Mortgage secured by existing housing

Is it possible to take out a mortgage using an existing apartment as collateral? Which mortgage is more profitable: targeted or non-targeted? What factors influence interest rate setting?

For the bank there is no difference in the wording - the security of the purchased or existing property is provided by the client, in any case it is a mortgage. Significant differences in conditions and tariffs are offered to the borrower. Today we will talk about a mortgage with the security of the purchased property.

We’ll find out how to avoid making a down payment at the end of the article.

What is a mortgage and what is it used for?

First, you need to understand that a mortgage is any loan that is issued against the borrower’s property as collateral.

Any lender is ready to cooperate only with a client who proves his reliability and also provides guarantees that the principal debt, along with accrued interest, will be repaid on time and in full.

For classic lending (consumer borrowing), a solvency check is taken as evidence of reliability. Of course, no one is immune from force majeure situations, but, in general, if the client brought a certificate proving the high official income that he has been receiving for a long period, then it is planned that the income will be no less stable throughout the entire period of lending.

A loan worth more than several million is a more serious obligation than a simple consumer loan. One certificate of income will not “soften” the creditor; he needs to be sure that the debt will be repaid with interest. Therefore, such an obligation is issued on the security of something valuable from the client. In general, an apartment is the most valued property as collateral.

A mortgage can be targeted or non-targeted. Let's consider the basic conditions.

Targeted or non-targeted: that is the question

There is no need to explain the essence of these two concepts - based on the name, everything is already clear.
The only thing is that a target mortgage can also be secured by the borrower’s existing real estate, or the purchased property will act as collateral. Which program is right for me? First of all, it all depends on what you are going to use such a large amount of funds for and whether you or your loved ones have an apartment available for collateral.

Target classic mortgage is suitable:

• If you are a young or large family, a military man or a young specialist;
• you want to buy your own home and cannot provide cash real estate as collateral.

The collateral will be the apartment being purchased, plus the listed category is often offered preferential conditions, and young families do not need to look for money for a down payment - they can use maternity capital funds.

A mortgage secured by an existing apartment from a bank is suitable:

• If you decide to improve your living conditions, but do not want to comply with the specific goals of the bank (usually mortgages are given for specific developers);
• at the same time you own (or your loved ones own) an apartment or house;
• you are going to spend the money on other purposes: invest in a business, refinance debts, buy a car.

The profitability of a particular program depends on the borrower’s goals. Yes, perhaps a classic mortgage implies lower rates. But you will have to:

• look for money for a down payment. The amount is calculated as a percentage of the total cost of the purchased property. On average, this is 20-30%. That is, you must pay 30% of the cost of housing at the beginning;
• bank programs are “tailored” to certain developers;
• preferential terms apply to certain residential complexes, that is, the borrower’s choice in the purchased housing is limited;
• The recipient will not see the real money.

I propose to consider the terms of a mortgage with the collateral of existing property; at the same time, such a loan is an alternative to a target loan without making a down payment, as well as a consumer loan, only with more attractive conditions.

The best mortgage offers secured by real estate from Russian banks

Today, not all banks are ready to issue targeted loans secured by the real estate that was previously purchased by the borrower. When choosing a credit institution, you should first of all pay attention to large market players, who, as a rule, offer more favorable interest rates and loan terms for clients. To make the right choice, you need to calculate the amount of overpayment at the interest rate offered by the bank.

The offers of the following Russian banks are considered the most popular and profitable today:

Sberbank . This bank implements both targeted and non-targeted loan programs secured by the borrower's real estate. You can get a non-targeted loan at 15.5-16.25% for up to 20 years. The down payment will be 20% of the cost of the purchased home. In this case, the maximum loan amount will be equal to 60% of the value of the real estate, which is pledged as collateral, but cannot exceed 10 million rubles. If the client agrees to insure not only real estate, but also life and health, you can count on a reduction in the mortgage interest rate by 1 point.

VTB 24 . It specializes in issuing non-targeted loans secured by existing real estate. Interest rates on such loans are 15.5%, and the term cannot exceed 20 years. The maximum loan amount is limited to half the value of the collateral property and cannot exceed 5 million rubles. No down payment required. A mandatory requirement of VTB24 Bank is the presence of a bank representative office in the locality where the apartment or house being pledged is located. For many clients, an important advantage is the opportunity to obtain a mortgage even if the collateral is registered in the name of a close relative - husband, wife, parents. This will require their written consent certified by a notary.

Alfa Bank . Unlike VTB24, Alfabank, on the contrary, focuses on issuing targeted mortgage loans secured by the client’s existing real estate. The minimum interest rate is 12.5% ​​with a maximum loan life of 25 years. The down payment cannot be less than 30%. The amount is usually determined at 70% of the value of the collateral specified in the independent appraisal report, but cannot be less than 300 thousand rubles.

