What can you spend maternity capital on?
There is a special list of expenses that are allowed using maternity capital money. The full list can be found in the Federal Law “On additional measures of state support for families with children.” It was adopted in 2006, but has been significantly expanded in 2021 and 2021.
Now the certificate can be used on:
- teaching children;
- social adaptation of children with disabilities;
- monthly payments - if the total family income is below the subsistence level;
- formation of a pension for the mother (funded part);
- and finally - to pay off the mortgage.
The last goal is the most popular. According to the Department of Labor, 61% of program participants spent money on paying off mortgage debt.
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In 2021, the amount of maternity capital for families with one child is 483.8 thousand rubles. At the birth of a second child - 639.4 thousand rubles.
How to pay off a mortgage with maternity capital?
There are several ways to use money to pay off a home loan:
- repayment of the mortgage body (including a loan issued before the issuance of the maternity capital certificate);
- making a down payment;
- repayment of part of the interest.
The most profitable option is to repay the principal amount. This may be a full repayment if the amount is enough to cover the balance. Or partial, if the debt still remains. If you partially repay the mortgage with maternity capital, the bank can offer two options:
- reduce your monthly payment;
- shorten the payment period.
Before using funds as a down payment, you need to check with the bank whether it agrees to such conditions. Most credit institutions are not bothered by this. But some banks may refuse and ask you to make a contribution with your own money - as a guarantee of solvency. Especially when it comes to a preferential program. For example, mortgages for young families.
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The rarest case is the repayment of part of the interest. We recommend using this method only when early repayment is definitely not planned. Otherwise, the whole event will lose its meaning and will not be profitable for the payer.
You can use the funds not only for a loan for the construction or purchase of an apartment, but also for:
- purchasing a private home;
- reconstruction or repair of a cottage, apartment or house;
- acquisition of land.
Read on topic: Conditions of the “Young Family” program in 2021
Conditions for obtaining a mortgage using maternity capital
Maternity capital can be used after the child is three years old. However, there are exceptions. If you take out a mortgage with maternity capital as a down payment or use funds to pay off an existing mortgage loan, you can use the state program immediately after the birth or adoption of a child. Maternity capital funds are transferred to the account of the lender or real estate seller after signing a loan agreement or purchase and sale agreement.
To use maternity capital funds to purchase a home, there are a number of conditions. In particular, it should not be in disrepair or subject to demolition, all family members must have Russian citizenship, and the property must be located on the territory of the Russian Federation.
Important!
In real estate purchased with maternal capital, it is necessary to allocate shares to all family members (yourself, spouse and children). If the housing was purchased with a mortgage through maternity capital, then this must be done within six months after repaying the loan. To sell such real estate, the consent of the guardianship authorities is required.
How to pay off a mortgage with maternity capital - step-by-step instructions
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Be prepared that the procedure will not be quick. You need to fill out a lot of documents and wait for responses from different structures.
Contacting the bank
The first step is to contact the bank that approved the loan. The credit institution must prepare the necessary documents for applying to the Pension Fund. The main document is a certificate confirming the issuance of a mortgage loan. The following must be indicated there: the agreement number, details of the borrower, as well as co-borrowers, the exact amount of the mortgage, details of the financial organization for the transfer of maternity capital funds.
Submitting an application to the Pension Fund
A certificate from the bank is prepared within a few days. Afterwards, it must be submitted to the Pension Fund along with the application. This does not have to be done at fund branches. You can submit an application through government services or at the MFC.
The application takes a long time to process. The shortest period is 14 days. But sometimes you have to wait up to 30 days for a response.
If the application is approved, the Pension Fund will issue a certificate with a note indicating the balance of maternity capital in the account. This document is valid for 3 days.
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Repeated contact with the bank
This time you need to write an application to the credit institution itself and submit a certificate about the amount of maternity capital. The purpose of the statement is to once again talk about the intention to repay part of the debt using maternal capital. And also discuss the repayment mechanism. How it will be - a down payment, a reduction in the principal amount or repayment of part of the interest.
The application must be submitted during a personal visit. You need to take your passport, capital certificate and certificate from the Pension Fund with you.
The last stage is the transfer of funds to the bank account and repayment of part of the debt.
Conditions for purchasing a house using maternity capital
There are few requirements for using a personal certificate for the purchase of real estate. The state does not dictate to families what kind of house they should buy with maternity capital. The choices are unlimited: new buildings, shared participation in construction, even dilapidated housing. You can buy a house with capital in any condition, if you have the desire and strength to complete it, renovate it and create conditions for comfortable living for your family and children.
