You can always find out about the conditions of a rural mortgage from the bank. But understanding how it really works, what pitfalls there are during paperwork and construction, is much more difficult.
There are two options here: talk to those who have already built or are in the process of construction, or directly ask questions to those who issue mortgages and build. I took the second path, but it was important for me to see objects at different stages of implementation.
The area around Irkutsk is currently being actively developed. Therefore, we decided to look at the facilities being built in the Irkutsk region. The route turned out to be as follows: Western - Malaya Elanka - Smolensk region - Anisimovo pole - Nikolov Posad.
Elena Kobeleva, and a contractor who specializes in individual housing construction, Alexander Voitkevich , went with me . Expert recommendations will be useful to those who are considering a rural mortgage as an option for building a house.
Why is it better to buy a plot in advance?
Alexander Voitkevich (contractor): Choosing a place of residence is quite a difficult task. Realtors interfere a lot in the market by posting fake advertisements. Therefore, it is almost impossible to find a site that meets the specifications based on an advertisement. Come, walk, see different options. The most important thing is that you like the place. When searching for a site, be sure to consider the season. It’s dangerous to buy land in winter, you don’t know what’s under the snow. Usually, when clients find a plot of land, we look at it and say whether it’s worth building on it or not, and whether the price will go up. For those who have decided on a site and are choosing a contractor, we recommend that you buy the land immediately if you have the money, because it will take some time to register it with Rosreestr.
Alexander Voitkevich
Elena Kobeleva (bank employee): You need to understand that if you take out a rural mortgage to purchase a plot with further construction, then the credit resources for building a house are reduced by the cost of the plot, and this is, on average, 400-700 thousand rubles. The maximum loan amount for a rural mortgage is three million rubles. If opportunities permit, it is better to consider the purchase of a plot as a separate investment.
Elena Kobeleva
The list of territories suitable for the Rural Mortgage program was approved by the government of the Irkutsk region in 2015. This year, it includes nine cities with a population of less than 30 thousand people: Bodaibo, Vikhorevka, Kirensk, Zheleznogorsk-Ilimsky, Alzamay, Svirsk, Baikalsk, Slyudyanka, Biryusinsk.
Mortgage for building a house
Buying a house, cottage, residential building or townhouse with a mortgage is a reasonable decision in a situation where savings are not enough to cover the entire amount, but you want to live in comfortable conditions today. Today, many banks in Moscow and the regions of Russia offer special mortgage lending programs for the purchase or construction of a house, cottage or townhouse, differing in interest rates, loan terms, down payment amounts, requirements for the borrower and other key mortgage conditions.
According to polls by sociologists, more than 60% of Russians would prefer to live in their own home. And one of the best options is a townhouse. Usually these are houses that mean a part of a whole house with its own small plot of land. They are located in a closed guarded village in an ecologically clean area.
To attract buyers, the villages offer a developed infrastructure, including clubs and sections for children, and various festive events for adults. Many developers offer profitable programs for purchasing a townhouse with a mortgage.
In short, for people who want to find a home away from the dust and bustle of the city, a townhouse or half a house with its own plot of land is just a godsend. However, the concept of “townhouse” is not spelled out in Russian legislation. This may make it difficult to obtain a mortgage for a townhouse. And many developers, in order to legalize this half of the house, call it by other words, for example, a share in a residential building or an apartment in a building with low-rise construction, or they register it as a separate section of the house with the proposed land plot.
The concept of “cottage” refers to a different type of construction and should be considered separately.
Buying a townhouse, list of documents for a mortgage application
The standard package of documents required by most banks to provide a mortgage for a townhouse is not much different from the package for a loan to purchase a finished home. Here is a list of documents relevant for a mortgage on a townhouse in 2021:
- passport of a citizen of the Russian Federation and its copy;
- a copy of the work record book or contract (for the military);
- income certificate in form 2 personal income tax;
- certificate of marital status (married or divorced);
- birth certificates of children (if any);
- for entrepreneurs and individual entrepreneurs - declaration for the last reporting period.
