therefore, the specialist has the right to request a lot of additional information.
- Documents on the security. Often, most securities from the list of pledges are not in the hands of customers, and collecting them quickly is not an easy task. Instead of upholstering the thresholds of Rosreestr and BTI, many turn to specialists for help.
- Account statements, other documents confirming the availability of the down payment.
- House project, sketches, copy of the contract with the construction company, construction estimate.
Lending terms
Before the events of 2014, a program such as a mortgage for the construction of a private house was more common in the country's credit organizations. Today, a relatively small number of banks offer it. Therefore, we will consider lending conditions using the example of Sberbank. Today, he is much more often associated with such transactions:
- Loan currency - only Russian rubles.
- The loan amount - from 300 thousand rubles, but not more than 75% of the value of the collateral.
- Down payment - from 25%.
- Loan term - up to 30 years.
- Interest rate - from 13.25%.
How will the whole process look in reality?
Often, borrowers, planning to get funds for construction on credit, have a poor idea of the whole process. Many expect to submit an application if they have two documents. In this case, the bank will additionally ask only for a certificate of the right to use the site. And within a few hours or days, the borrower will receive money in his hands.
Unfortunately, this is not so simple. Mortgage lending, whatever its purpose, requires a thorough examination of the borrower and the subject of the pledge. The bank needs to minimize possible risks for both the client and the organization itself. In addition, the targeted use of funds involves the availability of reporting, and the amount itself is rarely provided in cash.
What does a credit process like a mortgage for building a house look like in reality? Sberbank, for example, can offer the following cooperation scheme between a client and a bank:
- The borrower provides its documents and securities of guarantors. At this stage, the bank decides on the possibility of cooperation with the client.
- Collection of documents for the land. The collected certificates are sent to the bank for legal monitoring. In addition, the site is checked for compliance with the bank's requirements for physical characteristics.
- The pledge is assessed by accredited valuation companies.
- The client is engaged in ordering a house project, concluding a construction contract. The bank will also need a cost estimate to determine the required loan amount. The borrower will have to obtain these documents from the construction company of his choice, and then transfer them to the specialists of the financial institution.
- If all the previous steps have been completed successfully, the parties proceed to conclude a loan agreement.
- A loan for construction involves the imposition of an encumbrance on the land, so it will take some time to draw up documentation at the Federal Registration Service. On the day the new certificate is received, the bank transfers the first part of the funds for construction.
- The borrower provides a report on the intended use of the first part of the loan funds.
- The bank gives out the second part of the amount.
- The borrower completes the construction and prepares the house as a finished property. After that, the land plot with real estate becomes a guarantee. The interest rate on the loan is then reduced.
How can you ease your task?
For a more comfortable payment, some banks provide for a procedure such as deferring payment of principal. The borrower for the long term, up to 3 years, is able to pay only the interest accrued on the loan amount. This is very convenient, given the possible additional costs during construction, which can greatly affect the budget. In addition, maternity capital can be used to pay part of the main debt. You should ask about this opportunity in advance before applying for a loan. If a mortgage for construction in some banks requires a down payment, a certificate is also used for this.
Inappropriate loan secured by existing property
This type of lending is also a mortgage, with all the ensuing consequences. After all, a real estate object is taken as collateral, which means that the bank must take care of the possibility of realizing the object in case of loan default.
The advantages of such lending include the absence of a need for a report on the intended use - the borrower has the right to dispose of the funds at his discretion. In addition, like any mortgage, this is provided for a rather long period.
Of the minuses - all the same piles of documents during registration and the duration of the process of considering the application and issuing money. In addition, when misused, the rate increases slightly. Basically, lenders are ready to provide for misuse not more than 50% of the value of the collateral.
Is it possible to resolve the issue through consumer lending?
Given the above described mortgage conditions for building a house, a regular consumer loan may seem like an easier way to get the necessary money. Firstly, the bank will not track the targeted use of funds. Secondly, the borrower will not need to collect an impressive package of certificates and undergo other procedures. He will be able to receive money on the day of the appeal according to 2-3 documents. But this method has its drawbacks:
- The amount of ordinary loans rarely exceeds 1.5 million rubles.
- Consumer credit is provided for a short period, up to 5 years maximum. A large loan amount means exorbitantly large payments that are not available to everyone. Yes, and will become a heavy load in a difficult period of construction.
- Banks usually charge a high percentage on a regular loan. Mortgage in this regard has gone far ahead. Instead of the usual 22-24%, there is a chance to get only 15% per annum.
Consumer lending seems a convenient, but not the most profitable way to get the missing funds for construction. This option is suitable for those who plan to build a house in stages or already have some of the necessary building materials. In conclusion, we can add that the conditions of banks can change quite often. Therefore, before you opt for a credit institution, you should personally consult each. A loan for construction is a complex and long process, but the goal justifies work and expectation.