Mortgage for the construction of a private house. How to get a mortgage: step by step instructions

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

Such a banking concept as a mortgage has firmly entered our lives. Today, the vast majority of young families are unable to purchase their own housing without borrowed funds. Meanwhile, some do not want to buy a cramped box in the gray walls of the city. Building your own home is a more attractive option. But a mortgage for the construction of a private house is an incomprehensible phenomenon that raises a lot of questions. Let's try to understand them.

Build a house or buy ready-made reinforced concrete meters in the city?

Changing urban housing to your own house in the suburbs is a great way to save on the notorious squares and get rid of annoying neighbors with a drill behind the wall. And this is not all the advantages of a private house. Consider them in order:

• It's no secret how things are with the environment in the city. It is doubly insulting to use mortgage lending to buy an apartment in order to later pay for daily poisoning.air and endless tobacco smoke from the stairwell. Fresh air outside the city is a major plus for those who care about the he alth of the growing generation.
• Before entering the housing market, an apartment passes a mark-up from 2-3 intermediaries. This makes the cost prohibitive. The price for a square of a country house is 2 times lower, even if you take a mortgage for construction.
• When planning a home, there is room for imagination. In addition to the dwelling itself, you can build a gazebo, organize a pond or pool. In the apartment - just experiment with repairs and interiors.

What to do if you don't have enough own funds?

If a young family plans to move from urban concrete square meters to their own home, they must be prepared for substantial expenses. Construction is not cheap. And not every average family in our country can afford such pleasure. How can I find money for my own house?

There are several ways:

• get a mortgage to build a private house;
• get a general purpose loan secured by existing real estate and use the money for construction;
• get a consumer loan.

Let's consider the first method in more detail. What are the nuances and difficulties of a mortgage for construction? What conditions do lenders set for borrowers?

Bank claims

Mortgage for the construction of a private house is a risky event for a bank. In case the objectwill be unfinished, it will hardly be considered liquid. In an unfortunate set of circumstances, if suddenly the borrower fails to repay the loan in full and the sale of the collateral is required to pay off debts, the bank will not be able to sell the site with the construction begun.

Therefore, credit institutions are distrustful of such a mortgage. They issue it only on special conditions and with additional security in the form of a pledge and / or surety. Banks also set quite stringent requirements for future borrowers. Also for collateral. Basically, most of them have similar prescriptions. There are only some fluctuations in one direction or another regarding the age restrictions or other characteristics of the client. What parameters matter for banks? Here are a few of these factors:

• For the borrower and his guarantors - age, type of employment and length of service, citizenship and place of registration.
• For the subject of pledge - value, type of use, physical characteristics, legal purity, absence of encumbrances and other restrictions on full use for its intended purpose.

Also, the bank will require documentation of the availability of a down payment and a report on the intended use of funds provided on credit.

Loan amount and term

Each credit institution has limits on the amount of the loan. It depends not only on the total income of the borrower and his family members, but also on the value of the collateral. Typically, the bank financesconstruction costs in the amount of 20-85% of the total. A mortgage for the construction of a private house is issued for a period of 5 to 30 years. Some banks may offer a longer term. Then the borrower can get a very comfortable monthly payment. True, it is worth considering that the amount of overpayment will eventually increase decently.

Interest rate

It is difficult to determine the size of the interest rate in advance, even if we are talking about a particular bank. This value depends on a number of conditions - the term, the size of the down payment. Some credit organizations are ready to make a discount to a client who was once a borrower or is currently a borrower. Of course, if we are talking about a conscientious person who does not allow delays.

Reducing the interest rate can be expected by those who receive wages on the card of the selected bank, as well as public sector employees. After the construction is completed, when the house is put into operation and becomes a pledge, the lender will also be ready to reduce the rate. Why do banks make such concessions? The thing is that compliance with the above conditions indicates the reliability of the client and reduces the risks of the bank.

To get an approximate calculation, you need to go to the website of a credit institution. And in the "Mortgage" section, select the desired lending program, try out the so-called construction mortgage calculator. He will tell you the approximate interest rate, the amount of the monthly payment and overpayment.

Required documents

Don't be surprised by the immodest packagedocuments, much more than a regular consumer loan requires. A mortgage involves the issuance of a large amount by the bank for a long period. And this is always a greater risk for a financial institution. Even more risky is the very purpose of such a mortgage - construction. Indeed, in case of unfinished business, the bank may be left with nothing. Therefore, it is worth gathering your will into a fist, getting all the papers and certificates in order to get what you want.

First of all, you will need the following documents:

• Papers relating to the borrower and his guarantors/co-borrowers - proof of identity, income, documents on education and social status. The task of the bank is to determine the solvency and responsibility of the client, so the specialist has the right to request a lot of additional information.
• Documents on bail. Often, most of the securities from the pledge list are not in the hands of clients, and collecting them quickly is not an easy task. Instead of knocking on the thresholds of Rosreestr and BTI, many turn to specialists for help.
• Account statements, other documents confirming the availability of a down payment.
• House project, sketches, copy of the contract with the construction company, construction estimate.