Some banks may ask you to provide some other documents for a mortgage on a townhouse, and then it is better to consult with specialists of a particular bank.
It is more advisable to submit an application to several banks in order to then choose a profitable lending option. It usually takes up to 7 days to review the application, then the potential buyer of the townhouse is given 30 days to select the best option, which is presented to the bank for approval.
When looking for a townhouse option, you should pay attention to such nuances as the availability of appropriate permits from the developer, whether the land attached to the townhouse will be transferred to the buyer as ownership or lease, how the house is legally registered (approval of a mortgage by the bank may depend on this), as well as the seller’s documents .
After the bank sets the transaction date, loan obligations are signed and funds are transferred to the seller’s account.
Benefits of buying a townhouse
Of course, buying your own home is a pleasant event for any person. And there are a lot of advantages in a townhouse:
- the cost per square meter in a townhouse is much less than in an apartment building or cottage. For the same money you can buy a larger property;
- Usually a townhouse has a garage or parking space, its cost is already included in the total;
- operating a townhouse costs the owner less than maintaining a cottage;
- Many townhouses have an open layout, and you can arrange everything inside as you wish;
- a protected area, the presence of children's playgrounds and leisure centers allow you not to worry about the safety of children and what to do with them;
- Some distance from the city center makes living in townhouses more measured and calm.
Disadvantages of buying a townhouse
Although at first glance the purchase of such housing brings extremely pleasant emotions, it is worth dwelling on the difficulties that owners of townhouses may encounter:
- distance from the city. For many, this is an absolute plus, but only if they have their own car. It would be useful to assess the presence of traffic jams on the road to a given area, as well as whether there are minibuses or buses within walking distance; this will be very important for people without a license or without their own vehicles;
- Does this village have its own infrastructure (pharmacies, shops, hairdressers, kindergartens, etc.). Otherwise, for any small need you will have to go to a neighboring village or learn to think through all purchases in advance and for future use;
- The plot of land attached to the townhouse is small, and it is difficult to arrange a garden or vegetable garden on it. Usually this is just a platform for a flower bed in front of the house;
- neighbours. Still, this is not a separate house that can be fenced, and you will have to put up with people living behind the wall.
Many banks offer quite favorable mortgage conditions for a townhouse. And, of course, buying such a home can be the best decision if you approach it carefully and choose the right bank to receive a loan.
Selling houses with a mortgage is not uncommon. Some banks provide the opportunity to complete an online mortgage application, which allows you to avoid unnecessary visits to the bank. The online application serves as the basis for the bank to make a preliminary decision on the possibility of issuing a mortgage for a private house, cottage, townhouse or for construction. You can submit an online application for several mortgage programs (houses with a mortgage) and to several banks at once - this will increase your chances of receiving an approval and will help in the final choice of a loan. A mortgage on a country house is a real opportunity to buy real estate today.
With Banki.ru it’s easy to get a mortgage for a house, cottage or townhouse!
What does the bank pay attention to when choosing a contractor?
Elena Kobeleva: We make sure that the construction is carried out by a qualified contractor. The bank has certain requirements when accrediting developers. The company must have at least two years of experience in constructing individual residential buildings. Revenue for the last financial year was at least three million rubles. We check that the organization is not in bankruptcy or liquidation. The municipal administration can recommend a developer to participate in the rural mortgage program. If there is such a request, we may not consider construction experience and annual revenue. The requirements for contractors are quite loyal; this is the minimum that gives us confidence and a guarantee that the company will build a house with high quality and meeting all requirements.
Is it possible to take out a loan for unfinished construction?
Is it possible to take out a mortgage on an unfinished house? Unfortunately, the choice of banks that can provide such a mortgage is small. Due to the low liquidity of the unfinished facility, the transaction is risky for the credit institution. Also, the problem is that the concept of “unfinished” can mean almost finished real estate for finishing, and buildings without communications that are unsuitable for living. The bank's decision will also depend on this.
