How to get a mortgage for your child over 18 years of age

What's happened

Now more and more banks are lowering the minimum age for issuing a mortgage from 21 to 18 years. Now, if parents want to help their children buy an apartment, they do not have to take out a loan for themselves - they can act as co-borrowers.

Already 3% of banks’ mortgage portfolio consists of loans issued to young people aged 20–24 years, whose co-borrowers are their parents. In this way they try to teach children how to manage personal finances.

However, psychologists believe that it is important to teach financial literacy from preschool age - using simpler examples. And it is better if the child makes the decision about a mortgage on his own, and not at the insistence of his parents. Otherwise, an unwanted loan will cause anxiety rather than joy from the purchase.

Registration procedure

Let's consider the procedure for registering the purchase of an apartment. First, you need to get a decision from your chosen bank about the possibility of issuing a mortgage to a pensioner. The borrower collects certificates from work and submits them to the bank. If the applicant is married, documents and the presence of the other half are required.

The bank reviews the application for about two days and issues a decision. If approved, the borrower is given 60-90 days to find a suitable apartment. It must meet the bank's requirements. If we are talking about a new building, the developer will help you collect the documents.

Collecting documents for the object, transferring them to the bank to verify legal purity. If there are no complaints, you can complete the deal. The borrower must first insure the apartment, and the insurance must be renewed every year.

VK With a mortgage, the purchased property becomes collateral and cannot be sold. The encumbrance is removed after full payment of the mortgage. Despite the collateral, the borrower becomes the owner.

Should a child aged 18–20 take out a mortgage - opinion of psychologists

Valentina Shapurina

cognitive behavioral psychologist, coach

Own housing can help a child separate from his parents and take responsibility for his own life. But it is better to teach children responsibility and financial literacy through their own experience and simpler examples, starting from preschool age. Taking out a mortgage for an adult child for this purpose is like throwing him off a boat in the middle of the sea in order to teach him to swim. What lessons a child will learn from his experience depends on each specific story.

The main thing is that the child makes the decision about the mortgage independently. Initiative on the part of parents can lead to unpleasant consequences:

1. It will be extremely difficult for the child to part with the first money he earned and deny himself what he wants. Such restrictions in the future can lead to a person subconsciously saving on his desires, refusing to spend money on himself and buying everything that is cheapest.
2. Anxiety about upcoming payments, possible calls from the bank and fear of losing an apartment can create a general background of anxiety that will spread to other areas of life.

Sofia Kanevskaya

psychotherapist

Credit is not bad and even great; it gives young people the opportunity to make big purchases. However, this works positively in the case when the young person is already financially literate. In this case, he is already ready to cope with the restrictions and boundaries that are imposed on him.

How to get a mortgage at 18

In general, taking out a mortgage at 18 is no different from taking out a loan at an older age. The difficulty is that a young person, due to his age, may not meet the basic conditions for issuing a loan:

• as a rule, the length of service at the last place of work must be at least 3–6 months, and the total length of service must be at least one year;
• The down payment must be at least 15% of the cost of the apartment.

In addition, the monthly payment on all loans that the client has should not exceed a third of the confirmed monthly income of the borrower (and co-borrowers, if any).

If the bank considers that the risks are high, for example, the borrower has little experience or has other loans, it may approve the mortgage on unfavorable terms: increase the rate on the loan or the term of its servicing.

How can a pensioner increase his chances of getting a mortgage approved?

It is difficult for a senior citizen to get a mortgage. Even if you have a positive CI and have a job, the probability of refusal is still high. It's all about the risks that age provokes. The older the applicant, the more difficult it is for him to receive approval.

Some recommendations for borrowers:

• choose a bank you already know to contact. For example, in which you took out loans, kept a deposit, were its salary client, etc.;
• invite a co-borrower or a younger guarantor. Then the bank will know that if something happens to you, it will be possible to count on the second party to the transaction;
• prove all income received with certificates;
• pay off all your debt obligations before applying for a mortgage;
• make a large down payment. The larger it is, the higher the bank’s loyalty.

Since approval is difficult to obtain, you can select several banks at once on Brobank.ru and send them online requests at the same time. This will increase your chances of approval and give you the opportunity to choose the best offer if there are several positive answers.

Prepare for the actual visit to the bank. You must appear healthy and sane. The potential borrower's appearance and behavior are also assessed.

