Is it possible to get a mortgage in Russia without a down payment

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

Mortgages in Russia are associated with lifelong bondage, the reason for which are high housing prices compared to average incomes and high interest rates (from 10% and above). As a result, the payment schedule for the average family stretches almost to the point of retirement. The average term of mortgage loans is 17 years. During this time, the borrower overpays two to three times the cost of the apartment.

Despite their "predatory" rates, mortgages in our country are in demand and justified. In the rent vs. mortgage dilemma, a mortgage looks better because the monthly payments go toward buying your own home rather than disappearing into fixed costs.

Often, the borrower has difficulties with the down payment, but rather with its absence. What to do if you have not yet accumulated the first installment on a mortgage, but you no longer want to rent a house? And how to save up if renting an apartment "eats" an impressive part of income!? Taking out a mortgage with no down payment often seems like the only housing solution for many borrowers, butis it real? What are the features and pitfalls of such a loan?

An important point - to take a mortgage without a down 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, credit institutions are not ready and will not work under such conditions.

A zero down payment mortgage is only suitable for those who have a stable and high salary, as monthly payments will be large. Age also matters: it is necessary that the loan be closed before the retirement age of the borrower and his 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 a mortgage with an advance.

Also keep in mind that when applying for a housing mortgage, you will need the services of an appraiser and insurance of the property itself.

There are two ways to get a mortgage without a down payment. The first option is to issue a consumer loan for the first installment and the mortgage itself in one bank. At the same time, income should allow repaying both loans, therefore, this option is suitable for borrowers with high solvency. According to the requirements of banks, no more than 30% of net monthly income should go to repay a mortgage loanborrower. Net income - all documented income (wages, pensions, benefits, etc.) minus liabilities (loans, alimony).

The second option is to pledge other available housing. At the same time, it should be taken into account that the bank will issue a loan in the amount of not more than 90% of the cost of the apartment, thereby reducing the risk of its losses when real estate prices fall. Some banks even offer to mortgage the apartment of close people (for example, parents) of the borrower as a down payment. This area of mortgage lending is in great demand, because parents tend to help their grown children, but the pre-retirement and retirement age does not allow them to get a long-term loan. When pledging a second apartment as a pledge, you need to understand that in the event of delays in the mortgage, you endanger your loved ones and lose your cherished square meters yourself. Therefore, it is important to assess your capabilities sensibly, to be confident in your ability to pay, in the long term to maintain and grow your income (salary).

So, young able-bodied people with high official wages, 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 the second bail.