Many people want to have their own home, and everyone wants to acquire square meters in their own way.
Some save money for years, some borrow from relatives and then pay them off for the rest of their lives, and there are also those who take out a mortgage. Its advantage is that the borrower receives the property immediately as soon as the bank transfers money to him or the home seller.
How long does it take to obtain a mortgage, how long does the entire process of transferring housing into someone else’s ownership take?
Stages of obtaining a mortgage for an apartment
You don’t have to take out a mortgage for your apartment yourself. Credit brokers and realtors can come to the rescue and take on some of the responsibilities. However, it will not be possible to completely shift your responsibilities to assistants. However, no specific actions are required from the citizen. You can figure everything out on your own, the main thing is to have an idea of your actions.
Where to begin?
It is recommended to start by choosing the bank where you plan to take out a mortgage. Today, many banks offer reduced rates for obtaining mortgages with government support. It is worth analyzing the supply market and finding several suitable options from different banks, which will increase the likelihood of mortgage approval. In addition, it is worth considering the general economic situation. For example, 2021 was the period with the lowest mortgage rates.
Please note that each bank imposes requirements on the borrower that relate to:
- Age (most often from 21 years at the time of registration to 70 years at the time of full payment);
- Employment (in most cases, at least 6 months of experience at the current place of work is required);
- Documents that the client can provide to the bank. Usually this is information about salaries and information about co-borrowers.
When choosing a bank, the borrower himself should pay attention to the interest rate and the maximum amount. However, the choice of bank may be based on other nuances. For example, its reliability, the possibility of early repayment or favorable mortgage payment conditions.
Application and its consideration by the bank
It is recommended to submit a mortgage application to several banks at once. If one organization refuses, there is a chance that another will approve. Since this is only the initial stage, approval of the application does not force the client to enter into a final agreement with this bank. The processing time for an application depends on the bank. The minimum period is 3 working days, but in some structures it can take almost 2 months. During this period, the bank checks the client's solvency, as this is a fundamental requirement for approving the application.
Apartment search
An approved application is not only a bank’s readiness to lend, but also the amount of money it is willing to provide to a specific borrower. As with a regular loan, the bank may offer an amount lower than what the client initially asked for, so it is recommended to start searching for an apartment only when the approved mortgage amount is known. It takes about 3 months to find a suitable apartment, but at the request of the borrower the period can be extended.
Grade
Banks do not carry out fictitious transactions
, therefore, you cannot simply write down any figure for the cost of housing in the contract. This figure is indicated by the appraiser. Some banks offer an appraisal service as part of a mortgage; in others, the buyer must independently order an expert assessment of the value of the home from an independent company. The final figure will be affected by the condition of the apartment, its location, number of floors in the building and many other factors. The result of the assessment will be a conclusion that is provided to the bank.
Please note that the bank does not pay the full cost of housing
. It provides up to 85% of the appraised value, the remaining amount is paid as a down payment. This point must be clarified at the stage of choosing a bank, since different organizations provide different interest coverage for the loan. For the purchase of an apartment, the greatest assistance is provided from the bank.
Approval of an apartment by the bank
The apartment should please not only the buyer, but also the bank. Credit institutions refuse transactions with illiquid real estate. This means that the chosen housing must comply with residential premises standards
:
- The apartment must be connected to utilities (electricity, running water, central heating);
- The building where the apartment is located should not be dilapidated.
Such requirements are due to the fact that if the borrower is unable to pay the mortgage, the bank will have to sell the property in order to recoup the costs. It is difficult to sell a dilapidated building and, especially, a house for demolition to a new tenant.
The bank also checks the property for possible difficulties with transfer of ownership. For example, the presence of debts for utility services or registered minor children or other persons who in the future may protest the purchase and sale agreement. If, after checking, no such incidents are identified, the bank begins the next stage of cooperation.
Loan agreement
Signing the loan agreement becomes the main stage. From this moment on, the bank and the borrower are assigned certain rights and obligations. The loan agreement consolidates the cooperation between the parties. The remaining stages will go by fairly quickly.
Receiving funds
Depending on the terms of the loan agreement, the money can be transferred to the owner’s account or left in a deposit box. Other methods of transferring money may also be used. However, almost all of these cases bypass the borrower, that is, he does not see or receive this money. This ensures the safety of funds and also guarantees that the transaction is completed.
Notarization
Notarization of the transaction is not a prerequisite for drawing up a purchase and sale agreement. However, some banks require this certificate as a guarantor. Notarization also becomes mandatory in cases where housing is purchased from shared ownership. For example, an apartment belongs to 2 people in equal parts. Notarization endorses the absence of claims for the execution of the contract from each participant.