What to do if your income is not enough to approve a loan

At the stage of document verification, the bank may conclude that the borrower’s income is not enough: for example, the salary of a novice specialist is low or there are loans, the repayment of which takes more than a third of the monthly income. Then the client can attract a co-borrower. As a rule, these are parents or other close relatives.

The income of the co-borrower and his credit history affect the loan amount and interest on it. The co-borrower is jointly and severally liable for the loan, that is, if the borrower is unable to make the next payment, the co-borrower will have to do it for him.

Usually the co-borrower does not become the owner of the apartment, with the exception of several cases:

1. The borrower and the co-borrower formalized the corresponding agreement: for example, they reflected in the loan agreement the co-borrower’s right to a share if he conscientiously fulfills his duties (make payments and the down payment) on an equal basis with the borrower.
2. The co-borrower is the borrower’s spouse, and there is no marriage contract under which the apartment belongs to only one of the spouses.

Mortgage: how to choose, use and solve problems

Read on topic

Pros and cons of a mortgage for a student

Taking out a mortgage for a student, on the one hand, will be useful, but on the other hand, a mortgage can ruin life. Let's look at all the pros and cons of a mortgage.

Advantages of a mortgage for a student:

• Peace of mind, convenience, reliability and safety in your own apartment cannot be compared with living in a student dormitory or rented apartment
• You can pay off your mortgage by age 30-50 and no longer worry about credit
• You will be able to make your own renovation of the apartment according to your design
• You won’t have to worry about real estate if you have a family and a child.
• You can be proud of yourself and increase your self-esteem, feel strong and independent
• Parents will be proud and tell all their friends and relatives
• You can get a girl to like you faster

So, these are all the advantages of a mortgage for a student. Now let's list all the disadvantages

• The loan will constantly remind you of itself
• You will have to pay a significant amount every month
• The apartment is pledged to the bank for the entire time until the mortgage is repaid
• You will have to work constantly and look for money to quickly repay the loan
• It's difficult to change jobs
• You may have to borrow money from your parents and friends
• It's difficult to build a family, because... a lot of money will be spent on paying off the mortgage

As you can see, there are enough pros and cons to a student mortgage. And we haven’t yet considered the most important aspect: combining study and work to pay the mortgage. Therefore, before taking out a mortgage for a student in 2021, you need to think and take into account all external and internal factors.

Which banks to apply for a mortgage at 18 years old

There are not many banks that issue mortgages from 18 years of age and at an attractive interest rate. Basically, the best conditions are offered in programs with state support for the purchase of housing in new buildings, but such loans are limited to 3,000,000 rubles.

The rating is headed by MTS Bank with its “Government Support” program. With a down payment of 15%, the rate for a mortgage up to RUB 3,000,000 will be 5.6%, and if the contribution is 20%, the rate will drop to 5.2%.

Otkritie Bank, under the “With State Support” program, issues mortgages at a rate of 5.9% with a down payment of more than 30%. And with a contribution of 15%, the rate will be equal to 6.4% per annum. The required income will increase from 30,000 rubles to 38,000 rubles. If you do not confirm your income, the rate will be higher by 0.5 percentage points, and the minimum contribution will increase to 30%.

A larger loan can be taken out from the Moscow Credit Bank under the “Purchase of Real Estate” program. A rate of 7.85% is valid when purchasing housing from partner developers; the list can be viewed on the bank’s website. Otherwise, the minimum rate will rise to 9.95% per annum. At Uralsib Bank, with a mortgage rate for a new building starting from 7.99%, there are no such restrictions on the choice of housing.

The minimum rate on a secondary mortgage in the MKB is 7.4% per annum. At Uralsib, the rate on secondary housing of 7.99% per annum is valid for a loan amount of 7,000,000 rubles and a contribution of more than 20% of the value of the property. Otherwise, the rate will rise by 1 percentage point. Moreover, the maximum loan amount of 15,000,000 ₽ is valid only for residents of Moscow, Moscow region and St. Petersburg. For other regions it is equal to 6,000,000 rubles, and the rate rises to 8.39% per annum (for salary clients - 8.19%).

Newlyweds under 35 years of age, if they do not have housing or are recognized as needing to improve their living conditions, can apply for a preferential mortgage under the “Young Family” special program, and families with children - under the “Family Mortgage”, where the rates are even lower.

