Mortgage against housing: pros and cons of such schemes in 2022

Not every person has the financial capabilities that can allow him to purchase his own home in a new building. In such a situation, the only right decision would be to buy an apartment on credit or participate in a new mortgage program. Today, many financial institutions and large construction companies offer various programs to individuals, but special attention should be paid to mortgages against housing. Let's find out more about what a Housing Mortgage is, how and where to apply for it.

Schemes for purchasing an apartment with a mortgage using existing housing

Before choosing one of the proposed options for purchasing a new home to offset the old one, individuals need to carefully study all the schemes. It is necessary to calculate which option will be less expensive and risky in order to eliminate the possibility of problems arising in the future.

Installment plan with self-sale

The buyer finds a developer, studies all the options he offers, and then enters into an agreement. He will need to pay either the entire amount at once for a finished apartment in a new building, or make a down payment for housing under construction.

The principle of this scheme is that the client independently sells the property he owns. Naturally, the proceeds will not be enough for him to pay off the developer. That is why he receives the missing amount from a financial institution.

Mortgage secured

This traditional scheme for purchasing a home from a developer involves several stages:

An individual chooses for cooperation a bank that offers mortgage programs on the most favorable terms.
An applicant for a loan goes to a financial institution and receives a list of documents that he needs to provide to sign the agreement.
If the client manages to collect the necessary papers, and also has personal property that he can pledge, then the bank draws up a mortgage agreement and obtains consent to transfer the borrowed funds.
An agreement is signed with the developer.
The bank transfers money for an apartment in a new building.
As soon as the property is put into operation, the buyer will be able to make repairs to the apartment and move into it.
For a certain number of years, he will pay the bank monthly payments until the debt is fully repaid. It is worth noting that accrued interest and other banking costs are initially written off from payments received from the borrower, and lastly the mortgage loan body is reduced. If possible, the client can close his loan ahead of schedule, paying off the remaining amount of debt in one payment. In this case, the bank is obliged to recalculate.

Attention! While the borrower's property is in bank collateral, he will not be able to carry out any legal actions with it. Today, only some banks offer Russian citizens a mortgage for an apartment to offset their existing housing. We discussed mortgages secured by real estate in more detail earlier.

The developer buys the apartment

Large construction companies have the means to purchase secondary housing from their clients at a discount. In parallel, the former owners of the purchased properties are being issued claims for apartments in new buildings. It is worth noting that the process of assessing such housing in each company is carried out differently. But in most cases, with urgent redemption, the discount size varies in the range from 10.0% to 20.0%. In the future, the developer independently sells the purchased objects, thus returning the funds spent with a fairly decent markup.

Apartment reservation and sale

An individual contacts a company acting as a developer, selects a property and signs an agreement for the sale of secondary housing owned by him. The implementation of this property is usually carried out by a real estate office that works closely with the developer. Also, these functions can be entrusted to a staff member who is a specialist in these issues.

It is extremely important to ensure that secondary real estate is properly valued. If an individual doubts the estimated value announced by the developer’s representative, he may insist on engaging an outside professional.

It is worth noting that, according to the terms of the agreement signed with the developer, the owner of the property must sell it within a clearly defined time frame. As a rule, such contracts are concluded for no more than three months, since this is the time period that experts consider optimal for selling an apartment.

When an agreement is signed with the developer, an apartment in a new building is booked for the same period of time, which can be at any stage of construction or has already been put into operation. If a person cannot sell a secondary home, then his reservation will be burned and it will be transferred to other people. In the case where it was possible to sell the apartment, a new agreement is drawn up with the developer for the purchase of an object in a new building. In this case, the price fixed by the reservation will apply (it cannot be changed, even if the developer has good reasons).

Accommodation in an apartment before delivery of the house

If the choice is made in favor of this transaction formalization scheme, then the parties will have to enter into three types of agreement:

The first contract is drawn up for the purchase of an apartment in a new building from the developer. It is indicated that the developer gives the client a deferment for making payment until the property is put into operation.
The second agreement is drawn up for the sale of secondary housing that is personally owned by the client. It stipulates all aspects related to the legal and physical release of residential premises. All deadlines must fully correspond to the dates specified in the first document.
The third agreement is drawn up for the rental of secondary housing for the period that will be given by the developer to the client for his legal and physical release. If the parties do not want to draw up a separate agreement, then they can write down all aspects related to the lease in a second document.

The scheme provides the following nuances:

The client chooses an apartment in a new building and signs a purchase agreement with the developer.
At the same time, he transfers his secondary real estate to the developer under a sales agreement.
The developer allows the client to live in his old apartment on a rental basis until the facility under construction is put into operation.