A mortgage on an unfinished house is possible if the bank cooperates with developers and can provide benefits to buyers for their projects. There are also a number of requirements in relation to real estate - if you meet them, your chances increase significantly. It is better that the house is at least half built. There is also a great opportunity to get a loan if the buyer owns other real estate that can be used as collateral.
If you have collateral, you can use regular consumer lending. The collateral allows you to significantly increase the amounts issued and extend the loan terms.
If there is no real estate that can be used as collateral, and the object, in the bank’s opinion, is illiquid, then most likely the bank will refuse a mortgage - this is a rather specific branch of lending, and if there is no benefit, the credit institution will not formalize the transaction .
Can you build a house yourself?
Elena Kobeleva: Since the program is state-owned and the bank issues money, it is important for us that the house is completed and built. Where is the guarantee that if we give the borrower the funds, he will build it professionally himself or hire a team? Many are far from construction and argue that they will take the money, hire a couple of people and build everything for them. There are so many unfinished buildings and houses that are unfit for habitation. Therefore, the program defines requirements for the objects themselves.
Is it possible to change the contractor during the construction process if you are dissatisfied with the quality of the work?
Elena Kobeleva: There have been no such precedents in the Irkutsk region. But in other regions such questions arose because the contractors turned out to be unreliable and did poor quality construction. We have introduced an addition: you can change the contractor within six months after the loan is issued. If the customer sees that there are problems at a construction site, for example, deadlines are being violated, he has the opportunity to change the contractor. According to the program, the house must be built within two years. The bank regards failure to meet the deadline as misuse of the loan. In this case, the commercial rate of 11.5% per annum will apply (instead of 3% for rural mortgages - author's note), and the payment on the mortgage loan will increase.
Alexander Voitkevich: Two years is more than enough time to build a house. From my experience I will say that we usually build a house in 3.5-4 months, taking into account the registration of a mortgage - in six months. If after six months the construction is only at the foundation stage, then this is a serious reason to think about changing the contractor.
Conditions
- Loans for unfinished construction can be issued for a period of up to 15-30 years. Moreover, if the choice falls on an organization that cooperates with developers, during this time you will be able to save significantly.
- The size of the down payment is also higher than with standard lending. In practice, banks are unlikely to agree to issue such a loan if its value is less than 40%.
- As for the rate, usually in the case of unfinished objects it increases by 1-3% to reach 15-16% per annum. It is reduced to standard when the object enters the ready-made category. Then you can re-register the collateral: the already built house will act as such.
- The minimum amount differs depending on the lending institution. For example, in Sberbank it starts from 300,000 rubles, and in ATB – 600,000 for Moscow and the region, and 350,000 for other regions. The maximum loan amount is not limited, but usually does not exceed 70-75% of the value of the collateral property.
Important! The property that will act as collateral must be assessed to determine its market price.
What are the bank’s requirements for housing being built?
Elena Kobeleva: The state program “Integrated Development of Rural Territories” is aimed at improving the lives of people in rural areas. Rural mortgages have the same task, so there are certain requirements for objects under construction. The house must be suitable for living, with all necessary communications - electricity, sewerage, water and heating. Each municipality has established a standard area per person. In the Irkutsk region it varies from 10 to 18 square meters. If the area changes downwards, and therefore does not comply with the terms of the program, the client will be transferred to a commercial rate of 11.5%. There is also a limit on the number of floors; for individual housing under construction - three floors.
Country mortgage banking programs
It is possible to buy a house with a mortgage through financial lending from various banks, such as VTB, Sberbank or DOM.RF. For example, VTB offers a mortgage loan for an individual house under the terms of a standard program for secondary housing: an average term of 17 years; average loan size RUB 2,900,000; rate 9% (salary borrowers) and 9.5% (retail clients).
The mortgage program for the “fence” of the DOM.RF bank (house with land, secondary market) offers borrowers a rate of 11.1% with a 50% down payment. A smaller contribution (range 40-50%) is allowed at a higher rate of 12.1%. In the Moscow and Leningrad regions, DOM.RF lends a maximum of 30,000,000 rubles, in other regions - no more than 10,000,000 rubles.
