What is it?
A mortgage with state support is one of the types of preferential mortgage lending. It is provided to families with children, but not to all, but subject to a number of conditions. The main feature of such a housing loan is the establishment of a record low mortgage rate. For all families participating in the program, it is the same - 6% per annum.
In fact, this type of mortgage does not imply a reduction in the interest rate by the bank. It’s just that the difference between the required percentage and the established 6% is “paid” from the budget. This is precisely the essence of the benefit.
Important! Now the interest rate of 6% is not set for a limited period of time, as it was before (for 3 years for the 2nd child, for 5 years for the 3rd child, for 8 years for the 2nd and 3rd child in in general), but for the entire repayment period of the mortgage.
Who can apply?
There are certain conditions for obtaining a preferential mortgage. They relate mostly to 3 factors:
- recipient;
- housing purchased with borrowed funds;
- issued mortgage.
Compliance with these requirements together allows you to qualify for a reduced mortgage interest rate.
Borrower's portrait
This format of benefits appeared quite recently - in 2020. During this time, about 4,500 families managed to take advantage of the preference. In terms of the country, these are not such large indicators, so it was decided to simplify the conditions for participation in the program. Thus, families in which:
- the parent applying for the loan and the children taken into account in the program are Russian citizens;
- the second or subsequent children were born between 01/01/2018 and 12/31/2022.
After the changes regarding the mortgage term came into force, the number of children in the family ceased to matter. Thus, at the birth of the 2nd and 5th children, different families will receive the same preference - a reduction in the interest rate to 6% per annum for the entire term of the loan.
Banks have their own requirements for potential borrowers. They usually relate to the following factors:
- age;
- citizenship;
- experience;
- availability of work;
- income level.
It is quite logical that banks want to see reliable and solvent citizens among their borrowers. To increase the likelihood of approval, most financial institutions offer to attract co-borrowers. For this type of mortgage, they can be not only the parents of children (for example, the borrower is the father, and the co-borrower is the mother), but also other citizens. The only requirement for them is Russian citizenship.
Housing requirements
A family can become a participant in the program if it has become the owner of one of the following types of real estate through a mortgage loan:
- apartment;
- the house together with the plot on which it is located.
Additionally, conditions are imposed on the purchase and sale transaction itself. Thus, housing must be purchased on the primary market. Moreover, it is not necessary to buy an apartment under a shared participation agreement. For example, you can formalize the deal after the house has been delivered under a simple purchase and sale agreement.
Additionally, banks have their own requirements for purchased housing. As a rule, they relate to the presence of various communications, the stage of construction, and the developer.
The purchase agreement itself must be executed before the end of the program, i.e. before December 31, 2022. However, for families whose child is born after July 1, 2022, there will be a delay until March 1, 2023.
Mortgage requirements
The law does not limit which bank to apply for an interest rate reduction. Moreover, preferences can be used in relation to:
- a new housing loan (i.e. the mortgage is immediately issued at 6% per annum);
- refinanced loan.
It is noteworthy that starting from 2020, you can receive a reduced interest rate even on a refinanced mortgage, but provided that the purpose of issuing the money does not change. This is especially true for those families who have already taken out a preferential mortgage, but assigned it according to the old rules for several years. Then they can refinance the mortgage and receive a 6% rate for the entire loan period.
How to get a mortgage with government support?
When considering the positive aspects of this type of mortgage, it is worth noting that the main advantage will be the opportunity to obtain living space on preferential terms - thus, citizens or entire families are given the right to improve their living conditions. Among the negative aspects are a clear limitation on the area of the apartment, a certain area of location, the need to work in a certain place for the years specified in the conditions for providing benefits, as well as the collection of a large amount of supporting documentation. When deciding to participate in one of these government programs, you will have to do the following:
- Obtain information from government agencies about the list of social or benefit programs, as well as the conditions for participation in them.
- Choose a banking organization that provides mortgage services on preferential terms.
- Collect the documentation necessary for the banking organization, select housing that suits the conditions set forth, and fill out an application.
- Receive the bank's decision, draw up documents for living space.
It is worth understanding that at the moment, banking organizations that issue mortgages with partial subsidies from the state do not practice allocating funds without a down payment. The state is working to improve the mechanism for providing funds so that in the future it will be possible to obtain an apartment without such a transfer or with its repayment in a significantly smaller amount. When applying for a loan, you must understand that the applicant will need a list of certain documentation - passports and birth certificates of all family members, documents confirming the availability of state benefits, and the certificate itself for the allocation of funds (if it is provided in such cases). In addition, certificates from the place of work or copies of work records are provided, as well as confirmation of the level of income at the expense of which the borrower can easily repay the existing loan.