Not quite a trade-in

Since mortgage lending began to develop more actively in Russia, a certain sequence of actions has already been formed among borrowers. Thus, many people prefer to sell their old apartment (small, outdated or in an inconvenient area), and use the proceeds as a down payment on a mortgage loan for a new apartment. But, even though the housing market is still overheated, selling an old apartment is not so easy, and the sale drags on for months.

To help borrowers (and themselves), developers began offering an unusual service

– accept an old apartment and offset its value with a new loan. In other words, the borrower gives the old apartment to the developer, who counts it as a down payment against the appraised value. At first glance, this resembles a trade-in service at car dealerships, but this is not entirely true:

as part of a trade-in, a car dealership actually buys an old car from the buyer, after which it puts it up for sale as a used car (and there is good demand for such cars);
the developer does not buy the apartment - he simply helps to sell it faster, while simultaneously fixing the cost of the new apartment for a certain period.

Accordingly, this is simply a more complex transaction than the usual purchase of an apartment directly from the developer - it adds an agreement for the provision of services for the sale of the old apartment and an agreement to book the apartment (sometimes with a fixation of its price).

True, the market is still overheating – demand for housing, especially affordable housing, exceeds supply

. Therefore, developers are in no hurry to make such tempting offers - apartments are already selling well. Accordingly, large developers, although they offer such a scheme, are not yet ready to fix the price for several months while the agent sells the client’s old apartment.

Settlement scheme pros and cons

In theory, the system of offset for the purchased apartment in a new building provides for the quick sale by the buyer of his own home, the money for which is used to pay for the purchase. In practice, this method of payment is used extremely rarely, since most citizens who are ready to sign a contract with the developer do not have their own real estate.

The advantages of the mutual offset system include the ability to quickly get money to buy a new home and not overpay mortgage interest to banks. As for the minuses, one important nuance should be noted here. The seller of secondary housing and at the same time the buyer of a property in a new building must, before the developers put the house into operation, resolve the issue of not only temporary residence, but also registration. It should be borne in mind that in the construction industry deadlines very often move forward, which is why it may be necessary to increase the period of stay in rented housing.

What do clients themselves say about this?

Even 7 years ago, specialized media wrote that there were a number of serious problems in the real estate trade-in scheme. These are the same payments for the reservation and for sales services, as well as the fact that the “lured” real estate agency will somehow force the owner to sell the old apartment at a large discount

Two years ago, material appeared that in fact this scheme is not popular in Russia - although up to 40% of home buyers were interested in it, in fact it is not suitable for almost anyone due to the same problems.

And on specialized forums, experts and ordinary users categorically advise against resorting to this option. The arguments are:

the scheme works only if prices on the market are constantly rising, and the “saved” price will be so lower than the current market price that it will pay off the discount when selling the old apartment;
real estate agencies are interested in selling the old apartment as quickly as possible (and therefore cheaper), and given the fact that new apartments are very expensive, the client is almost guaranteed to lose;
in almost any case, it is more profitable to sell your old apartment yourself and draw up a contract for a new one after that;
“alternative schemes”, for example, when the client continues to live in the apartment given as a trade-in until the developer completes the construction of a new house, are too exotic and unlikely in practice;
if the old apartment is completely illiquid, the real estate agency may refuse to sell it at all.

To summarize: the trade-in scheme makes it relatively easy to book a new apartment and sell the old one a little faster, but at the cost of a large discount. And whether it is worth resorting to this option must be decided in each individual case.

Which option is better to choose?

The most common scheme is to sell your own property and buy an apartment in a new building with the proceeds. If they are not enough, you can apply for a cash loan from the bank, and also negotiate with the developer on installment plans. But, when planning to carry out such a large financial transaction, as well as to attract borrowed funds, an individual must realistically assess his capabilities.

For many years, he has to bear the sometimes unbearable burden of a loan or installment plan, as well as pay for current expenses, the lion's share of which will be rent for rented housing. Also, the client must have confidence that the developer will not unilaterally change the terms of the agreement and will not increase the cost of the new building.

If a person seeks to minimize possible risks, then he should purchase a property in a new building that is not yet under construction. In this case, the developer will not set an exorbitant price, and the money received for the sold personal home will be quite enough to make a full settlement.