Sberbank offers mortgages both for the purchase of a finished secondary cottage and for the construction of an individual house or summer cottage. Sberbank's conditions for construction loans are as follows: down payment of 25% or more; repayment period up to 30 years; loan rate from 9.7%. Temporarily, while the secondary house being financed with a land plot undergoes collateral registration, the bank will need collateral in another form (collateral for another premises, guarantee of individuals).
What material should it be built from?
Alexander Voitkevich: For rural mortgages, we work in the economy segment. If the client has a limited budget, then he has a choice of timber or frame. We clarify in advance whether the person previously lived in a log house. The timber, unlike the frame, will deform throughout your entire stay. We actively offer frame houses because it is a more modern technology. The frame is 15% more expensive than timber*. A house made of aerated concrete with an area of 100 square meters (5 million rubles) is one and a half times more expensive than a house made of timber of the same area (3.5 million rubles). A house made of brick is almost twice as expensive as one made of timber. The price of a stone building is close to the cost of an apartment in a new building. In principle, you need to understand that the construction of a one-story detached building will never be cheaper than in a multi-story complex where you share walls with neighbors.
Why do you need a house project?
Alexander Voitkevich: Sometimes clients come to us with a finished project. If it is not there, we suggest looking for an option that you like; it could just be a picture from the Internet. Based on it, we create a model with layout options, taking into account the customer’s wishes. We coordinate the project with the bank at the sketch stage. Then we make working drawings with all the structures. We have many completed projects. Often clients see a finished house with a layout and ask to build them the same. Each project is individual, in the process we change something and refine it. A person has the opportunity to shape his own living environment, the logistics of moving around the house the way he wants, the way he’s used to. The project is needed so that the customer understands what the house will look like. Otherwise, they will not build him what he expects. The contractor has no intention, it’s just that when the agreement was made, everyone had different ideas in their heads. Lack of a project leads to errors during construction. The most common is the “trampoline” on the floors. They didn’t calculate the length of the span, and when a person walks, his furniture “walks.”
What documents does the bank check?
Elena Kobeleva: Documents for a plot of land for individual housing construction - a certificate of state registration of the owner’s rights, or a lease agreement; basis of ownership, extract from the Unified State Register of Land Register for the land plot, cadastral passport of the land plot. The applicant must also submit an estimate, a housing construction permit and a contract. The bank checks the purity of the transaction. We conduct an examination to determine whether the cost of the property corresponds to what is stated in the estimate. In the event of the borrower's insolvency, the bank needs to understand whether it will then be able to sell the constructed facility. If there were no assessment, borrowers would build 40 square meters, and take out a loan in the amount of three million. After our approval, the documents are sent to the Ministry of Agriculture. There they check that the client has not previously used this program and that he does not have approval from another bank. The procedure takes no more than two days.
List of papers that will be required after the credit institution approves the loan
After the bank approves the mortgage loan, the client is required to provide another list of documents for consideration. It includes a certificate that can confirm that the borrower has sufficient funds to make the down payment under the loan agreement. This could be a statement from the bank account in which the funds are kept. Clients also provide a receipt indicating that money was borrowed from relatives or friends for these needs. If maternity capital is used for the down payment, the corresponding certificate must be provided.
How does the bank check the finished object?
Elena Kobeleva: Once the house is ready, it is registered. The bank issues a ready-made registered object as collateral. Plus, the client makes an assessment report with photographs and a list of all necessary communications. We must make sure that the built house is suitable for habitation.
If the house does not meet the bank's requirements
You have chosen a cottage and applied for a mortgage, but the bank refuses to accept this property as collateral. There is another way to get a loan in this situation - to offer the bank another collateral that is your property.
For example, more liquid real estate – your city apartment – can become collateral for a country house mortgage.
However, keep in mind that in case of financial difficulties with repaying the mortgage loan, you will have to give it back to the bank. To select the home of your dreams that is suitable for a mortgage bank as collateral, contact the realtors of our association.
