Pitfalls of a mortgage: the nuances of a mortgage loan, the risks, the intricacies of concluding an agreement, advice and recommendations from lawyers

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Mortgage loans are an integral part of the life of public and individual households that need land, housing, and improved living conditions. The concept of mortgage has existed in the world since ancient times, when the very personality of the debtor, who was made a slave, was pledged for debts. In the 6th century BC, the pledge of the person was replaced by the pledge of all property that the debtor had, in particular, land. While the debtor's property was pledged to the creditor, a mortgage pillar was installed on the territory of his land ownership - evidence of the pledged property. A record of the debt was recorded on the post.

Historical facts about the origin of mortgages

During the reign of Elizabeth Petrovna (250 years ago), the nobility of Russia was subsidized by mortgage loans. At the same time, the same estate was remortgaged several times withoutonly in noble banks, but also from private moneylenders. Lack of debtor-creditor feedback control, deferment and refinancing (remortgage) of the 18th century mortgage led to a huge debt to the state treasury and the natural bankruptcy of banks.

The impetus for a new round of development of the mortgage loan was the reform of the abolition of serfdom, when millions of peasants needed a loan to buy land. The 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 for 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 loans. Mortgage bonds were strictly registered by a notary, and securities were issued against them on the stock exchange, 35% of which by 1913 was foreign capital. The system of bank loans developed due to the formation of the country's new economy.

After the October Revolution, during which banks were nationalized and credit relations were centralized, the concept of mortgage was forgotten for 70 years.

Revival of mortgages in Russia began only in the 1990s, and received legislative support in 1998. After a wave of crises, mortgage lending has undergone a number of changes - tightening lending conditions, mandatory mortgage insurance, mandatory down payment and a system of pen alties - mortgage pitfalls.

Mortgagestatistics today

To date, about 400 credit institutions operate in the Russian mortgage lending market. After the Central Bank of the Russian Federation established strict rules governing the activities of credit institutions, only reliable, proven and efficient mortgage lenders remained on the mortgage market. According to the Central Bank, the average term of a mortgage loan is 15 years, and the average mortgage interest rate in Russia is 9.8% per annum. The percentage of Russians who want to buy housing in the next 5 years is 70%. In fact, a mortgage loan is now available to only 33% of the working population, for comparison - before 2000 - only 5% of the working population. The most popular banks among the population for obtaining mortgages are Sberbank and VTB, with which buying an apartment on a mortgage can also become more difficult if you don’t know about them.

Features of providing 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 term, but also with a number of conditions and possible shortcomings in the banking system, the so-called mortgage pitfalls.

It is important to remember that the more convincing documents about the reliability of the borrower are presented, the more stable the relationship with the bank will be. Before going to the bank, you need to prepare standard documents: a Russian passport with registration at the location of the bank, as well as a certificate of income.

The bank may agree to issue a loan without a certificate of income, but inThe scoring questionnaire must indicate the place of work and the amount of the monthly salary. The state security officer will definitely check 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 term of the mortgage loan. 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 period of the mortgage.

Bank fees

When registering a mortgage agreement, the following additional commissions are possible:

• For the execution of the contract, opening an account.
• Payment is provided for an independent mortgage appraiser.
• Compulsory mortgage insurance, as well as the he alth and life of the borrower, ownership of collateral.
• Additional requirements the bank may put forward to the borrower in case of distrust of the developer when applying for a mortgage in a new building. This could lead to higher mortgage interest rates.
• The bank may oblige the borrower to choose a mortgaged apartment only through a reliable re altor, who may be a partner of the bank (re altor services are usually not less than 5% of the cost of housing).

Fines and pen alties

Pen alties for late mortgage payments can significantly increase the total amount of the loan, so you need to find out before signing the contract - by what date you need to make payment, howbetter way to deposit: cash, ATMs, electronic payments. It is useful to know how long it takes for funds to be credited to a bank account, for example, from account to account 1-3 banking days.

Due to queues at bank offices or at ATMs, situations may arise that slow down timely monthly payments. It is necessary to find out exactly what pen alties will be applied in the event of one or two delays, and which ones - in cases of systematic non-payment (due to layoffs 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.

The 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 incomprehensible points. So, what exactly are the pitfalls when applying for a mortgage that you need to work out?

1. Study the amount of all fees and how they are paid.
2. Familiarize yourself with the list of pen alties, their size and the reasons for their imputation. The contract should not contain a pen alty for early repayment of the mortgage.
3. Study the payment schedule: contribution amounts and due dates.
4. It is important to read the list of situations that involve an increase in the interest rate on a mortgage. Discuss with the bank manager any unclear language such as "increasing the interest rate as a result of a change in market conditions."
5. Find out how much insurance is needed and whether it is possible withoutget by with it. The bank does not have the right to force to insure a loan or the life of a borrower with a mortgage, but has the right to raise the interest rate in case of refusal of insurance by 1-1.5%.

The 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 the mortgage and the risks. In case of disputes, it is necessary to resolve them before signing the contract. The client can request that a clause on the right to refinance the mortgage be included in the agreement, which will greatly facilitate possible force majeure circumstances in the future.