Even if the bank does not require notarization of the transaction, the buyer is recommended to initiate it himself. This is a paid service, but it provides guarantees that there are no claims against the contract that will arise later.
State registration and mortgage registration
After the purchase and sale agreement is completed, the property must become the property of the new owner. This status is confirmed by registration of housing. The result of the procedure will be a document of ownership. Since a mortgage is most often a loan pledged as collateral for the purchased property, the document of ownership can be taken into custody by the bank as a guarantor of the return of funds. The state registration procedure lasts up to 1 month.
Insurance
Real estate purchased with a mortgage is subject to compulsory insurance. This is a mandatory condition of the bank, which guarantees that in the event of damage to real estate, the bank will be able to return its funds. Also, some banks may require life insurance for the borrower and co-borrowers as additional guarantees.
The insurance procedure does not necessarily follow after registering the home to the new owner. This stage can be postponed to an earlier date. For example, immediately after drawing up a loan agreement. Some banks offer customers discounts when purchasing insurance through their organization.
Further actions
The mortgage holder's further actions are to comply with the loan agreement with the bank. This means you need to make regular payments on time to pay off your mortgage. As for housing, you can move into an apartment immediately after registering ownership rights.
So how long does it take to buy an apartment with a mortgage, if you take the minimum terms?
If we take into account that the entire transaction procedure for the purchase and sale and registration of a mortgage apartment will go perfectly smoothly, then the calculation of the minimum period for registration of such an apartment will be as follows:
- Submission of an application and its approval by the bank – 1 day;
- search for housing and its approval by the bank – 2 weeks;
- insurance and real estate valuation – 2 days;
- registration of a purchase and sale transaction and a mortgage agreement – 1 day;
- registration of ownership of a new home – 3 days.
In total, it turns out that under favorable conditions, it takes at least 3 weeks to register a real estate mortgage.
Nuances and possible problems when obtaining a mortgage
When applying for a mortgage, the main attention should be paid to the bank's conditions. The loan is provided for a period of up to 20 years. A long term looks convenient from the point of view that the obligatory monthly payment will be small, however, a long-term credit relationship with the bank is not the most desirable consequence. It is worth paying attention to whether there is a possibility of early repayment of the loan and how this happens. For example, some banks set a limit on the maximum monthly amount, which should not exceed 40% of the income of the borrower or co-borrowers.
Problems may also arise if the client does not have funds for the next payment. Some banks have a mortgage freeze feature that can be activated in the event of a job loss. Thus, the citizen suspends payments for a certain period - up to a maximum of 1 year. After which payment obligations are resumed.
It is also worth remembering that failure to pay a mortgage leads to loss of property. For non-payment of the loan, the bank has the right to sell the home at auction. If the apartment is sold at a cost exceeding the borrower's debt to the bank, the rest of the funds will be returned to him. However, apartments at auction often lose almost half of their original value. If even after the sale of the apartment the bank remains at a loss, it has the right to make up the costs by selling other property of the mortgagee.
What can and cannot be done with a mortgaged apartment?
The borrower has the right to live in the apartment and use the property. He can register there. However, there is no complete freedom of action.
What you can’t do without the bank’s consent:
- Sell real estate. The owner has the right to alienate property, but only with the permission of the bank. Thus, when selling a mortgaged apartment, the obligations under the mortgage must be transferred to the new owner. The bank must know who will make payments on the loan. If the buyer is cash, he must pay off the seller's mortgage for the deal to go through.
- Carry out large-scale repairs and redevelopment. This requires the consent of the bank. Significant changes affect the characteristics of the apartment. Therefore, they can reduce its cost. However, not all repair work is permitted by law. The borrower will have to obtain approval not only from the bank, but also from the insurance company.
- Damage real estate, influence the operating conditions of the property. As with the previous point, this changes the cost of the apartment.
The law does not prohibit bank representatives from visiting the borrower and checking the condition of the property. If violations are detected, the institution has the right to demand early repayment of the loan. If the owner does not have the required amount, the property may be sold to pay off the mortgage debt.
According to the law, the bank has the right to take away the apartment if the borrower:
- Does not make monthly payments. The bank can take the property, sell it and cover the balance of the loan. Although in practice it rarely comes to such radical actions. Citizens are protected by law: the bank’s actions must be proportionate to the offense of the offender. This means that a single late payment cannot be grounds for deprivation of property rights. The law does not say what amount of debt is considered sufficient for radical action. It is not recommended to exceed debt accumulation of more than 5% of the total cost of the apartment.
- Violates insurance obligations. The mortgaged apartment must be protected by law. If the borrower violates the terms of the contract with the insurance company, not only it, but also the bank will apply sanctions.
