A mortgage is a long-term form of collateral in which the mortgaged real estate is provided for use by the borrower, but if the debtor fails to fulfill his loan obligations, property rights are transferred to the creditor. The creditor gets the opportunity to sell the property. Mortgage lending is a type of mortgage in which a bank acts as a lender.
Since 2005, the Russian Federation has had a savings-mortgage housing system for military personnel, or in other words, a military mortgage. In order to ensure its obligations to support military personnel and their families, the state repays in full the loan taken under the military mortgage program. Maternal (family) capital can be used as a down payment.
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Military Mortgage Refinancing
What is a military mortgage
This is a government program to provide housing for military personnel.
Thanks to it, they can buy an apartment without investing their own money: the down payment will be provided by the state, which will also make monthly loan payments. A military man is not limited in his choice of housing: he can take out a mortgage on an apartment in a new building or on the secondary housing market, or purchase a private house with a plot of land. The state allows you to choose any region to purchase real estate. For example, an officer serves in Kamchatka, but can buy an apartment in his native Serpukhov, Moscow or Sochi - closer to the sea.
An officer can take advantage of a military mortgage, even if he already has his own home: the program is designed to increase the prestige of military service.
Why does the state prohibit spending CZHZ funds on individual construction?
The law on military mortgages states that a program participant can purchase an apartment, as well as a plot of land with ready-made or partial homeownership. At the same time, independent construction is practically excluded.
Rosvoenipoteka allocates funds strictly for the property. The department does not provide for tracking the intended use of funds in the conditions of individual construction. This is caused by the following factors:
- The military department will not be able to track all payment documents that confirm the expenditure of funds specifically for construction needs. To carry out such control, it is necessary to create a separate supervisory body. However, under these conditions this is impractical.
- The duration of construction poses particular risks for both the department and the bank. The house may not be completed at all, which will entail losses from the organizations that issued the funds.
- Providing a purchased land plot as collateral is also not entirely rational. The cost of individual construction is several times higher than the cost of the land plot, so in such a situation the bank may make a negative decision on the mortgage loan.
Of course, neither the military department nor the banking organization will allow themselves to risk funds. However, there are options in which building a house using CZH is quite feasible.
How does a military mortgage work?
To take advantage of a preferential mortgage, a military man must Federal Law dated August 20, 2004 N 117-FZ “On the savings and mortgage system of housing for military personnel.” serve under a contract and be a participant in the savings and mortgage system program. The project is supervised by Rosvoenipoteka, a special unit of the Ministry of Defense. When an officer registers in the system, a personal account is opened for him. The state pays contributions there from the budget, and the military can use them.
Who can become a participant in the savings and mortgage system
To do this, you need to fall into one of the categories specified in the law:
- officers who graduated from a military school or entered service under a contract after January 1, 2005;
- warrant officers and midshipmen who served under a contract for three years;
- military personnel who went into reserve and signed a new contract.
These categories of military personnel are connected to the savings and mortgage system automatically. Other military personnel can join the program voluntarily: to do this, you need to submit a report to the unit commander about inclusion in the Register.
You can take advantage of this opportunity:
- sergeants, foremen, soldiers and sailors who have entered into a second contract for military service;
- military personnel who entered into their first contract for military service before January 1, 2005.
In addition, military mortgages can be obtained by military personnel of the Ministry of Internal Affairs and the Ministry of Emergency Situations: officers of the riot police, the National Guard, SOBR, and private security.
How much money does the state give?
After inclusion in the savings-mortgage system, the state will annually accrue a fixed contribution to the military’s personal account: in 2021 it amounts to Annual Contributions. 280 thousand rubles. The payment is indexed so that in 2021 the amount will increase in accordance with the inflation rate for 2021.
For the first three years, the money is accumulated in the military account and cannot be used. During this time, the amount of deductions will reach approximately 850 thousand rubles - enough for the down payment on the mortgage.
Maximum loan amount Mortgage calculator for calculating the maximum amount for programs with annuity payment under the program - 2 million 590 thousand rubles. If the apartment is more expensive, the military man will have to pay extra: either add his own funds to the down payment, or pay the mortgage himself after retirement.