Subtleties of concluding a mortgage agreement

When studying the pitfalls of a mortgage, 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 fully dispose of it until the end of the contract. Also, the borrower cannot:

• Rent out mortgaged property for rent without prior approval from the bank. Typically, credit institutions are reluctant to allow such transactions with real estate as collateral, since the condition of the object may deteriorate, which will lead to a decrease in its market price if it is necessary to sell it. However, the lender does not have the right to prevent the collateral from being leased for a period not exceeding one year.
• Perform renovation work, including illegal redevelopment of the apartment. To carry out the necessary repair and construction changesyou will need to prepare a project, then get permission from the housing inspectorate, and then notify the lender.
• During the entire duration of the mortgage agreement, it is prohibited by law to re-register mortgaged property into non-residential premises.
• It is impossible to make exchange or donation transactions with collateralized real estate, as well as to sell without the permission of the creditor. The sale will be possible only if the borrower is indebted to the creditor bank and the proceeds from the sale will be used to pay off the debt and close obligations to the bank.

Pitfalls of mortgages in Sberbank

Sberbank has a standard mortgage loan agreement, its sample can be found on the website for preliminary review.

The main pitfalls when concluding a mortgage agreement with Sberbank are additional costs for an appraiser of collateral, for renting a bank cell, for the services of a re altor or a lawyer, paying for insurance and, of course, paying a state fee.

The terms of the mortgage agreement stipulate the possibility of self-selection by the borrower of the appraiser, but he must meet the requirements of Sberbank. Therefore, it is not worth taking risks and evaluating collateral property in advance, Sberbank may refuse the submitted documents on the assessment, explaining the refusal as non-compliance with the established rules of the process, and the money will be wasted.

Fine for delays in Sberbank

The most unpleasant part of the pitfalls of a mortgage in Sberbank for discussion is pen alties and fines. But it is important to understand the following points of the contract.

Item regarding late fees. The amount of the pen alty directly depends on the refinancing rate of the Central Bank on 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 pen alties for late payments.

Conditions for termination of the mortgage agreement. Sberbank has the right to cancel the contract in some illegal situations, for example, in case of systematic delays, when the collateral is used for other purposes, in cases where the creditor bank refuses to check the condition of the property, and also when terminating the insurance policy contract.

During the term of the mortgage loan agreement, the borrower does not have the right to sell mortgaged housing, register other persons in it, rent it out, redevelop it without the approval of the lender.

Mortgage in "VTB": pitfalls

From 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 for property rights (title), he alth, life only with your partner VTB Insurance. If you refuse insurance, the mortgage loan rate will definitely 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 the bank to give small loans for long periods.

Whenin the event of delays, the bank does not take the initiative to restructure the debt or arrange a credit holiday. 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 with late payments, the borrower himself submits an application to the bank.

Bank "VTB" is a reliable efficient credit institution and therefore requires a clear fulfillment of obligations under the contract. Therefore, in case of doubts about the financial strength of your budget, it is better to postpone the decision to take out a mortgage for a while.

Advice and advice from lawyers

Practicing lawyers recommend avoiding mortgage pitfalls before concluding a loan agreement.

• Calculate mortgage payments in such a way that they do not exceed 30% of family income.
• Take out 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 when the exchange rate fluctuates, you will have to overpay many times over 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 a 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, preferential terms.
• No need to take out a mortgage immediately on a large living space. It is recommended to gradually improve your living conditions. For example, after odnushki you should not aim at three- or four-room apartments.apartments. First, buy a two-room apartment, and after paying the entire amount, you can already think about a more comfortable three-room apartment.
• Carefully study the contract, paying attention to additional commissions and expenses when applying for a mortgage. They are the pitfalls of the mortgage agreement.
• The longer the term of the mortgage, the higher the rate. It is advisable to take out a mortgage for a shorter period. After all, the longer the mortgage term, the greater the total overpayment.
• Choose a fixed rate, preferring it to a floating one, which, in fact, is more profitable, but not in conditions of high market volatility, which can drive the borrower into huge debts. A fixed rate does not allow you to save, but it also does not allow you to lose.
• Contact only independent appraisers when choosing a mortgage object, as re altors always embellish the condition of the property in order to sell more profitably.
• It is advisable to create a financial reserve in advance before signing the contract. This is the so-called financial airbag, consisting of 3 monthly mortgage payments to feel confident during the entire period of the contract.

Resale mortgage

Mortgage on the secondary market is easier to arrange due to the fact that the house has been commissioned and there are no construction risks.

When buying a secondary property in a mortgage, the pitfalls must be checked: who is the owner and who is registered in the selected housing. A situation may arise when one of the owners of parts of the living space does notagree to sell.

Next, it is imperative to check whether all existing redevelopment in the apartment is legal, whether there are debts on bills and make sure that the apartment is not already a pledge in another credit institution.

Check the state of communications, whether repairs were carried out and at what level, make sure windows, ceilings and other elements of housing are in good condition.

Mortgage refinancing

Refinancing is the 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.

Please note that during the period of transfer of collateral from bank to bank, the interest rate will be slightly higher, since the new bank will temporarily lack collateral, and this is a big risk.

When refinancing, there will be mandatory costs for valuation of collateral, notary, etc.