Rosselkhozbank . It actively practices issuing both targeted and non-targeted loans secured by the borrower’s real estate. If the client chooses the targeted loan option, the mortgage interest will range from 13.5% to 16%, and the maximum loan term is set at 30 years. The loan amount should be in the range of 100 thousand - 20 million rubles, and it is calculated as 70% of the appraised value of the property. If the borrower chooses a non-targeted loan, the amount that the bank is willing to issue to him is set at half the value of the collateral and cannot exceed 10 million rubles. In this case, the maximum loan repayment period is also reduced to 10 years. An important feature of the proposals from Rosselkhozbank can be considered an increase in the interest rate by 3.5 points in the event of a client’s refusal to insure not only real estate, but also life and health.

Raiffeisenbank . This credit institution also offers targeted and non-targeted loans. A targeted loan secured by an apartment or house owned by the borrower is issued at 12.5% ​​for a period of up to 25 years. The maximum loan amount is set at 85% of the cost of housing. Residents of Moscow can take out such a mortgage in the amount of 800 thousand to 26 million rubles, while for representatives of other regions the minimum amount is set at 500 thousand. The down payment on a targeted loan can be at least 15% of the value of the purchased property. Non-targeted loans are issued at 17.5% and are issued for a maximum of 15 years. The amount is defined as 60% of the market price of the property and lies in the range of 800 thousand - 9 million rubles.

What should be the collateral for a mortgage?

Compliance with the bank's established requirements is one of the most important components of obtaining a mortgage on favorable terms (and obtaining, in general).
In order for the lender to be confident that the transaction is minimally risky on its part, the apartment provided as collateral must first of all be liquid. That is, such property must have demand in the market. As many people know, the “hot” apartments on the market are one-room or two-room apartments with a standard layout. That is, overly expensive mansions with designer renovations are not welcome.

Important! The apartment must be located in a multi-storey urban residential building.

It is important to have all utilities and their functionality.

By the way! An apartment on the first or last floor may not be approved as a deposit or a smaller amount may be given for such real estate. This is due to the risk of housing flooding.

The condition of the apartment must be satisfactory, with at least minimal repairs. Besides:

• Unplanned layouts in the apartment are not welcome;
• apartments in wooden houses are not considered;
• housing must be privatized, otherwise the owner of the apartment is the state, not the borrower.

Any additional criteria should be clarified with the lender. Although we have considered, basically, all the requirements for collateral.

Relevance of the issue

The collateral status of mortgaged housing implies a limitation on the ability of the debtor (buyer) to dispose of the purchased apartment during the entire term of the loan agreement with the bank, that is, until the final repayment of all obligations under the target housing loan. In order to legally carry out any legal transaction with housing that is pledged under the terms of the current mortgage, the owner of the apartment (borrower) must obtain the consent of the lender (mortgagee).

It often happens that the borrower is unable to pay the mortgage on time, regularly allowing delays to occur when making monthly loan payments to the bank.

If the overdue debt on an outstanding mortgage accumulates, and the situation with the borrower’s solvency does not improve, the lender has the right to sell the collateral housing, having received appropriate permission through the court.

It should be noted that purchasing an apartment that is secured by an unpaid mortgage becomes a very profitable and convenient way to resolve the housing issue. Meanwhile, the procedure for the purchase and sale of housing under collateral has many nuances that a potential buyer of mortgaged real estate should be very well versed in. We are talking about the key features of such a transaction, its legal consequences, advantages, disadvantages, and risks. It should also be borne in mind that the specifics of the implementation of any transaction in relation to real estate with an encumbrance may require taking into account a variety of circumstances (for example, possible claims by the debtor for maternity capital, which was previously used to repay a housing loan). Let's take a closer look at how to buy an apartment if it is mortgaged from the seller.

Which banks give secured loans?

Almost every bank is engaged in targeted mortgage lending. The users of such services are often young and large families.

Non-target mortgages with an apartment as collateral are only gaining popularity among the population. But already at this stage, the purposeless program is in high demand among clients, because many even manage to make money from it. For this reason, similar offers are increasingly appearing on the market, and for existing ones, rates are reduced and possible credit limits are increased.

Mortgage with an apartment as security in Sberbank

A non-target offer also includes other collateral objects, but the most profitable offer, both in terms of borrowing terms and service conditions, would be an offer with an apartment as collateral. For such security they will give:

• credit money up to 60% of the collateral price;
• 60% should not be more than 10 million rubles. (this is the credit limit);
• loan cost from 12.5%;
• repayment of the debt is carried out over a period comparable to the issued loan, but will not exceed 20 years.

At the same time, it is quite possible to get a loan without proof of income, but only for those who have a salary account at the bank.

No-purpose mortgage with an apartment as collateral in VTB

The program from VTB Bank does not provide for other collateral objects. With such security they will give:

• loan funds in an amount not exceeding half the value of the collateral;
• half cannot exceed the credit limit of 15 million rubles;
• loan cost from 11.1%;
• the period for repayment of the debt cannot exceed a period of 20 years.

Without proof of income, mortgages will be issued only to salary clients, but before registration, the bank will carefully check the receipts on the card.

Mortgage from Raiffeisenbank

You can get both a designated and non-purposed apartment using the security of an apartment.

If the borrower intends to buy real estate or carry out renovation work, you can inquire about the terms of the target program. But you need to understand that the bank will necessarily require confirmation of the use of loan funds.