Mortgage as a gift for coming of age

The largest Russian bank has lowered the age limit for housing loans

Sber has reduced the minimum age of mortgage borrowers by three years, to 18 years. There is demand from such young clients, but it is not high, experts say. Most banks prefer to issue mortgages to Russians over 21 years old

Photo: Oleg Yakovlev / RBC

From September 1, Sberbank will review the conditions for issuing mortgages and lower the minimum age of potential borrowers to 18 years, a bank representative told RBC. Previously, only citizens over 21 years old could qualify for a mortgage loan.

Two Sber mortgage programs will be available to young clients - loans for new buildings and finished housing. The new conditions apply when applications are submitted to branches nationwide or online. Other requirements for potential young borrowers do not change. The minimum down payment on the mortgage must be 10% of the cost of housing, the loan term must be up to 30 years, and the length of service at the current place of work must be at least three months.

The revision of mortgage terms is due to the fact that more and more young clients are thinking about loans to purchase real estate, a bank representative explained to RBC. He added that young people in Russia start working quite early and lowering the age limit for lending will give young people the opportunity to start an independent life by buying a home.

As of June 30, Sberbank’s mortgage portfolio amounted to 5.8 trillion rubles, as follows from its IFRS reporting (.pdf). Since the beginning of the year it has increased by 12.8%. Over the same period, Sber softened the non-price parameters of the mortgage several times, in particular, reduced the minimum down payment from 15 to 10%, allowed clients to include the cost of additional services in the loan amount, and increased the maximum refinancing amount to 85% of the cost of housing.

Experience of other banks

Most large Russian banks issue mortgages to borrowers over 21 years of age, as follows from the information on their websites. Mortgage lending is offered to clients over 18 years of age by Moscow Credit Bank (MCB), Uralsib, Ak Bars and Bank St. Petersburg (if the borrower’s total work experience is more than one year). Gazprombank and Sovcombank accept mortgage applications from citizens over 20 years of age.

• A VTB representative said that a borrower over 18 years of age can apply for a loan, but, according to the bank, “more relevant for obtaining a mortgage is the age of 21 years, when the active period of employment begins.” The share of mortgage borrowers under 25 years of age “is within 5% and has been growing slightly recently” due to the offer of mortgages in digital channels and the development of state support programs for young families. However, “a much more significant share falls on borrowers aged 30–45 years,” VTB emphasized.
• The share of loans to young borrowers (under 25 years old) is about 7%, estimates Irina Petrova, Managing Director of the Mortgage Lending Group at Bank St. Petersburg: “The portrait of the client, in our opinion, is really getting younger. Government support measures and the growing financial literacy of the population also play a role in this.” She admits that younger clients “have not yet had time to develop established payment discipline” on loans. “But at the same time, the young segment responds better to changing labor market conditions, and the search for work takes a shorter period of time in the event of such life circumstances. Therefore, it is incorrect to make an unambiguous conclusion that all young borrowers are less reliable,” Petrova emphasizes.

Finance

The Ministry of Finance announced the permissible amount of a mortgage payment

• “The established age threshold allows borrowers to take a conscious approach to planning spending and developing responsible financial behavior,” comments Igor Seleznev, head of the mortgage lending department at MKB. He believes that the extension of preferential mortgages until July 1, 2022 will stimulate demand for loans from young people.
• “The mortgage decision-making model takes into account many factors and allows you to compensate for a negative assessment on some parameters through a positive assessment on others,” said Alexey Kramarsky, head of the credit risk department of the retail segment of Raiffeisenbank. There is no direct connection, he said, between age and approval level “provided that the income is sufficient for the requested loan amount.” However, average income varies statistically by age, “so the youngest borrowers can typically only borrow a small amount,” he added.

Is it risky to issue long mortgage loans to young people?

According to the Bank of Russia, Russians' mortgage debt as of July 1 amounted to 10.8 trillion rubles. (.pdf). Since the beginning of the year, it has grown by 8.2%, but the quality of the banks’ mortgage portfolio still remains consistently high: the share of loans overdue over 90 days (NPL90+) was only 1% as of the reporting date.

The accelerated growth of mortgages raises concerns against the backdrop of rising housing costs and a relatively high share of high-risk loans, the Central Bank noted. In the second quarter, Russian banks issued about 20% of loans with down payments below 20% to borrowers who already spend more than half of their monthly income on servicing loans. In the third quarter, the risks of market overheating decreased, the regulator stated.

