Mortgage: maximum maturity

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

Mortgage for many citizens of our country is the only option for acquiring their living space. It is considered a long-term banking product, which is associated with many risks. Usually a mortgage is issued for 10-15 years. The maximum repayment period varies from bank to bank. It is necessary to choose the appropriate period in order to fully pay the mortgage without delinquency.

Concept

What is the term of a mortgage? This is an approved time period during which the client must pay the cost of housing with interest. This information is specified in the loan agreement. The client can independently choose the period during which the mortgage will be issued. The maximum repayment term is usually quite long.

According to banking rules, the shorter the term, the less the overpayment. Short-term payments are quite large, which creates the risk of non-payment if the borrower has financial difficulties. Even with a stable income, you should make sure that you take a loan for a long period. If you have enough funds, you can pay the mortgageahead of schedule, saving on interest.

What do banks offer?

If you need to apply for housing loans, you should know how much Russian banks provide loans. What is the maximum mortgage term in Sberbank? It is equal to 30 years. And it is installed in almost all programs. If you choose the maximum mortgage term in Sberbank, as well as pay without early repayment, then the overpayment will be large. Therefore, you should think carefully before applying.

In other banks, the maximum mortgage term is also set. VTB 24 offers to issue housing loans up to 50 years. Not every credit institution offers such conditions. The programs are designed for young professionals and young parents aged 25-35, as they help to get the amount to buy real estate at a favorable rate.

What is the maximum mortgage term in other banks? Other institutions offer to issue a loan up to 30-35 years. Mortgages are also issued at Raiffeisenbank and Promsvyazbank. The maximum repayment term there is 25 years. In Rosselkhozbank and Gazprombank it is 30 years.

Bets

Depending on the term, the rate may change. In Russian banks, it ranges from 11 to 16%. Its size will be higher if there is no down payment. There are also programs for real estate, for which you need to provide a minimum of documents. Then the rate can be from 18%. With participation in government programs, it will be possible to get a mortgage at a low interest rate -8-14%.

Requirements

To apply for a mortgage, you must meet certain requirements:

• age 21+;
• citizenship of the Russian Federation;
• official income;
• registration before retirement age;
• last installment payment period no later than 75 years.

Requirements may vary by bank. Sometimes you need to confirm the experience of 6 months at the last job. If the client has real estate, this will help to arrange a mortgage. The property is used as collateral.

An important requirement of banks is a positive credit history. If loans were previously issued, but not paid within the specified period, then there may be a refusal. The absence of such a history can also cause the application to be rejected. It is often necessary to have a guarantor so that in case of non-payment, obligations are transferred to him.

Whatever term is chosen, many programs require a down payment. It can be in the range of 10-25% of the property price. Often you need to have a certain level of income, for example, from 25 thousand rubles. The higher the salary level, the higher the chances of obtaining a mortgage and the larger the amount issued. Other types of income are also taken into account: from business, part-time jobs, renting out real estate.

Minimum term

Mortgage loans are issued for a period of 1 year. In practice, the annual loan is almost never used. Reasons include:

• large payments;
• high stakes;
• provisionmoney back guarantee.

If you have a steady and large income, you can take a consumer loan to get the missing amount. The disadvantage of a short-term contract is the difficulty of regulating the schedule and using early payment. The borrower has to pay large amounts every month.

Customers to consider:

• revenue risk;
• probability of job loss;
• additional costs;
• lack of revenue growth;
• inflation.

Under these circumstances it is difficult to make payments. Therefore, this should be taken into account when drawing up a contract. Violation of the payment schedule will affect the credit history, which is why it is unlikely that applications will be approved in the future. To reduce the risk, banks offer insurance.

Which term to choose?

This question interests many borrowers. The average period is 10-15 years. As can be seen from the statistics, this is enough to pay off the loan. Compared to Western and American clients who pay mortgages for a long time, Russians prefer to get rid of debt faster. The reasons are overpayments - in the USA the rate is 1-2%, and in Russia the figure is 12-15%, so large overpayments are obtained over 30 years. This is different in different countries mortgage.

Maximum repayment period allows the borrower to choose the desired period. Here are some tips to keep in mind:

• The risk of short-term delinquency is high iffinancial situation will worsen;
• choosing a long period, the loan can be paid ahead of schedule in partial installments, reducing the final overpayment;
• early payment is now carried out in most banks without fines and commissions.

Overpayment at different times

It turns out that the maximum mortgage term in Russia in each bank is different. If you choose a longer period, then the overpayment will be greater. For example, if you get a loan for 1 million rubles for 5 years at 13%, then the overpayment will be 360,000 rubles.

When the contract is drawn up for 15 years, the overpayment will be 1.3 million rubles, and the rate is 13.5%. As a result, it is better to get a mortgage for a shorter period. In this case, you must take into account your financial situation before a mortgage is issued. You can choose the maximum repayment term, but you should try to pay early.

Early payment

It is better to pay ahead of schedule at the beginning of the term, when interest is calculated. In this case, you need to reduce the amount of the principal debt, since interest is charged on the balance. In the second half of the repayment, early payment will not be so noticeable.

If it is known that there will be early repayment, for example, after receiving maternity capital or obtaining a subsidy for a young family, then it is advisable to apply for a mortgage for a short period. The payment term must be assigned based on the actual financial situation.

Change in payment schedule

Most of the interest is charged at the beginning of registration, and then the principal is paid. Russian banks usually issue annuity payments. The interest is paid first, and then the debt. If early repayment is made, the amount of the debt changes. With partial payment, the payment schedule changes.

Usually offered to customers:

• decrease the term of the loan, but the payment remains the same;
• reduce the payment, leaving the number of months.

In case of early payment, what is more profitable - reducing the term or the amount? In the first case, the monthly load does not decrease, and the interest will be less due to the short period. The second option involves reducing monthly payments.

When is it beneficial to reduce the term?

Due to early payment of 50-100 thousand rubles, the term is reduced by several months. If you calculate everything on a loan calculator, then with a single early repayment, it is beneficial to reduce the term. Since the payment amount will be the same, the overpayment will be less.

Specialists advise to apply for a mortgage for a maximum period, and if possible, make payments ahead of schedule. This will allow you to save housing, even if you overpay a little. Determine how best to pay a mortgage, ahead of schedule or not, should be based on your situation. It is necessary to take into account inflation, how money depreciates. With a high rate, it is recommended not to pay the loan ahead of schedule, but to purchase goods.

When is the best time to pay early?

If the mortgage is issued for a long period, it is better to choose earlyrepayment in the first year. This will save you a lot. If there is no extra money for payments, then you should pay off the mortgage in the way that the situation and the agreement with the bank allow. For example, Sberbank establishes that early payment is possible 3 months after the first payment, since it does not benefit from quick repayment. Other banks may have their own requirements. But the sooner you pay off your debt, the more you can save on interest.