“The child does not need to wait until he is three years old,” clarifies Yuri Kapshtyk. — The very fact of the birth of a child gives the right to receive maternity capital. The only condition is that when purchasing, you must indicate the child as a co-owner of the house, since you are purchasing real estate taking into account his interests. Part of the house becomes his shared property.”
The procedure for obtaining a certificate has been simplified this year. Young parents do not need to run anywhere with documents. The Pension Fund of the Russian Federation interacts with city and district registry offices and receives from them information about additions to the families of Russians. The certificate is issued automatically; a young mother needs to log into her personal account on the Pension Fund website about a month after the baby is born and make sure that the document has already been issued.
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List of documents
At the first stage - when ordering a certificate from the bank - you only need a passport and a certificate of the owner of maternity capital.
Afterwards, when applying to the Pension Fund, you will need more documents:
- again - a certificate confirming the right to maternal capital;
- the applicant’s personal documents - passport, marriage certificate, child’s birth certificate, SNILS;
- a certificate prepared by the bank;
- a copy of the loan agreement concluded with a financial institution;
- certificate from the Unified State Register of Real Estate;
- a certificate confirming the transfer of money from the bank to the account of the seller of the apartment or house.
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Additional documents will be required, depending on the type of housing. For an apartment on the secondary market - a purchase and sale agreement. For housing under construction – a share participation agreement.
A written commitment, confirmed by a notary, to allocate shares in real estate to children is now optional. This rule has been abolished since 2020. Now it is only stipulated that parents are obliged to allocate shares to their children within 6 months after full settlement of the loan debt. If this obligation is not fulfilled, the state will demand the return of subsidy funds allocated for the family.
Requirements for the borrower
They will be the same as when applying for a regular mortgage. However, there are a number of conditions that will increase the applicant’s chances of obtaining a loan using a maternal certificate:
- The borrower plans to take out a mortgage from his salary bank. In this case, the credit institution considers the application faster, does not require proof of income, and may offer a reduced interest rate.
- The family has additional savings in addition to maternity capital. This indicates that the borrower is able to repay the mortgage on time.
- One of the family members works in a steadily growing company and receives a high and regular salary. The employer's relationship with the bank may also influence the loan decision and terms of the loan.
- A good credit history is a big plus for the borrower. The bank may have doubts if there is no credit history and refuse if it is tainted by past unsuccessful loans.
The main borrower can attract up to three co-borrowers to increase the credit limit, who will be subject to the same requirements. At the same time, they will share the obligations of the main client to the bank.
Reasons for refusal and what to do if refused?
It happens that the bank has approved the application and is waiting for the funds to be transferred, but the Pension Fund refuses to transfer the money. What could be the reason?
- It turned out that the parent who submitted the application does not have the right to dispose of the certificate. For example, he lost his parental rights;
- the package of documents turned out to be incomplete or some errors were discovered in the preparation of papers. Please note that some certificates are only valid for a few months.
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These are the most common reasons. Sometimes it may turn out that the refusal comes not from the Pension Fund, but from the bank. Most often, because the property being purchased has not passed all the necessary requirements. For example, it was dilapidated or included in the list of emergency premises.
Why they may refuse and what to do in this case
According to the law, credit organizations cannot refuse to accept MSK in payment of debt on a mortgage loan. However, the application may still be rejected if there is no approval from the Pension Fund, due to an incomplete package of documents or if they contain errors.
Result: The pension fund refused. Why might this happen?
- The owner for some reason has lost the right to use the certificate
- Some documents are missing or errors were found in the documents provided. Add whatever is required to your application and resubmit.
- Real estate purchased with borrowed funds is classified as dilapidated or dilapidated housing (that is, there are doubts that the purchase contributed to the improvement of living conditions).
- Housing belongs not only to the certificate holder and his spouse, but also to someone else.
If you do not agree with the decision, then you have every right to appeal it in court or appeal to a higher authority.
Alina and Sasha did not have any problems during the paperwork process, and on July 10, the amount of maternity capital was credited to the CHD account, thanks to which the guys reduced the loan term by 3 years and will ultimately save 857,122 rubles on the purchase of an apartment (which, by the way, just over 13%).
Pitfalls when using a certificate
You need to be prepared for some difficulties when repaying:
- if a standard 13 percent tax refund was issued for the purchase of real estate, and then maternal capital was used, then you will have to return part of the funds. The fact is that the refund only applies to personal savings spent on the purchase of housing;
- Problems may arise when selling real estate due to distributed shares among children. To sell an apartment or house, you will need to convince officials that the children will receive equal shares in other real estate;
- Due to children's shares in real estate and other difficulties in registration, another problem may arise. Most banks will not undertake to refinance such a mortgage.
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