A loan secured by real estate is a type of financial agreement in which an apartment or a house acts as collateral. In fact, this is the mortgage. Citizens of Russia, trying to solve the housing problem, offer the bank the existing real estate as collateral. Is a mortgage loan always a mortgage? No not always. And now we will find out when this type of financial relationship has a right to exist.
What is a loan and what are its varieties?
Depending on the requested amount, loan term and the algorithm for obtaining it, there are several types of loans:
- Express loans (a loan in this case can be obtained without leaving your own home).
- A loan for urgent needs (in fact, this is a regular consumer loan, the processing of which does not take much time and effort).
- A loan for education or payment for medical services (as a rule, educational and medical institutions take paper formalities for obtaining a loan).
- Vacation loan (similar to the previous one).
- A secured loan (such a loan is needed when it comes to a solid loan amount).
- Credit cards.
Today we are talking about a loan secured by real estate. This is a loan issued by a financial organization, secured by any property of a potential borrower.
Collateral
In some situations, the bank is entitled to demand collateral. When does this happen? First of all, this applies to large loans (for the purchase of real estate, a car or opening your own business). The size of the requested loan may not be so large, but the financial institution still requires a security deposit - this is possible if the potential applicant does not have a complete set of documents or if there is no permanent source of income.
Collateral is the so-called airbag for the bank. In the event that the borrower for some reason can not return the money, the lender will simply sell the property, thereby compensating for their losses. It is clear that the pledge must have liquidity, since the bank is not going to look for a potential buyer for a long time. That is why a loan secured by real estate is a responsible decision for both the borrower and the lender. The collateral may be both real estate objects and other values (bank deposits, boats, yachts, cars, etc.).
What gives a loan secured by real estate?
Without certificates of income and guarantors, you can get a loan, owning a property or any other value. In addition to a substantial amount, the potential borrower has the right to rely on lower interest on the loan and loyalty from the credit department. A loan secured by real estate without guarantors is executed as a mortgage. Take into account this type of lending is when you need a large amount - from 500 thousand rubles.
This opportunity is also used by individual entrepreneurs who plan to open their own business or expand production. As a rule, obtaining targeted loans is much more difficult, therefore it is easier to provide collateral to the bank in order to receive the necessary funds.
How to get a loan on bail?
As a rule, such agreements are drawn up according to traditional schemes. First of all, you need to find a bank that can issue a loan secured by real estate. You can get it by providing a package of necessary documents. Pay attention to the fact that it is necessary to prepare the relevant papers regarding square meters.
When applying for a loan, the potential borrower must indicate that he can provide collateral. After that, the client, if it meets all the requirements of the bank, must go through underwriting - the verification procedure. At this stage, the bank receives information about the state of the borrower's credit history, checks its source of official income, and also finds out if it owns real estate and whether it is under arrest. It would seem that getting a loan secured by real estate without information is much easier. But this is not so. There are several nuances to consider.
What you need to know about mortgage lending?
First of all, it is worth noting the following: any property needs to be evaluated. This means that the borrower must evaluate the collateral from an independent appraiser. After that, insure against damage or damage. This will allow the bank to gain confidence in the value of collateral. Here you need to understand that all associated costs will fall on the shoulders of the applicant.
The process of obtaining a loan secured by real estate in a bank requires much more time than obtaining a typical consumer loan. This is due to the fact that the financial institution must verify the reliability of its client. More checks - more time.
And one more nuance. The value of the collateral must exceed the size of the loan by at least 20%. Moreover, the higher the price, the greater the likelihood that the bank will approve the application.
How is real estate valuation?
It is this moment that takes a lot of time, and all expenses for this item fall on the shoulders of the potential borrower. There may be several options for assessing real estate. Assume the real value of the object can directly the employees of the credit department. Not the best option, since they, like no one else, are interested in the low cost of square meters. But there is also a positive point - most likely, an individual will not have to pay for the services of the evaluation commission.
There is another option - when the assessment will be made by a company accredited by the bank. In this case, additional costs appear, but the cost of the object will be assumed quite real, which will well affect the receipt of a loan. In any case, when obtaining a loan secured by real estate without income and guarantors, you need to think in advance about how the square meters will be evaluated.