Lending terms
When applying for a mortgage, citizens first of all look at the current interest rate. If state support is used, it is set at 6% for all participants, regardless of which bank the applicants applied to. Other conditions are determined mainly from the wishes and capabilities of the client. This applies to the terms of the loan, the size of the down payment, and the amount of the monthly payment. However, the program has its own limitations regarding:
- The size of the down payment. Applicants must contribute at least 20% of the cost of housing themselves (by the way, for these needs you can use not only your own funds, but also those received under other government programs, for example, from maternity capital funds, but they have their own restrictions and will have to apply to the Pension Fund for approval);
- Maximum loan amount. Please note that we are talking specifically about the amount of borrowed funds, and not the cost of housing, i.e. an apartment or house may cost more than the established limit. Moreover, the restriction depends on the location of the residential property itself. If we are talking about an apartment or a house located in Moscow, St. Petersburg, the Moscow or Leningrad region, then the loan size should not exceed 12 million rubles. For housing loans in other regions, the limit has been reduced by 2 times, i.e., it is 6 million rubles.
When calculating the maximum loan size, the family’s own funds are not taken into account, but if we are talking about maternal capital, then it is included in the maximum allowable amount.
For example , the Bezverkhov family wants to buy an apartment in Kazan for 7.5 million rubles. How much of their own money must they contribute to participate in the program, assuming they have a maternity certificate? When calculating the loan, matkapital is included in the maximum amount, i.e. 6 million rubles. Consequently, Bezverkhov himself will have to save up: 7.5 – 6 = 1.5 million rubles.
Where to apply?
Mortgage with state support is essentially one of the mortgage lending programs of Russian banks, which involves subsidizing the rate by the state. To apply for such a loan, the applicant can contact:
- AHML "House of the Russian Federation";
- credit institution.
If you decide to contact a bank, remember that subsidies for compensation for state mortgages are not provided to all credit institutions. There is a certain list where banks and the amount of subsidies for them are indicated. Therefore, we advise you to check with your chosen bank about the availability of the appropriate program in advance. The list of credit institutions where you can get a mortgage with state support includes:
- Sberbank;
- VTB;
- Absolut Bank;
- Rosselkhozbank;
- FC "Otkritie";
- Promsvyazbank;
- Raiffeisenbank.
In total, the list currently includes 47 organizations. And the amount of subsidizing the difference between the percentages varies from 320 to 171,205 million rubles. Maximum amounts are set for such large banks as Sberbank, VTB, Gazprombank.
Read: How to write off your mortgage when you have a baby in 2020
Who is this subsidy aimed at?
A citizen of the Russian Federation in need of housing with a certain level of solvency can apply for participation in the program. The bank's requirements for the borrower are standard - he must be over 21 years old (in some cases - 18) and have Russian citizenship.
The borrower must have at least a year of work experience , and must have worked at his last place of work for at least 4-6 months. It is important for banks that the loan payment does not exceed 50% of the borrower’s income. Salary clients of banks have greater concessions.
There is also an upper age limit - at the time of making the last payment, a man must be no older than 60 years, and a woman no older than 55. It is permissible to attract co-borrowers.
You will need to bring your passport, a copy of your employment record, and a certificate of income to the bank. Further processing of the mortgage is standard and does not differ much from the usual. Read more about how to get and apply for a mortgage with government support here.
The down payment starts from 20%. If the borrower has the opportunity to deposit an amount of 40-60%, then the interest rate will be reduced.
Attention: The advantages of the program include a long loan term, which can be up to thirty years, as well as a fairly large amount - 8 million rubles for Muscovites and residents of the Moscow region, as well as St. Petersburg residents.
For other regions, the loan amount does not exceed three million.
To implement certain state support programs, housing loans are provided to certain categories on more favorable terms.
Such programs include:
- young families (you must be registered with the municipality as needing improved housing conditions and at least one family member must be under 35 years old);
- State employees - teachers, doctors and other state employees are compensated by the state for up to 30% of the cost of purchased real estate (the following conditions must be met - do not own real estate, live in a living space of less than 14 sq.m. for each family member);
- large and low-income families - subsidies of up to 35% are assigned with the approval of municipal authorities.
You can find out more about the basic requirements for providing subsidies and programs in different banks here.