In this sense, a goalless program is better, with the provision of an apartment they will offer:

• credit limit up to 9 million rubles;
• loan costs start at 11.99%;
• the established debt repayment period cannot exceed 15 years.

Proof of income is required for everyone.

Credit from Orient Express

The purposeless program is aimed at issuing a maximum limit of up to 30 million rubles. In this case, not only apartments can act as collateral.

The following will be secured against real estate:

• cost from 9.9% (the value is almost the same as discounts in supermarkets);
• the bank reports a maximum cost of 26%;
• the return period can reach 30 years.

Confirmation of income for individuals who are not participants in the program with an open salary account is mandatory.

Non-targeted loan secured by existing real estate

Banks issue loans secured by existing real estate not only for the purchase of housing. The peculiarity of a non-target mortgage is that there is no need to report to the bank for the expenditure of funds. The money can be used to build a house, make repairs, open a business, etc.

It is advisable to take a non-targeted loan secured by real estate when it is not possible to obtain a large amount of a consumer loan due to insufficient solvency. All other things being equal, the lender will give preference to secured loans, which is the pledge of real estate. At the same time, interest rates are significantly lower than for a standard loan, or the maximum loan amount exceeds the threshold for a standard consumer loan.

How to take out a mortgage with collateral: brief instructions

I will not remind you that a mortgage secured by your own apartment is an obligation that will accompany the borrower for decades, and systematic failure to fulfill the agreement may well lead to the loss of the apartment if it is impossible to reach an agreement with the lender.

Therefore, you need to take a serious approach not only to the application, but also to the choice of the loan program itself. Well, I’ll tell you right now what the instructions for applying for a mortgage with an existing property consist of.

Stage 1. Selecting a bank and program

From my experience, I will say that most of the troubles of borrowers are due to a careless attitude towards choosing a loan program. There is no need to rush only to your salary bank or choose a lender according to the principle “closer to home is better.”

Consider all possible bank lending options, be sure to calculate each of them. Inquire about non-bank lending programs from reputable lenders.

Stage 2. Submission of the application form and documentation

Often, lenders accept customer requests online. Although many even large banks do not provide such an opportunity to the borrower.

After the bank reviews the application, a decision is made on the loan. If positive, you need to visit the office with all the documentation: passport, second identity document and income certificates. For a pledge, you will need the fact of ownership and the basis for its receipt. In addition they will require:

• technical certificate;
• certificate of the number of people registered in the living space;
• status of payment of utility bills.

Stage 3. Collateral assessment

After submitting the main package of documents, a cost assessment is carried out.

It is not critical if you have ordered an expert assessment in advance. But remember: the relevance of such a document does not exceed 6 months.

The appraiser can be either a bank or a specialized company. You can’t count on the reality of the result in the case of an assessment by the bank. To please the lender, he will lower the cost as much as possible in order to increase his profit several times if something happens.

Remember! Nobody took away your right to choose an independent company.

Stage 4. Decisive

After careful consideration of the documents and the borrower, the lender sets the final conditions. Negotiates tariffs with the borrower; if the parties agree, a loan and collateral agreement is signed. The latter must be certified by the Rosreestr authorities. Without this, the transaction is not considered completed. In addition, banks issue money only after actual registration.

Stage 5. Receiving money and paying off debt

The issuance of money is carried out, as a rule, in the form of a non-cash transfer.
For this purpose, a special account is created, and most banks issue a debit card for it for the convenience of their clients. Debt payments must be made regularly and strictly in accordance with the payment schedule. Any delay or partial payment of the required payment will result in penalties and interest.

By the way! Penalties must be specified in the loan agreement. Please read carefully at the stage of signing the documents.

How to get a mortgage without a down payment: three legal ways

To get a classic mortgage secured by an apartment without having to look for money for a down payment, you need to try very hard. I offer 3 ways to do this.

Be interested in benefit programs

Unfortunately, as of the date of writing this article, the main benefit program was cancelled. Despite this, each bank aims to ease conditions for certain groups of borrowers. Such clients are offered lower rates and better service conditions. And for young families, the down payment can be covered with money from maternity capital.

Promotional programs

You should definitely take a closer look at such offers. Basically, such loans are typical for large banks, such as Sberbank, VTB or RSHB.

The essence of such a mortgage is that lenders, in cooperation with certain developers, offer low rates for apartments in the houses of their partners.

The disadvantage of such a mortgage is that there is no alternative for the borrower. He will not be able to choose a developer and a residential complex.

Help from financial brokers

These companies know their stuff and will help you choose any loan, even a secured loan without a down payment. The main thing in this matter is to find a reliable partner.

By the way! A non-targeted loan with collateral is a good alternative to a simple mortgage and does not require a down payment.

Specialized financial companies can also provide assistance in obtaining such a loan. For example, ➥ “With Collateral” is ready to lend with a maximum amount limit, while the mortgage program provides rates from 9.5% per annum. There is also a preferential program, and it provides for borrowing funds at an annual rate of 6.5%.