Despite their prevalence, mortgage loans still remain an inaccessible type of lending for many citizens of the Russian Federation.
For those who want to purchase a home with a mortgage, but cannot afford it due to their modest income, we offer the opportunity to take out a mortgage loan for two people. Next - all about it.
What should you consider?
Any bank strives to increase its client base, but obtaining a second mortgage loan is a high risk for the bank, so the client’s data will be considered more carefully.
Before making a decision to apply for a second mortgage, you should first take into account your income and evaluate your solvency for a long time, since the presence of a second loan significantly increases the financial burden - for a positive decision on applying for a second mortgage without repaying the first, late current payments are unacceptable.
Save bills and receipts
In an official union, relations are regulated. But in an unregistered marriage, dividing property is more difficult. Therefore, if an apartment was purchased with a mortgage outside of marriage, it is necessary to preserve all documentary evidence of payments.
Recommended article: Unified housing document - what is it and how to get it
This is especially true if you pay for a loan from a card, through a terminal or from an electronic wallet. Make sure the payer is identifiable. It may be better to make payments over the counter by showing your ID.
Important! Having payment orders in hand, you will be able to prove that you actually repaid the loan and participated in the acquisition of property.
Second mortgage availability criteria
It is not legally prohibited to issue several loans for one individual, including mortgages, but it is necessary to determine the main points:
- Solvency: obtaining a second mortgage is possible if payments on both loans amount to no more than 40% of the client’s total income (co-borrowers can be attracted to increase income levels).
- Credit history: to obtain approval for an application for a second loan, you must have an absolutely clean credit history and not be in default on an existing loan.
- The need for a down payment: some banks allow the use of maternity capital in this capacity.
- Qualitative characteristics of the property: after preliminary approval of the client’s application, the bank provides the borrower with 3 months, during which he must select the property purchased using borrowed funds. The bank's appraiser analyzes the selected object and only after that the bank makes a final decision on approving the mortgage and conducting the transaction. If the client becomes insolvent, the property is put up for auction and its market value will have to cover the loan amount.
Mortgage for two without marriage
Whether or not to register a marriage is a mutual matter between two persons running a joint household. Previously, banks did not issue mortgages to civil couples. But today everything has changed: 95% of credit institutions agree to such a deal without requiring a marriage certificate from co-borrowers.
The conditions for concluding the contract in both cases are the same, with the exception of one feature: registered spouses, having paid the mortgage, will receive living space in joint ownership, and civil spouses - in shared ownership.
Co-borrowers who are not members of the same family can take out a mortgage loan only if they act as co-investors. And their shares in the apartment are distributed depending on the established agreements and the financial participation of each of them.
For example, if a wife, having sold a room in a communal apartment, made an initial payment of 40% of the cost of housing, and the remaining 60% of the mortgage was paid by the husband, then the property will be divided in the same proportions. However, co-borrowers can determine the shares themselves as they wish.
The share scheme in this case protects the interests of each spouse . After all, an apartment registered as part of a civil marriage to one of the cohabitants will, by law, have no relation to the second cohabitant. Of course, you can prove your involvement in buying a home through court, but this is a very lengthy and quite expensive process.
There are no other differences in mortgage lending conditions for official and civil families, but problems arise if the civil husband and wife decide to separate.
However, if the mortgage on the apartment was registered as shared ownership, then the division of property during a divorce will not be particularly problematic.
You can sell the apartment (even collateral) and divide the money according to investments or compensate one of the spouses for his share. At the same time, the bank may revise the payment schedule for the ex-spouse who bought out the co-borrower’s share.
When applying for a mortgage for unmarried spouses, include in the agreement an additional clause on the procedure for repaying the mortgage debt in the event of one of the spouses withdrawing from the lending program.
The disadvantages of taking out a mortgage for two unregistered spouses include:
- Lack of opportunity to participate in preferential mortgage loan programs.
- Impossibility of obtaining government subsidies for the purchase of an apartment.
Second mortgage terms
In most cases, the second mortgage is arranged as a separate loan agreement under standard terms.
Something to keep in mind! Preferential categories of borrowers, for example, those who signed up for the first mortgage agreement under the state program for young families, will not be able to take advantage of state support a second time.
Documents for registration:
- Passport or other identification document (mortgages are available to citizens of the Russian Federation and foreign citizens working in the country);
- application form, which indicates the basic data of the potential borrower, information about family composition, monthly income level and other essential data;
- proof of income (2NFDL or a certificate issued in the bank’s form - you can print it on the official website or take a sample at the territorial branch of a banking institution).
- confirmation of the availability of a down payment;
- a certified copy of the work book with a note indicating that the employee is currently working;
- in some cases, the bank may require a certificate of no arrears on an existing loan, but, as a rule, most banks verify this information by sending the client’s data to the credit history bureau.
Something to keep in mind! Some banks put forward a requirement for the maximum amount of the client’s current obligations; these conditions should be clarified with the credit institution itself.
The application can be filled out at any territorial branch of the bank or a preliminary application can be completed online on the official website. A bank specialist checks the received documentation and contacts the client and employer to clarify the data. Then a preliminary decision is made.
