Many bank clients are trying to buy an apartment with a mortgage from their parents. Some want to buy the living space using maternity capital, others want to re-register ownership. When making transactions of this kind, the question of their legality arises, because even the law provides for some restrictions.
In practice, many banks are faced with fictitious paperwork, so they treat them with suspicion. How you can buy a house from your parents with a mortgage, which bank will give you a loan and under what conditions, we will tell you in our article.
Mortgage to buy a home from relatives
The legislation of the Russian Federation does not prohibit registering paid transactions between adult children and parents (or other family members). Including using mortgage funds. The reasons for purchasing real estate from relatives can be very different. For example, division of property, parents moving to another city, re-registration of property using maternal capital, etc.
In practice, such agreements are concluded quite often, but if you try to obtain borrowed funds, you will encounter difficulties in getting a mortgage approved. This is especially true for small commercial banks that have strict restrictions on the acquired real estate.
☝The main reason for the negative attitude towards related transactions is the high risk of the fictitiousness of the agreement, the purpose of which is to cash out credit funds. The fact is that the mortgage loan is targeted, the bank must know where the money issued will go, for example, to the account of the seller or developer.
If you go through the terms of mortgage bank programs, you will notice that most of them prohibit buying an apartment from relatives. When an explicit restriction is not specified in the terms of the loan, the likelihood of such an application being rejected is extremely high. Moreover, this applies not only to the purchase of housing from parents, but also from spouses, children, grandparents, etc.
Keep in mind that related transactions are prohibited under some preferential government mortgage programs. For example, you cannot buy an apartment from your parents using a military mortgage or using a housing subsidy. Therefore, before submitting an application, check whether it is possible to buy an apartment with a social mortgage from your parents at the bank of your choice.
☝Is it possible to buy an apartment with a mortgage from your parents with a tax deduction?
Unfortunately, you cannot get a tax break after completing the transaction. This restriction is directly stated in the Tax Code of the Russian Federation.
Mortgage loan approval factors
Transactions between close people are given special attention by credit consultants and bank security services. The reason is the practice of fraudsters and unscrupulous borrowers to use the funds received for inappropriate expenses, to benefit from the transaction within the family, and to deceive the credit institution. To avoid falling under suspicion, you should:
- Do not hide the fact of kinship, even distant ones. At various stages of registration and registration of property, information may reach the bank and be interpreted as an attempt to deceive;
- Explain to the consultant for what purpose the mortgage loan is being taken, and the degree of relationship of the participants. The more transparent the situation, the higher the likelihood of a positive decision;
- Consider the importance of loan collateral. The presence of existing housing for the borrower significantly increases the chances of approval of a mortgage loan;
- Remember to reduce risks for the bank. In a situation where children purchase an apartment from their parents, an additional guarantee is that the older generation has additional living space in which they are registered.
- Make all payments non-cash. Good, warm relationships do not always remain between close people. Non-cash payments made through a bank serve as protection against intra-family conflicts and a guarantee of transaction transparency.
The more complete information is provided to the credit consultant without attempts to deceive, the higher the chance of getting a mortgage loan approved.
How to get a mortgage
When you contact the bank, the first thing you should do is clarify whether it is possible to buy a home from your parents with a mortgage. You can look up the lending rules on the financial institution's website, but usually only the general conditions are set out here. To understand the likelihood of loan approval in your situation, it is best to consult with a mortgage specialist.
You will probably have to go to several financial institutions to get an affirmative answer. If you find a bank where you can buy an apartment with a mortgage from your parents, follow the instructions:
- Gather a package of documents to apply for a mortgage. You need to fill out forms and provide the bank with passports of all co-borrowers, certificates of solvency, and additional papers if necessary. The spouse of the main borrower necessarily becomes a co-borrower on the mortgage, that is, bears the same responsibility for repaying the debt.
- Apply through a mortgage specialist at your bank. Nowadays, many financial organizations accept applications through the website, but this method is only suitable for initial approval. To get a final decision, you will still have to go to the bank branch in person.