What else do you need to know about real estate that will act as collateral? Many Russian banks require that no one be registered at the time of signing the loan agreement in the apartment or house. Like, there will be no problems with the sale of property in case of its further sale. In fact, these requirements are unfounded. Since, in accordance with the law, a financial organization, that is, a creditor, can write out and evict all residents in this territory.
Distinctive features of a loan secured by real estate
Of course, the main distinguishing feature of this type of lending is the availability of collateral and the associated subtleties of processing. In turn, it is precisely this moment that does not allow taking a loan secured by real estate as quickly as an express loan, for example. As a rule, the whole procedure takes about 30 days, taking into account all the checks and evaluation activities.
A loan secured by real estate is a rather risky type of financial transaction. Primarily for the borrower. In case of delay, the bank has the right to take the property, regardless of how much money has already been paid.
Despite such great risks and the complexity of processing, a loan secured by real estate is often the only true and effective way to get the necessary amount.
Can I get a loan secured by commercial real estate?
Unfortunately, more often than not. There are two reasons for this. First, commercial real estate is almost never owned by an individual. Legal - yes, but this is a completely different type of lending.
And secondly, since an individual has commercial property, it can be argued that a citizen of the Russian Federation is an individual entrepreneur. And this means that he needs a loan to carry out his professional activities. In this case, the bank should consider the application for a business loan, not a consumer loan. And this again is a completely different type of banking arrangement.
Mortgage loan classification
A loan secured by real estate without proof of income has two varieties. The first of these is a targeted loan. Its definition is quite understandable - a loan for the implementation of specific plans. A potential borrower can take out a target loan secured by real estate to buy a car, build a house or start his own business. As a rule, a targeted loan is characterized by attractive interest rates and more convenient terms of use. The only minus is when drawing up a target loan for the purchase of a car, for example, the applicant has no right to spend money on anything else.
There is an inappropriate loan, which can also be issued on the security of real estate. Here, the client may encounter higher interest for using bank funds. But at the same time, this type of lending allows you to spend the loan at your own discretion.
Documents required for applying for a loan
As already mentioned, when obtaining a loan secured by real estate, banks do not pay attention to the financial reputation of the borrower. But this does not mean that everyone who owns square meters can get the money. Having submitted an application, it is necessary to start collecting the relevant documents:
- Passport of a citizen of the Russian Federation.
- A document confirming the solvency of the applicant.
- Documents that indicate the presence of real estate in the ownership of the applicant.
- An identification number.
- Married property owners must also provide a marriage certificate, TIN of the spouse, as well as a copy of the passport.
- Individual entrepreneurs provide a certificate of registration and a declaration of income.
This list of documents may vary depending on each specific case and directly the requirements of a financial organization.
What can act as a guarantee?
As already mentioned, any property representing a certain value can act as collateral. Personal transportation, bank accounts, precious metals, securities and, of course, real estate. We’ll talk about the latter.
When sending an application for a loan secured by existing real estate, a potential applicant must understand that a commercial building cannot act as security. In turn, an apartment, a country house, an office, a garage, storage facilities can one way or another act as collateral. A pledge agreement for this category of property is subject to mandatory registration.
It is worth recalling that many Russian banks practice issuing a loan to purchase housing directly on the security of acquired square meters. Interest, however, is high. But often this method is the only one possible for those who have not yet become the happy owner of their own apartment.
What real estate can serve as collateral?
Yes, almost any. Cottages, townhouses, apartments, ready-to-live-in apartments and private houses. The main thing is that any of them have the right of ownership. In fact, the requirements for collateralized real estate are almost the same as for acquired square meters. The law governing these legal relations is one, therefore the conditions are identical.
There is one caveat to which you should pay close attention. Cottages and townhouses owned by a potential borrower can be used as collateral only together with the land on which they are located. What's so bad about that? There is practically nothing bad here, if you do not take into account the fact that the land itself can be leased. In this case, it will not work to provide the bank with a deposit.
Based on the foregoing, we can conclude - to get a loan secured by real estate without proof of income and even with a bad credit history is possible. The main thing is that the property meets the requirements of a potential lender.