How to renew your mortgage

Is it possible to transfer a mortgage to another person?

The relationship between the lender and the borrower is regulated by Federal Law No. 102 “On Mortgages”, according to which a change of borrower is allowed only with the consent of the bank.

The procedure for reissuing a mortgage will not bring any benefit to the lender, however, the bank can accommodate the client halfway to get their funds back.

Re-issuance of a mortgage loan is a complex procedure, which is carried out only after obtaining the consent of the credit institution.

It is worth remembering that the bank will agree to reissue a mortgage to another person only if it is absolutely confident in the solvency of the new borrower.

At the same time, a credit institution will never give its consent to reissue a mortgage unless the borrower has a good reason for doing so. What reasons can be considered serious?

The most common reasons are:

• Loss of the borrower's ability to work and, as a consequence, solvency.
• The presence of severe or incurable diseases.
• Moving to another area.
• Divorce of spouses.

The above reasons entail the need to reissue the loan, but this can only be done in certain ways, such as:

• re-issuance of a loan to another citizen of the Russian Federation within the same bank;
• refinancing a mortgage with another bank (refinancing);
• re-registration of a mortgage loan for another residential area.

There are currently no other types of mortgage re-registration . Banks can agree to this procedure only in the above cases and for the reasons stated above.

The person to whom the mortgage will be reissued must meet all the bank’s requirements regarding reliability, financial reputation and the availability of the necessary documents. Only after successfully passing all checks will the bank agree to change the borrower and reissue the mortgage loan.

Other possible options

As already mentioned, a more common way out of a situation that requires transfer of debt to the buyer of residential real estate is to look for opportunities to pay off the original borrower with the bank. We are talking about mortgage refinancing, the essence of which is that another banking organization (or even the same bank acting as the mortgage holder) issues finance to pay off the mortgage debt with the execution of the corresponding loan agreement.

Having received a consumer loan, the mortgagor of the home can pay off the debt, and the buyer, if necessary, can already take out a mortgage to purchase residential real estate from which the encumbrance has been removed.

If refinancing for some reason causes difficulties, you can use the option in which a third party, for example, a relative of the borrower, takes on a new loan obligation in order to use the funds received to pay off the corresponding mortgage debt.

Theoretically, even a potential buyer could become a third party, who will transfer funds to the home seller (the bank's debtor) for the latter to repay the mortgage debt and remove the encumbrance. After this, the seller can sell the apartment free of encumbrances. However, of course, this option is associated with certain risks and time expenditure for the potential home buyer, so convincing him to act in this way will not be easy.

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Is it possible to re-issue a mortgage at Sberbank to another person?

Only large credit organizations, including Sberbank, are involved in re-issuing mortgages.

If the borrower indicated a decrease in his solvency as the reason, then Sberbank will offer mortgage restructuring for a period of up to 10 years at the interest rate in effect at the time of application (for more details on the conditions for restructuring a mortgage at Sberbank, see here).

The absence of an account with Sberbank will increase the rate by 0.5%. In this case, the borrower will have to document his insolvency.

You can re-issue a mortgage at Sberbank if:

• replacement of collateral;
• withdrawal of one of the parties to the agreement;
• extension of the contract term;
• transfer of debt repayment obligations.

A mortgage taken out from Sberbank will be more likely to be reissued if the applicant plans to combine mortgage and other loans.

In this case, the bank will raise the rate by 1% if the client:

• refuses to insure his life, health, and ability to work;
• cannot provide the bank with loan documents;
• The loan registration process is underway.

Sberbank may also offer the client to re-register the agreement with another, solvent borrower. An alternative re-registration option may be to replace the collateral object (for example, to another apartment). But this option is quite rare in practice.

Mortgage renewal process.

• Submitting an application for a transaction indicating the reasons and attaching documentary evidence.
• Obtaining written consent from the bank for the transaction.
• Submission of a package of documents (both from the current and future borrower): passport, work book, income certificates, questionnaires, applications for the transfer of obligations.
• If the answer is positive, the contract is concluded for the remaining amount of the debt. All issues related to money already paid are resolved without the participation of the bank.
• The registration procedure will take from a couple of days to a month. Before the new client takes over, all obligations are still on the old borrower. If they are not fulfilled, the bank may refuse the transaction.

It is worth noting that this process has not yet been fully debugged by banks, so it has a number of subtleties. This is due to the situation why the client decided to renew the mortgage. It’s not worth taking risks alone here, and it’s better to contact an experienced lawyer who will tell you about all the intricacies of the deal.

From a mortgage. There are features of changing the composition of participants in the transaction. Banks are not always loyal to such changes, so citizens are forced to use maximum arguments in such situations.

How to transfer a mortgage to another person?

Re-registration of a mortgage to another person is possible if:

• the new borrower will be solvent;
• one of the co-borrowers withdraws from the agreement;
• The bank was provided with additional collateral.