Finance

Analysts pointed to the “illusion of affordability” of mortgages in Russia

The willingness of some banks to lend to younger borrowers may be explained by the rapid growth of the mortgage segment, says Moody's analyst Svetlana Pavlova: “The market is moving towards a saturation point, and banks are starting to look for new borrower niches. Market conditions are such that lending is growing much faster than real incomes of the population, but for now mortgages remain one of the lowest-risk products.”

Experts interviewed by RBC agree that, in general, young people are a riskier segment of clients for banks, but lenders are able to stop the increase in default.

“The main risks of young borrowers are the lack of a stable source of income or a high probability of losing their current job due to insufficient experience or the need to combine work and study. Nevertheless, borrowers with specialized secondary education may well have a stable job already at the age of 18–20, and such programs can be targeted at precisely such borrowers,” notes NKR Managing Director Mikhail Doronkin. He believes the potential for lending to younger clients will be limited due to banks' high down payment requirements for mortgages. “Young borrowers often simply do not have the necessary savings,” states Doronkin.

Demand for mortgages from young people will be small, believes Irina Nosova, director of the ACRA group of financial institution ratings. She also attributes this to the inability of such borrowers to show lenders a high and stable level of income. “However, if parents act as co-borrowers, mortgage issuance may become more active,” admits an ACRA analyst.

Rating of mortgage programs for borrowers over 18 years of age

To search for mortgage loans with the lowest rates, we used the Sravni.ru mortgage calculator. We searched among banks from the top 50 in terms of assets, and the condition was that the borrower's age was 18 years.

Two best offers for mortgages with state support were added to the rating, two programs for mortgages for an apartment in a new building and two for mortgages for secondary housing.

Minimum rates are indicated subject to the insurance offered by the bank. You can calculate the possible rate, taking into account individual conditions - region, cost of the apartment, size of the down payment, mortgage term, availability of documents confirming income, and others - in the Sravni.ru mortgage calculator.

How to get a mortgage from the age of 18 - step-by-step instructions

1. Compare mortgage conditions in different banks and choose the ones that suit you. It’s convenient to do this using special services, for example using the Sravni.ru mortgage calculator (it’s free).
2. Contact one or more banks - visit a branch or leave a request on the website. You can also indicate the details of the co-borrower or co-borrowers.
3. Receive pre-approval of your application. The bank will calculate and announce the amount, interest rate and loan term. If applications are submitted to several banks, it will be convenient to compare offers and choose the most profitable one.
4. Decide on an apartment. It should be taken into account that banks refuse transactions with illiquid real estate, that is, the house should not be dilapidated, intended for demolition, the apartment should not have unauthorized redevelopment - it is better to check with the bank for specific requirements.
5. Order an assessment of the cost of housing from an independent company. Some banks offer this service when issuing mortgages.
6. Provide the bank with an appraiser's report and other necessary documents, and then enter into a mortgage agreement.

When purchasing a home in a new building, you can apply for a mortgage by contacting the developer directly. In this case, the company itself works with the bank, and the borrower sends the required documents to the developer. The borrower directly interacts with the bank only when signing a mortgage agreement.

Do banks give mortgages to pensioners?

Pensioners are a special category of borrowers, to whom banks always treat ambiguously. On the one hand, such clients are statistically the most responsible, on the other hand, there is an increased risk of facing non-payment of debt due to the death or illness of the borrower.

The likelihood of a mortgage being approved for a pensioner depends on three factors:

1. Pensioner status, what pension he receives.
2. The citizen’s income level, his employment.
3. Age.

Status. If this is a citizen of non-retirement age who has retired due to length of service, then for the bank this is an ordinary borrower. The main thing is that he works and confirms his earnings with certificates. If the pension is assigned specifically based on age, then it’s more difficult; you’ll have to look for a bank.

Income level. If you come to the bank for a mortgage and say that you live only on your pension, they simply will not accept your application. A prerequisite for any bank is that the mortgage borrower is employed and receives official income.

Age. Here's the hard part. If you are 65 years old, you still have a chance of getting a mortgage. But if you are already 70 or older, it is better to leave this idea. Banks will not work with borrowers of this age within the framework of mortgages. They will give you a loan, a credit card, but not a mortgage.

When choosing a bank, look at the age requirements. The indicated upper limit is at the time of cancellation according to the schedule. If you are exactly 65 today, and the bank works with citizens up to 70 years old, you can conclude an agreement for a maximum of 5 years.