How to buy an apartment with a mortgage? Mortgage apartment insurance

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

Some people get precious square meters as a gift, others huddle in their parents' houses for many years, while others decide to purchase their own housing. However, even having collected all the savings, it is not always possible to purchase real estate. For this reason, more and more people find no other way but to buy an apartment with a mortgage.

Pros and cons of housing on credit

Before you take out a mortgage on an apartment, you should carefully consider and weigh the possible consequences of this step. First of all, it must be borne in mind that the burden of paying a mortgage loan over 10-30 years of life will be additionally accompanied by significant interest overpayments. Monthly considerable monetary expenses will cause destabilization of the financial situation of most families. And not everyone is able to withstand such a test morally. In addition, before deciding to take such an important step, you should think about the reliability of the current workplace and career prospects.

Perhaps it is worth postponing the purchase of an apartment for a while? It is also not worth delaying with this, since housing pricesare growing at an extremely fast pace. In the case when a potential borrower lives in a rented apartment, he should also think about the rise in price and cost of rent. After all, by investing in a mortgage, he pays for his own property, and not someone else's.

Features of home loans

A person who decides to issue a mortgage agreement should think about what kind of housing he wants and can afford to have. Banks offer several options on where to buy property and how. Today you can buy an apartment in a mortgage on the primary or secondary housing market. In addition, it will be useful to familiarize yourself with the special cases of its design.

A home loan, like any other, can be characterized primarily by its maturity and interest rate. Its specific attribute is the presence of a down payment, the amount of which may vary depending on the conditions of the mortgage and the capabilities of the borrower.

To select the best conditions, you should look at the offers of all credit organizations. Those who are most interested should contact in person. By providing bank employees with data on the estimated amount of the down payment and the value of real estate, you can get a payment schedule calculated in a certain way.

About existing housing markets

The primary option involves the acquisition of real estate in new buildings. The prices for such apartments are low, but in this case, it is necessary to take into account the existing pitfalls:

• Long process of joiningown. For this reason, not every lender is ready to provide a loan for an apartment in a new building.
• New housing is in the early stages of construction, is not ready for occupancy or has not passed state registration, which means that it does not legally exist. All this may raise questions for the borrower, since the loan is secured by the purchased property.

In the case of purchasing housing on the secondary market, all the disadvantages of the first option are excluded. Banks are more supportive in such a situation, but even here there are rules: the apartment being bought cannot be located in an old or emergency building, it must have communications. The fact of renting it out should also be excluded. The purchased housing cannot act as collateral for another loan.

Solving the housing issue of servicemen

In order to provide housing for the military and their families, a federal program created by presidential decree is in force today. It functions on the basis of a specially developed savings and mortgage system, which provides for the opening and maintenance of individual savings accounts for persons serving in the army under a contract.

The funds collected in this way can only be used by the military to purchase housing. The increase in the amount on the account is based on the volume of annual contributions and the period of participation of a particular person in the program. Three years after joining it, a soldier receives the right to use his savings forbuying an apartment on a military mortgage. In this case, we are talking about a special type of loan called a targeted housing loan. There are no restrictions for military personnel when choosing housing. Further savings under the program will be used to pay off mortgage debt.

Young Families Loan Program

Another category eligible for benefits when purchasing an apartment is young families. There is also a special state program for them today. Persons who have become its participants, in addition to privileged lending conditions, receive a subsidy from the state, which becomes part of the down payment.

There are certain conditions for getting into the federal program, with the help of which an apartment can be purchased on a preferential basis with a mortgage. A young family wishing to become a member must meet the following requirements:

• So that the age of both spouses does not exceed 35 years.
• Have a properly calculated verified minimum monthly income.
• Get formal recognition of the need for better housing.
• Have savings to pay the down payment in the minimum amount - 10%.

In addition to the aforementioned federal program, young families can take advantage of targeted mortgage offers from commercial banks. They provide some benefits for these categories of citizens. This option of acquiring an apartment is also worth considering, becauseit is very difficult to get into the state program.