Each bank independently determines the conditions for re-issuing a mortgage loan. The general scheme of the re-registration procedure will be something like this:

1. The client contacts the bank with a corresponding application, in which he must indicate a good reason for the need for re-registration.
2. Finds a buyer for a mortgaged apartment (except for those cases when the mortgage is reissued to another family member).
3. Collects the necessary package of documents for the buyer. It is worth remembering that the new borrower must have a clean credit history and a stable official income.
4. Submits a package of documents for consideration, attaching to it an application with a request to re-register the mortgage to another person.
5. The bank reviews the application and makes a decision on it.
6. If the candidacy of the new borrower is approved by the bank, then a loan agreement is concluded for the portion of the debt remaining to be paid.

A borrower transferring a mortgage to another person should remember that throughout the entire re-registration process until the bank enters into a loan agreement with the new borrower, the mortgage is still on him and he will have to make payments on time according to the schedule.

Mortgage renewal algorithm

Details may vary, but in general the scheme is as follows:

1. The borrower and his “successor” contact the bank to obtain permission to carry out the operation and to clarify the list of required documents.
2. The new consumer collects documents, fills out an application and waits for a positive decision.
3. The previous borrower must continue to make payments during this time. If there is a delay, he will have to liquidate it first, otherwise re-registration will become impossible. The entire procedure rarely takes less than a month, so you will have to make at least one payment.
4. If the new payer is approved, you can proceed directly to re-registration of the mortgage. Read about how a buyer can increase their chances of getting a loan.
5. At the appointed time, the previous and new payers approach the bank. The former payer fills out an application for early repayment of the loan using funds provided to him by the new owner of the property. He, in turn, submits an application for a mortgage loan for the remaining amount of the debt. We talk about early repayment of a housing loan

The mortgage agreement is concluded for a long time. During this period, many things can happen in the borrower’s life that will make it necessary to get rid of the mortgage. Most often in mortgage practice there are cases of selling a mortgaged apartment. This mechanism is fine-tuned to the smallest detail, so neither the buyer nor the seller has any questions.

True, the transaction must obtain the consent of the bank, and it is given only if there is a justifiable reason on the part of the borrower. In addition to selling a mortgaged apartment, there is also the opportunity to re-register the mortgage to another person. This practice is quite rare. Banks are reluctant to use it, although they have a similar opportunity in their arsenal. The fact is that the creditor does not gain anything from such a transaction, although the effort and resources required to carry out the operation will be large. Let's consider what it is to re-register a mortgage to another person, in what cases is such a procedure allowed?

Features of re-registration of a mortgage in case of divorce with children

When re-issuing a mortgage loan to himself or to his wife during a divorce, in addition to the above-mentioned Federal Law, the borrower must also refer to the Family Code (Articles 33-39, 45, 60), according to which not only the interests of the spouses are protected, but also the interests of minor children.

Since the spouses bear joint responsibility for the children, the bank will force them to repay the loan jointly after the divorce. The division of mortgage debt occurs differently in each case, since everyone has different incomes and circumstances.

The following options are possible:

• Making changes to the mortgage agreement and dividing responsibility for repaying the debt into established parts with the consent of the spouses.
• Division of debt and apartment according to a marriage contract or court decision.

The mortgage can be reissued only to one of the spouses if the bank is satisfied of his/her financial solvency, reliability, and good credit history.

If a husband or wife refuses to contribute money to pay off the mortgage, then after the divorce the debt passes to the shoulders of the second co-borrower . If he disagrees, the apartment will be put up for sale by the bank.

If a child is registered in the apartment, he must be discharged . In this case, the court may give the parents a deferment to find new housing.

If the child is not deregistered in time, the guardianship authorities will raise the issue of depriving them of parental rights on the basis that the parents are unable to provide normal living conditions for the children.

List of documents for re-registration of a mortgage

The list of documentation for re-registration of a mortgage includes:

• Russian passport;
• documents confirming employment;
• certificate of earnings;
• application form.

Additionally, the creditor bank may request:

• SNILS;
• TIN;
• documents on marital status;
• military ID;
• international passport;
• information about the property owned by the applicant.

Only a Russian passport and a signed application will be required from the previous borrower.

Possible reasons for refusal to re-register

Banks usually refuse to re-register a client for the following reasons:

• the borrower has made several short delays (up to 3 days) or one long one (20-30 days);
• the client has no insurance or insufficient solvency;
• due to bad credit history or insufficient solvency;
• if the borrower is under 21 years old or over 60 years old;
• if the reasons for re-registration are unfounded.

Transferring a mortgage to another person is quite troublesome . The most important thing that is needed is the consent of the creditor bank.

If all requirements for borrowers are met and this procedure is justified, large banks, such as Sberbank, can transfer the mortgage to another person.

Conclusion

We answered the question of how to transfer a mortgage to another person. To do this, you need to contact the lender directly, since he is an interested party in this matter. It is he who makes the final decision on re-issuing the loan agreement. If the bank did not cooperate and refused to reissue the mortgage, you can use other options, for example, refinancing the loan. But this opportunity is only available if the person to whom the loan is transferred is a co-borrower on the existing mortgage and a direct participant in its payment.