Buying an apartment as collateral from a bank: pros and cons, features of the transaction

Why are they selling an apartment that has a mortgage?

If the apartment was transferred to the bank through the court because the owner owed a loan, then the financial institution sells it through a public auction. When the owner himself decides to sell the property as collateral, potential buyers may be suspicious. Mortgages have a reputation for slavery, the shackles of which can only be thrown off with the final payment. If a person sells an apartment, something is wrong either with him or with the housing, some believe.

In fact, there could be a million reasons. The owner decided to move to another city for work or to a larger apartment due to an addition to the family. The couple is getting divorced, wants to pay off the debt and divide the money for the mortgaged apartment. The borrower’s financial circumstances have changed, he is unable to cope with the loan and wants to repay it before the situation becomes irreparable.

Of course, the reason could also be something unpleasant: the roof is leaking, there is a drug den in the entrance, and the management company collects so much money that it’s as if it were sprinkling the sidewalks with Swarovski crystals in winter. But you are not insured against such risks even when buying an apartment without a mortgage - you just need to check everything.

Now in Russia, almost half of the share of mortgage transactions with housing in Russia is named, transactions with real estate involve mortgages. So there will be more apartments encumbered with collateral on the market.

Buying a mortgaged apartment: pros and cons

The lending company can't just post a sale ad. Bidding is held during which buyers submit bids. The initial price is low: the bank has no goal of making a profit, the main thing is to compensate for its own expenses. This is the main advantage of the procedure. But there are also pitfalls: for example, there are many participants at the auction and everyone raises the bid, wanting to beat the competition. As a result, the cost is compared with the market average and the benefit will be reduced to zero.

The purchase of collateral apartments is available with a mortgage. Despite the fact that the bank has already made a mistake once in issuing a loan to an unreliable client, it is ready to take the risk again. The conditions are usually standard, but in some cases clients are offered a preferential interest rate (when housing has not been in demand for too long).

Until the property has an owner, the previous owners have the right to live there. Consequently, one of the disadvantages associated with the procedure is the poor condition of the rooms, lack of repairs, and dirt. It is possible that you need to invest a large sum for restoration.

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Accumulated utility debt is another drawback. The court will oblige the previous owners to pay receipts for electricity, gas, and water. But not for major repairs and maintenance of common property: they are classified as an apartment, not a person. Consequently, it is necessary to pay off the debt to the management company - this is another unforeseen expense item. An additional problem when the housing has already been cut off from communications.

Have you decided to purchase collateral real estate? Ask in advance if there are any minors among the owners. It is very difficult to discharge children from their only home; it is better to refuse the deal and look for another option.

How to buy an apartment encumbered with collateral

Depending on the conditions, you can buy an apartment in different ways.

With mortgage repayment during the transaction

Conditions: the transaction is carried out with the consent of the bank in which the current owner took out a mortgage; The buyer purchases the property for cash.

The safest scheme. It protects all parties to the transaction: the buyer, the seller, and the bank. Let's look at an example.

An apartment is put up for sale for 3 million rubles. The bank agrees to the transaction and determines the amount of the remaining debt - 500 thousand rubles. Two cells are used for calculations. Before signing the purchase and sale agreement, the buyer’s money is deposited in them: 500 thousand in one and 2.5 million in the other.

The documents for the boxes indicate who can pick up the bills and when. If the purchase and sale agreement is signed and the transfer of ownership is registered in Rosreestr, the bank will be able to withdraw its 500 thousand from one cell, the seller - 2.5 million from the second, and the buyer - the mortgage to remove the encumbrance. If the deal falls through, the buyer will return his funds, and nothing will change for the rest.

Sometimes funds for a loan may be deposited not through a cell, but directly to the bank, but the financial institution is in any case actively involved in the process.

With assignment of debt

Conditions: the transaction is carried out with the consent of the bank, the buyer purchases housing with a mortgage from the same bank.

The buyer submits a mortgage application to the bank, as if buying any apartment. The approval process will be similar and take about the same amount of time. Since he will be the borrower during the purchase, the financial institution will check his solvency and decide whether he is ready to see him as a client.

Here, in addition to the purchase and sale agreement, an agreement on the assignment of rights of claims under the old loan or a new loan agreement is concluded between the bank and the buyer. The encumbrance in Rosreestr is removed and a new one is imposed with the registration of the rights of the next owner.

Tatiana Trofimenko

Leading lawyer of the European Legal Service

This scheme is also quite safe.

With early repayment of the mortgage at the expense of the buyer

Conditions: the bank does not agree to sell the apartment, the buyer purchases the property for cash. Or the buyer gets a loan from another bank.

In this case, the loan is repaid by the buyer. Accordingly, he must have on hand an amount equal to the balance of the debt. The parties enter into a preliminary agreement for the purchase and sale of an apartment, under which money is transferred to the seller to close the mortgage. Then the encumbrance is removed from the apartment, and then the housing is sold as real estate without collateral.

This option is more risky for the buyer, since the money is transferred under an agreement that is not subject to registration with Rosreestr.

Tatiana Trofimenko

Leading lawyer of the European Legal Service

Theoretically, the seller may refuse to register the purchase and sale agreement with Rosreestr. The buyer will be able to get money from it, but only through the court.