Sberbank PJSC offers an additional service for submitting an electronic application, which allows you to receive approval remotely and upload documents to evaluate the selected property without visiting the office.
Are there any risks?
The main risk is that in the event of separation, the property will remain with the person in whose name it is registered.
Of course, it will be possible to prove that the second partner also has the right to half the share due to existing agreements (or at least to pay part of the cost of the apartment/house), but it will be difficult to prove this. Therefore, before purchasing, write down all the conditions in the contract in advance and determine the shares of each person in the purchased object (Article 244 of the Civil Code of the Russian Federation).
It must also be remembered that if one of the owners of common property in which he has a share significantly improves the common facility, he will be able to claim an increase in his share (Article 245 of the Civil Code of the Russian Federation).
Probability of approval
All incoming applications are considered by the banking institution on an individual basis; in some cases, to minimize risks, the bank may approve a second mortgage at higher interest rates or a shorter loan term. In conditions of high competition among banks to attract clients, if the borrower has sufficient own funds to make a down payment and confirm high levels of income, there are fairly high chances of approval of a second mortgage without repaying the existing loan obligation.
How to increase?
In order to increase the chances of approval for a second loan agreement if you have existing obligations to the bank, you can provide documentary evidence of additional income, for example, a lease agreement for your own real estate (not pledged by the bank) or additionally attract co-borrowers: in this case, the bank will estimate total income.
In addition, to reduce the bank’s risks, the client can additionally provide his own property as collateral.
Pros and cons of a mortgage in a civil marriage - what they write about in reviews
There are quite a lot of responses to this problem on the Internet. They say that the topic is relevant, but, unfortunately, there are no proven recipes. The authors of the reviews strongly recommend resolving issues of property division in advance, consulting with specialists, and studying the laws.
The question is often raised on forums whether a common-law husband or wife can claim real estate if the costs of the mortgage were borne by the other party. Such precedents have occurred in judicial practice. If the plaintiff manages to prove in court that the couple lived together for a long time and ran a joint household, then theoretically the common-law spouse can claim half of the apartment. The final decision depends on the evidence base, the experience of the judge and the lawyers involved.
The situation is also often discussed when a common-law husband takes out a mortgage and then stops paying for it. Of course, the apartment is taken away for debts (), and the other party cannot influence the process, even if it participated in paying the loan. If the housing is registered for two people, then the second party to the transaction will be able to re-register the contract in their name, pay the remaining balance and become the owner of the real estate.
What to do if you refuse?
When receiving a refusal to issue a second mortgage agreement, a potential borrower has several options:
- submitting a repeated application after a certain time (re-application is available no earlier than after 2 months);
- contacting third-party banks;
- sale of the first property. Since it is pledged to the bank, written permission will be required. You can agree with the buyer to contribute part of the funds to fully repay the obligations to the bank, remove the encumbrance on the property and complete a standard purchase and sale transaction;
- applying for a consumer loan to repay an existing mortgage: a high-risk method of repaying obligations, since the rates on consumer loans are higher than on mortgages.
Mortgage for two spouses
The legislation of the Russian Federation clearly establishes the procedure for inheriting both property and debt obligations, so banks are most willing to issue loans to relatives.
An apartment with a mortgage for two spouses is a very common practice in Russia . By law, spouses purchasing housing on credit automatically become co-borrowers and owners, unless otherwise specified in the marriage contract.
Buying an apartment with a mortgage for two owners means that each spouse will have to collect their own set of documents.
With a marital mortgage, there are 2 options for repaying the debt:
- Each spouse makes monthly payments.
- Only one of the spouses pays the mortgage (for example, the husband works and pays, and the wife is on maternity leave).
An interesting detail: it is known that the borrower can return income tax from the cost of housing and interest on the mortgage.
This can be done at the end of each year by providing the required package of documents to the tax office.
However, only a working co-borrower can claim a tax deduction . This nuance is enshrined in law.
No mortgage transaction is complete without insurance. Therefore, you should know that taking out insurance if you take out a mortgage for two will cost 2 times more.
Note! If one of the co-borrowers becomes unable to work, he retains ownership of the mortgaged property.
Which bank to get a second mortgage from?
With the increase in demand for mortgage loans, competition among banks is increasing, and more and more new mortgage programs are appearing under which it is possible to sign an agreement at reduced rates in comparison with the existing agreement.
Note! Sberbank PJSC offers its clients special conditions for reducing interest rates when taking out life and health insurance for the borrower, as well as when completing electronic registration.
Old or new bank?
To reduce the time required to assess the borrower’s identity and solvency, it is more advisable to contact the bank with which the first mortgage agreement was concluded. The bank will evaluate the history of interaction with the client, calculate the risks and make a decision in a short time based on the information studied. Reduced interest rates can also be provided to reliable customers.
If the bank refuses to provide a loan, you can submit applications to third-party lending institutions, since different banks have their own criteria for assessing potential borrowers. In addition, third-party banks may have more favorable lending conditions.