When purchasing a home, you can use maternity capital and receive a 13% tax deduction, but only for the amount that the serviceman invested himself. The maximum deduction amount is 260 thousand rubles. You can get them if you invest 2 million of your own money in the purchase of real estate.
It is not necessary to use the money three years after opening the account: while the military man is serving, deductions will accumulate.
Tax deduction
A deduction is due if the mortgage included not only money from the Federal budget, but also the serviceman’s own savings.
For example, if he added his 250,000 rubles to the down payment, then the deduction is calculated from this amount: 13% of 250,000 rubles is 32,500 rubles. The maximum deduction amount is 260,000 rubles if the military man contributed at least 2 million rubles of his money.
If the borrower’s personal money did not participate in the mortgage at all, but only government money, then no deduction is allowed.
What conditions must a military man fulfill?
During military service, the loan is paid for by the state. But the program has an important nuance: Article 10. The emergence of the right to use savings accounted for in the participant’s personal savings account: the money used by the military personnel belongs to the country. When he takes out a mortgage, the apartment is under a double burden: from the state and from the bank. In order not to remain in debt, the military man must comply with the terms of the program:
- serve 20 years;
- serve 10 years and not terminate the contract early without good reason.
Then at the end of his service he becomes the legal owner of the apartment.
If you quit without a good reason, you will have to return all the money to the state - the down payment and mortgage payments - and repay the loan to the bank yourself.
An exception is dismissal after 10 years of service for a valid reason (reduction due to organizational and staffing measures, reaching the maximum age for service, being declared unfit or partially fit by a medical commission, transfer to a new duty station). It turns out that there are three scenarios for the development of events.
Military person served 20 years or more
In such a scenario, the officer owes nothing to the state. If during his service he took out a mortgage, the apartment becomes his property. But if the mortgage is not paid in full, after dismissal the military man makes contributions himself.
If the military man did not use a mortgage during his service, the money remains in his account. After dismissal, he can use them to buy an apartment.
The military man served 10 years or more (but less than 20) and resigned for good reason
In such a situation, the military man also does not need to return money from his personal account in the savings and mortgage system. He pays the rest of the mortgage himself.
If an officer did not participate in the military mortgage program, he can do so after dismissal.
The military man served less than 10 years or resigned without good reason without serving 20 years.
Under such conditions, the officer cannot use the money in the savings account and take out a mortgage, and if he did this during his service, all the money will have to be returned: both loan payments and the down payment.
What is the savings-mortgage system (NIS)?
The system provides military personnel with the opportunity to buy an apartment with a military mortgage thanks to a targeted loan. The state issues loan money in two parts:
- Cumulative
Every year the participant receives a sum of money into his personal account. In 2021, the state transfers RUB 299,081 to the NIS participant’s account. (24,923 rubles per month). Every year, contributions increase with inflation. The total amount of the target loan is the amount of all savings contributions. - Investment
Through a management company, the state invests money in shares and federal loan bonds. Income from investment investments replenishes the participant’s account quarterly.
Transferring money from a personal account for the purchase of housing is possible no earlier than after 3 years of savings. When the 3rd year comes, the participant has the right to use the accumulated money for a down payment and monthly mortgage payments or to pay off an existing home loan.
The money in the military account does not belong to the military man - these are funds from the Federal Budget. In order not to remain in debt to the state, you need to serve for at least 20 years, or 10 years with dismissal for a narrow list of reasons. Otherwise, the budget money will have to be returned.
Who can participate in NIS?
The law defines citizens of the Russian Federation who have the right to participate in the Rosvoenipoteka program:
- Graduates of military educational institutions who received their first military rank, and officers who signed a contract.
- Contract midshipmen and warrant officers who serve longer than 3 years.
- Military reserves, as well as sergeants, soldiers, foremen and sailors serving under a second contract.
- OMON, SOBR, Russian National Guard and private security officers.