Buying a mortgaged apartment that is pledged to the bank - methods

There are three main ways (methods) of organizing a transaction:

1. Early repayment of the loan by the Seller and subsequent sale of the apartment.
2. Early repayment of the loan by the Buyer in the process of purchasing an apartment.
3. The mortgage debt is not extinguished, but is transferred to the Buyer as a result of the transaction. That is, in fact, a mortgaged apartment is being purchased using a mortgage .

Which way is better to go? What is the procedure for purchasing an apartment with a mortgage? Where will the Buyer's risk be higher? The answer is ambiguous and will depend on the specific situation. In the real estate market, all three options for purchasing a mortgaged apartment . Let's look at them one by one.

Assignment of rights of claim under the DDU - how does this happen? Nuances, risks, features.

Early repayment of the loan by the Seller and subsequent sale

The easiest way to get rid of the encumbrance of a mortgage apartment is to repay the loan ahead of schedule . Then the Seller can act freely, without asking the bank’s consent to the transaction. The only question is how exactly (by what means) will the Seller be able to repay the debt to the bank?

It all depends on the size of the balance of this debt. If the Seller has a relatively small amount left to pay the bank (for example, 100-300 thousand rubles), then this amount can be transferred to him by the Buyer before the transaction as an advance or deposit. Having repaid the mortgage loan with this money, the Seller obtains a debt repayment certificate from the bank and removes the encumbrance from the apartment from Rosreestr. A detailed algorithm of actions when buying a mortgaged apartment in this way is described in the link - see there Option No. 1 .

After this, the purchase of an apartment occurs in the usual way (see the link - the corresponding step of the INSTRUCTIONS).

Another option for early repayment of debt for the sale of a mortgaged apartment is refinancing the Seller for the duration of the transaction. That is, the Seller takes out a regular consumer loan for 2-3 months (from the same bank or another), pays off the balance of the mortgage debt, removes the encumbrance from the apartment, and sells it to the Buyer. Having received money for it, the Seller immediately repays his short-term consumer loan.

This method of purchasing an apartment with a mortgage (collateral) from a bank is the easiest, most reliable and safest for the Buyer. But expensive for the Seller. After all, consumer loans have the highest interest rates. Therefore, he needs to reduce the term of such a loan to a minimum.

What should be indicated in the Apartment Acceptance and Transfer Certificate - see the Glossary at the link.

Early repayment of the loan by the Buyer during the transaction

If the Seller has a significant debt balance, and he does not have the opportunity to refinance, then it is too risky for the Buyer to transfer him a large amount as an advance (to pay off the debt). In this case, the purchase of a mortgaged apartment pledged to the bank occurs with the involvement of the bank itself . The bank here requires not only written permission for the transaction (needed for registration), but also its direct participation in the transaction itself.

Then the Buyer, before making an advance payment for the apartment, must first agree on the terms of the transaction with the mortgage bank . In this case, the bank's lawyers take control of the transaction, so the risk of purchasing a mortgaged apartment for the Buyer is greatly reduced.

The key point here is mutual settlements under the transaction . After signing the Sale and Purchase Agreement, the Buyer transfers money for the mortgaged apartment in two parts at the same time - one part to the bank (to pay off the debt), the other part to the Seller (the price of the apartment minus the debt).

The method of transferring money for an apartment can be either cash or non-cash. For cash payments, respectively, two safe deposit boxes , and for non-cash payments, two letter of credit accounts (see how this is all done at the specified link in the Glossary).

After the agreement is signed, the transaction is registered in Rosreestr, and the payments are completed, the bank issues the Buyer a certificate of repayment of the mortgage loan. With this certificate, the Buyer himself removes the encumbrance from the purchased apartment in Rosreestr. The detailed algorithm for this scheme for purchasing an apartment with a mortgage encumbrance is described in the link - see there Option No. 2 .

Refund of the advance (deposit) for the apartment. Is it possible? The answer is in the note at the link.

Buying an apartment with a mortgage - how it's done

Here we are talking about a case where the Buyer himself expected to use a mortgage loan to purchase an apartment, but the chosen apartment also turned out to be mortgaged and already mortgaged to the bank. How can we be here?

There can be two situations:

1. The buyer takes out a mortgage loan from the same bank in which the apartment he has chosen is mortgaged.
2. The buyer obtains a loan from another bank .

In both cases, the very possibility and conditions of such a transaction will depend on the position of the bank.

In the first case, the procedure for purchasing a mortgaged apartment and re-issuing a mortgage to a new borrower will be much simpler. Here, the mortgage bank has complete control over the entire process and creates transaction conditions that are beneficial to it. At the same time, the mortgaged apartment itself remains as collateral in the same bank, and the encumbrance on it is not removed . The new borrower (Buyer) is approved for a new loan, and the apartment already mortgaged to the bank is approved.

Such transactions are carried out by many banks, including Sberbank. All of them are supervised by lawyers and the bank’s security service. The risk of purchasing a mortgaged apartment under such conditions for the Buyer is minimal.

In the second case, everything is more complicated. To obtain a mortgage for an apartment in another bank, you need to agree on the conditions and interests of two different credit institutions. At the same time, the conditions of Rosreestr for re-registration of a registered mortgage encumbrance on an apartment in favor of a new mortgagee must also be met. This is a rather complicated and lengthy procedure; banks are reluctant to do it, so it is rarely found on the market.

As a result, if the Buyer decides to buy an already mortgaged apartment with a mortgage , then it is better for him to apply for his loan in the same bank in which the apartment is mortgaged.

What you need to know about taxes and tax deductions when making a transaction for the purchase and sale of an apartment - see here.