The most profitable algorithms

Many mortgage borrowers who own another home that is not burdened with a financial obligation to the bank do the following:

They take out a mortgage according to traditional conditions (the newly acquired property is pledged to the bank);
Existing housing is sold under a lease agreement;

This algorithm provides the following guarantees:

The borrower receives additional income above salary and maintains financial stability;
In case of default, the bank will sell the housing that is the subject of the mortgage, but the borrower will have the first option for living space, which the bank will not be able to foreclose on if:

The borrower did not provide it as security under the mortgage agreement;
It is his only home (when enforcement proceedings are opened due to the recognition of an individual client as bankrupt).

Selling a secondary home can bring in enough funds to purchase a draft version of a new building. The features of this option are:

You will have to bear additional costs for repairs in the newly purchased property;
Modern developers offer new buildings with improved layout;
The price per square meter of a house that is under construction is often lower than the price per square meter of secondary real estate;
Large development companies provide interest-free installments or for a purely symbolic interest (if the settlement period for the obligation does not exceed 2-3 years).

Before using the scheme for purchasing a new building through the sale of previous housing, the following points must be taken into account:

Find out about the reputation of the developer and check his financial condition. The following needs to be analyzed:

Registration documents;
Tax statements and debts;
Information about construction loans;
The stage of construction in which the object is at the time of contacting the company (what percentage is completed);
How many properties (apartments) were offered for sale and how many have already been sold.

Familiarize yourself in detail with the terms of the contract proposed by the developer and the periods for putting the house into operation, including:

Conditions on a possible increase in the cost of a new building after commissioning;
Cases of unilateral change of the agreement by any of the parties;

Pay great attention to sanctions and methods of returning funds in case of violation of the terms of the contract by the company providing the new building.

The problem of undervalued apartment value

In most cases, the assessment of objects offered for purchase is carried out by separate divisions of real estate companies. Their employees use the analogue method in this matter, which involves comparing apartments with similar parameters in a specific area. After leaving the client’s address, an inspection of his property is carried out. The appraiser may deliberately underestimate the value of the property, focusing on any defects. Next, the foreclosure company offers the owner an amount that is slightly lower than the appraised value. The discount amount is set individually by each company and can reach 25.0%. But, if good real estate is offered in an elite area, the discount can be reduced to 5.0%.

Attention! If a person wants to get the most accurate assessment of his property, he needs to insist that this procedure be carried out by professionals working in specialized private or government agencies.

Advantages

The main advantage of the “apartment against credit” scheme is that it allows you to sell an old apartment quickly - a partner agency, as a rule, sells an apartment within the required period - 3-6 months. Cases when the agency does not meet the deadline are rare, and then the situation is resolved individually (the client is extended the time to sell the apartment or is offered to use installments or a mortgage).

However, in some cases, a plus turns into a minus - in order to sell an apartment in a given short period of time, you have to offer it at a price that is lower than the market price.

“Of course, there is a risk that the apartment will not be sold within the specified time frame. It all depends on how it was assessed. In my opinion, it is more profitable for the client to price his apartment slightly below the market in order to speed up the sale, and if the proceeds do not cover the entire purchase, take out, for example, a mortgage for the remainder,” says the head of shared construction at the Advex Corporation. Real estate" Olga Morozova.

Among the advantages of the trade-in scheme, experts say that the price is fixed when concluding an agreement and paying the first installment. Moreover, some companies are ready to fix the same price as with 100% payment or using a mortgage.

In addition, some developers fully or partially compensate the client for the costs of the services of a real estate agency that sells an old apartment.

“A client who decides to take part in the Apartment Offset program can independently evaluate and sell his existing apartment. For those who do not have the opportunity to do this on their own, specialists from KVS Group offer to use the services of a partner agency. The company bears the bulk of the costs of paying agency fees. The client pays a small fixed amount, which is significantly less than what he would have to pay if he sold his home independently through an agency,” says the manager of KVS LLC. Real estate" Anzhelika Alshaeva.

However, not all companies adhere to this practice - some developers do not compensate the client at all for the costs of paying for the services of a realtor.

Requirements for qualifying housing

Each construction company, acting as a developer, puts forward its own requirements for real estate that will be provided to clients on credit. The general requirements include the following:

Any real estate for which the client has issued title documents is accepted for offset.
Objects must be legally and physically free, or their owners can vacate them in record time.
There should be no illegal redevelopment of the property.
Objects must be personally owned by their owner for at least three years.
Some developers, or buyout companies, require that the property be located in prestigious cities or areas.

We are waiting for your further questions. We will be grateful for rating the post, likes and reposts. You will also be interested to know what is more profitable: a mortgage or an installment plan from the developer.

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