If a citizen of the Russian Federation fits into one of the listed categories, then within 3 months he will be connected to the Rosvoenipoteka program.
How to get into the NIS register?
Algorithm of several stages:
- The military unit generates a NIS participant card and attaches it to your personal file.
- The Housing Department of the Ministry of Defense enters the serviceman’s data into the NIS register.
- Rosvoenipoteka generates a registration number and opens a personal account using it. His number is recorded in his personal file.
You can check how much money has been accumulated on the Rosvoenipoteka Internet portal. The participant’s personal account contains information on savings.
To submit documents to the registry, you will need a personal card, as well as copies of your passport, contract and report.
How to get a military mortgage
Step 1. Registration of a certificate
Three years after inclusion in the savings-mortgage system, a military man can use the money in the account. To do this, you need to submit a report addressed to the commander of the military unit to obtain a certificate. The document is issued at Rosvoenipoteka within three months, and it is valid for six months.
Step 2. Selecting a partner bank
Not all banks operate under the military mortgage program: on the Rosvoenipoteka website you can see a list of accredited institutions. The rate ranges from 9.2% to 10.6%, the term is calculated so that the military man can repay the loan before reaching retirement age (45 years). For example, if an officer buys an apartment at 25 years old, he will be given a mortgage for 20 years, and if at 30, then only for 15 years. Some banks allow you to add your own funds so that the military can buy a better apartment.
To understand how much to expect, you need to come to the bank with a certificate. Taking into account the serviceman's age and the interest rate, the bank will determine the approximate cost of housing that you can purchase.
Step 3. Choosing housing
You can choose an apartment in a new building or on the secondary market, a cottage or a townhouse. After this, enter into a preliminary purchase and sale agreement with the seller.
Step 4. Applying for a mortgage
After choosing an apartment, the military man enters into a loan agreement with the bank. The documents are sent to Rosvoenipoteka for approval of the transaction, after which the organization transfers the initial payment to the bank account (from those savings that were in the military’s personal account).
Step 5. Property registration
The military man registers the purchase and sale agreement and receives a certificate of ownership and an extract from the Unified State Register of Real Estate. They will note that at the time of the mortgage the housing does not belong to the military and is under double encumbrance. On this basis, the bank transfers the money to the seller of the apartment, and Rosvoenipoteka begins to transfer monthly mortgage payments.
The process of formalizing obligations between the contractor and the NIS participant
First of all, an agreement is concluded that will regulate the rights and obligations of the parties. The contract specifies an end date by which construction must be completed. An appendix to the contract will be a technical specification and a list of planned works.
If during the contract the developer violates his obligations, he may be subject to penalties. Also, the NIS participant may insist on termination of the contract if gross violations are detected.
To conclude an agreement, the participant must provide the following documents:
- identification document;
- a document that establishes the right to receive a targeted housing loan;
- a certificate from the bank about preliminary approval of a mortgage loan.
Important! As a guarantee obligation, the developer may request the participant to make a deposit in the amount of up to 100 thousand rubles. The final decision on cooperation with the NIS participant remains with the representative of the contracting organization.
What's the result?
A military mortgage is a profitable deal for those who are confident that they will devote their entire lives to the Russian army. Under this program, the state pays a loan for a military serviceman without cutting his salary. But you should understand that for an apartment an officer must pay 20 years of military service without the opportunity to resign and change his profession, and the amount of the mortgage depends on the age of the borrower - it may not be enough for good housing. The benefit is different in each situation, but in any case it is an opportunity to get an apartment at the expense of the state.
How to remove an encumbrance
We have already said that in a military mortgage the burden is double - in favor of the bank and the state. They are removed in different ways.
Encumbrance in favor of the state
Cancelled when the military man leaves service for valid reasons or returns all debt to the state. A month later, an application is received from Rosvoenipoteka to Rosreestr, and then another 2-3 days - and the document on the removal of the encumbrance is ready.
Encumbrance in favor of the bank
Everything here is the same as with a regular mortgage: the amount of the debt is paid and the encumbrance is removed.