Loan terms

Before the events of 2014, such a program as a mortgage for the construction of a private house was more common in the country's credit institutions. Today it is offered by a relatively small number of banks. Therefore, consider the terms of lending on the example of Sberbank. He is todayis much more likely to be associated with these deals:

• Loan currency - only Russian rubles.
• Loan amount - from 300 thousand rubles, but not more than 75% of the value of the collateral.
• Down payment - from 25%.
• Credit term - up to 30 years.
• Interest rate - from 13, 25%.

How will the whole process look like in reality?

Often borrowers, when planning to receive funds for construction on credit, have a poor idea of the whole process. Many count on filing an application if they have two documents. In this case, the bank will additionally ask only for a certificate of the right to use the site. And within a few hours or days, the borrower will receive the money.

Unfortunately, it's not that simple. Mortgage lending, whatever its purpose, requires careful verification of the borrower and the collateral. The bank needs to minimize possible risks both for the client and for the organization itself. In addition, the intended use of funds requires reporting, and the amount itself is rarely provided in the form of cash.

How does such a credit process as a mortgage to build a house look like in reality? Sberbank, for example, can offer the following scheme of cooperation between a client and a bank:

• The borrower provides his documents and papers of guarantors. At this stage, the bank decides on the possibility of cooperation with the client.
• Collection of documents on the land plot. The collected certificates are transferred to the bank for legal monitoring. In addition, the compliance of the site with the requirements of the bank in terms of physical characteristics is checked.
• The pledge is being appraised by bank-accredited appraisal companies.
• The client is ordering a house project, concluding a construction contract. The bank will also need a cost estimate to determine the required loan amount. The borrower will have to obtain these documents from the construction company of their choice, and then transfer them to the specialists of the financial institution.
• If all the previous stages were completed successfully, the parties proceed to the conclusion of the loan agreement.
• A construction loan involves the imposition of an encumbrance on the land, so you will have to spend some time on paperwork in Rosreestr. On the day a new certificate is received, the bank transfers the first part of the funds for construction.
• The borrower provides a report on the intended use of the first part of the loan.
• The bank issues the second part of the amount.
• The borrower completes construction and formalizes the house as a finished property. After that, the land with real estate becomes a pledge. The interest rate on the loan then goes down.

How can you make things easier for yourself?

For a more comfortable payment, some banks provide for a procedure such as deferring the payment of the principal debt. The borrower for a long period, up to 3 years, has the opportunity to pay only the interest accrued on the loan amount. This is very convenient, given the possible additional costs during construction,which can hit the budget hard. In addition, maternity capital can be used to pay part of the principal debt. You should inquire about this possibility in advance before applying for a loan. If a mortgage for construction in some banks requires a down payment, a certificate is also used for this.

Non-purpose loan secured by existing real estate

This type of lending is also a mortgage, with all the ensuing consequences. Indeed, a real estate object is accepted as collateral, which means that the bank must take care of the possibility of realizing the object in case of non-payment of the loan.

The advantages of such lending include the absence of the need for a report on the intended use - the borrower has the right to dispose of the funds at his discretion. In addition, like any mortgage, this one is provided for a fairly long period.

Of the minuses - all the same piles of documents during registration and the duration of the process of considering the application and issuing money. In addition, in case of inappropriate use, the rate increases slightly. In general, lenders are ready to provide no more than 50% of the value of the collateral for inappropriate use.

Is it possible to solve the issue through consumer lending?

Given the terms of the home mortgage mortgage described above, a regular consumer loan may seem like an easier way to get the money you need. First, the bank will not track the intended use of funds. Secondly, the borroweryou will need to collect an impressive package of certificates and go through other procedures. He will be able to receive the money on the day of applying for 2-3 documents. But this method also has its drawbacks:

• The amount of ordinary loans rarely exceeds 1.5 million rubles.
• Consumer credit is provided for a short period, up to 5 years maximum. A large loan amount means prohibitively large payments that are not available to everyone. Yes, and they will become a heavy burden during the difficult period of construction.
• Banks usually set a high interest rate on a regular loan. Mortgages have come a long way in this regard. Instead of the usual 22-24%, there is a chance to get only 15% per annum.

Consumer lending seems to be a convenient, but not the most profitable way to get the missing funds for construction. This option is suitable for those who plan to build a house in stages or already have some of the necessary building materials. In conclusion, we can add that the conditions of banks can change quite often. Therefore, before choosing any credit institution, you should personally consult each one. A construction loan is a complex and long process, but the goal justifies the work and the expectation.