Mortgage secured by real estate

If the borrower already owns a home, they can use it as collateral to buy a new one. Credit institutions usually have a very positive attitude towards such proposals, since they significantly reduce their risks. Refusal should be expected only in a situation where minors are registered in the apartment, since such a situation excludes the recovery of the pledged property.

There are two possible options for how to buy an apartment on a mortgage using existing housing and thereby simplify the conditions for obtaining borrowed funds or repaying debt:

• A person who decides to apply for a loan does not have an officially certified income. In this situation, the bank can make concessions and provide money secured by the existing property.
• A person wants to improve their living conditions with the help of a mortgage. Here, banks usually offer customers a loan secured by property, which will subsequently be sold. After the sale of the old apartment, the amount of debt is reduced by its value.

Who and how can apply for a mortgage loan?

Under the law, citizens of the Russian Federation of working age from 18 to 55 years old can become the owner of an apartment on a mortgage. To do this, you need to contact the selected bank with a pre-prepared package of documents that confirm the identity of the citizen, his education, the presence of a permanent place of work, disclose his income,provide information on other available loans, as well as on the purchased property. Based on them, an application for a mortgage is drawn up.

The bank may refuse a citizen if he is not sure that he will be able to pay off his obligations. The main confirming factor here will be information about his income and work experience. In some cases, to make a positive decision, you may need the help of guarantors. After reviewing the application and the documents attached to it, the bank's experts give a final answer on the consent or refusal to provide a loan to this person.

Peculiarities of the mortgage agreement

In case of a positive outcome, a mortgage agreement is drawn up, according to which the bank provides the borrower with funds to purchase real estate secured by it. This document should cover all the nuances of the transaction, including the rights and obligations of the parties. The main attributes of a mortgage agreement for the purchase of an apartment are as follows:

• Estimated value.
• Amount of down payment.
• Location.
• Sizes.
• Basics of ownership.

A feature of the rights and obligations of the participants in the transaction is the absence of bank restrictions on the use of property. A citizen who has received a loan has the opportunity to live, repair, and inherit a property. He is not able to refuse to fulfill obligations under the contract until he covers the full cost of the apartment and the bank's expenses.

Insurancemortgage loan

Not a single banking institution will provide funds for the purchase of an apartment without proper insurance documents. First of all, such actions are aimed at minimizing its own risks. To obtain a housing loan, it may be necessary to insure an apartment on a mortgage, property rights to it, life, he alth and working capacity of the borrower. The first is mandatory in accordance with applicable law, but in the absence of the rest, the bank has the right to refuse to provide borrowed funds.

It's easy to get all these services. To do this, you need to contact any insurance company dealing with mortgage lending. Usually, the execution of the entire package of documents costs no more than 2% of the cost of the purchased housing. There are situations in which the borrower also has the right to terminate the insurance contract and return the unclaimed part of the payments under it, for example, early repayment of a loan debt or the sale of an apartment in a mortgage.

Possible insured events

Each type of insurance used when applying for a loan for an apartment has a set of certain situations, the occurrence of which entails making payments under the contract:

• Mortgage collateral property is completely or partially destroyed as a result of an accident such as a domestic explosion, fire or flood. In this case, the creditor has the right to demand repaymentdebt ahead of schedule at the expense of funds paid by the insurance company. The amount of payment under the insurance contract can also be used to restore damaged housing.
• Death of the person who issued the mortgage agreement, as well as his recognition as disabled due to the assignment of I or II disability groups. When one of these cases occurs, further repayment of the mortgage debt is carried out at the expense of the insurer. The borrower or his heirs become full owners of the property.
• Recognition of the transaction for the purchase of an apartment as invalid due to the loss of ownership of it. Here, the insurance company is obliged to compensate the victims for losses in the amount of the market value of the property.

The occurrence of insured events obliges the borrower to notify the bank and the insurance company about this.

Thus, before you buy an apartment on a mortgage, you need to explore the current state of the housing loan market: current requirements and conditions, available preferential programs, necessary documents. The use of this approach is very important, as it can help the borrower with the choice of the best home loan option and get rid of possible problems associated with its execution.