- Violates the terms of the mortgage agreement. For example, he hid the transfer of rights to third parties. This could be rent, sale or donation. This is considered a violation of the contract. The document on the basis of which the real estate was transferred becomes invalid.
- Used the mortgage for other purposes. Funds are issued only for the purchase of real estate approved by the bank. The law takes this situation as seriously as possible and quickly terminates the contractual relationship.
Expert opinion
Alexander Nikolaevich Grigoriev
Mortgage expert with 10 years of experience. He is the head of the mortgage department in a large bank, with more than 500 successfully approved mortgage loans.
Even the most advanced cases can be corrected and loss of housing can be prevented. For example, refinance. This program allows you to take out a new loan to pay off the old one. With the help of refinancing, you can reduce monthly payments, extend the mortgage term, and reduce the financial burden. You can refinance a loan either at the bank where the primary agreement was drawn up or at a third-party financial institution.
Features of obtaining a mortgage for other types of real estate
In addition to a mortgage to buy an apartment, you can borrow from a bank for:
- Buying a country house;
- Townhouse purchases;
- For building a house.
The main difference when obtaining a mortgage for different types of housing is the amount of the down payment. The bank covers a certain percentage of the cost of housing with a loan. At the same time, the bank offers the highest percentage of coverage when purchasing an apartment - up to 85%. However, in the case of purchasing a country house or for its construction, only 50% of the required amount may be approved.
The borrower receives quite a few offers when choosing a mortgage in a house under construction. Developers often delay the delivery of a house, and there is also a risk that the house will never be put into operation. This is unprofitable not only for the buyer, but also for the bank. Such fraud can only be avoided through constant cooperation with reliable developers; accordingly, the bank can only approve an apartment in a house under construction if the house is being built by partner organizations.
Early repayment of a mortgage loan
All banks, and Sberbank is no exception, allow you to repay the loan ahead of schedule. However, you need to remember that you cannot just come and give money. First, the financial institution must be warned about this. Usually 1 month in advance, but you can try to negotiate a shorter period for considering an application for early repayment.
This document must indicate the specific repayment date and the amount that the client intends to pay. This is necessary in order to calculate the balance of the debt in advance and prepare a new payment schedule (provided that the repayment was complete).
What additional steps are possible in obtaining a mortgage?
The procedure for obtaining a mortgage is quite stable, so there will be no deviations from the above stages. However, for some citizens, this stage may involve collecting the documents necessary to submit an application. This step is necessary in any case, but the set of documents may vary. For example, sometimes the bank does not require official confirmation of income, but due to this “bonus” it increases the overall interest rate on the loan.
Also, in some cases, the bank may additionally require an updated income certificate. This happens if the client was unable to choose a suitable apartment within the 3 months allotted to him. The reason for updating the certificate may also be other situations due to which the procedure for obtaining a mortgage has been delayed.
Sometimes, in order to reduce mortgage rates, citizens are advised to prepare the ground” at the bank. The most favorable conditions are offered to current bank clients, so it is recommended to apply to banks whose cards have been issued. However, priority is given to salary card holders, since monthly transfers will serve as additional confirmation of the borrower’s income. Some banks offer discounts for meeting certain requirements. For example, Sberbank reduces the mortgage rate with electronic registration.
Additional amounts of money
The mortgage transaction is carried out on the bank's premises. A financial organization, as a full-fledged participant in the process, has a number of requirements for the procedure for transferring money. Lease of a safe deposit box, letter of credit can be used, additionally the amount will be recalculated or the banknotes will be checked for authenticity. Services will cost from 5 to 10 thousand rubles.
If you're unlucky, the bank may require a fee for its services . It is almost completely a thing of the past; moreover, it has been declared illegal by the Supreme Arbitration Court. However, bankers still find loopholes and opportunities to get paid for their services.
The commission in the loan agreement can be disguised under the column “checking the accuracy and completeness of documents when submitted by the applicant” or, for example, “filling out a loan application.” It ranges from 0.1% to 2% of the loan amount.
Since the lending market in Russia is competitive, a borrower can easily find a credit institution without commissions; the main thing is to clarify this issue already at the stage of agreeing on an agreement.
Attention! If the loan document has already been signed, you will have to pay a commission.
Mortgage broker and realtor services
Mortgage brokers and realtors make life easier for those wanting to purchase real estate by doing most of the work for them. Finding the desired apartment, choosing a lender, approvals and much more falls on the shoulders of the hired agency, but they also have corresponding commissions.
For the help of an intermediary you will have to pay from 1 to 5% of the cost of the found apartment . Usually, citizens who seek to get a loan as quickly as possible resort to the help of brokers and realtors.
