Purchasing a separate apartment is a sore point for many Russian citizens. Most people cannot afford to purchase an apartment with one payment, and the way out of this situation is a mortgage loan.
Statistics show that mortgages are most often taken out by young families. In such families, one spouse acts as a borrower of funds, and the other acts as a co-borrower.
Most people do not understand what it means to be a co-borrower, who this person is, what rights and responsibilities he has. Many people think that a co-borrower on a mortgage is a kind of guarantor, but such a comparison is not true.
Let's try to figure out who a co-borrower is, what requirements are put forward to him, what rights he has, and also find out the answers to many other popular questions.
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Who is a co-borrower and his role in a mortgage loan?
If you look at legal documents, you may come across the following wording: a co-borrower is a person who bears the same financial responsibility to the credit institution as the main borrower.
You need to understand that there may not be a co-borrower. They are most often attracted in cases where the borrower of funds does not have a high income, or has an unstable, shadow income.
The role of such safety net falls on the shoulders of the husband or wife. But the bank may agree to accept any other close relative (mother, father, brother, daughter, etc.) for this role.
One of the main requirements of the bank is age. The age of a co-borrower in most credit institutions is set to 70 years. And if the loan repayment period is long, then the age may be even less.
It is important to know that if a married couple takes out a mortgage loan, the second spouse will always be a co-borrower. But this is only possible if the marriage is registered with the registry office. If this is a civil marriage, then the common-law spouse cannot become a co-borrower, since he is not a close relative according to documents.
Most credit institutions allow you to attract several co-borrowers at once, but most often their number should not exceed three. But these limits are set exclusively by creditors; in fact, there can be as many co-borrowers as you like.
Features of providing a tax deduction when paying interest
Refunds are possible from an amount not exceeding 3 million rubles. However, in this case, the borrower will receive a maximum of 390,000 rubles, which is 13% of the maximum possible transaction amount. Accrual of such a large deduction is possible only when receiving a high official salary.
The client can calculate the amount of the refund without outside help. To do this, you should refer to the payment schedule. Several values are indicated here, one of which goes to pay off the interest rate, the other to pay off the principal debt.
If the transaction amount is 1,000,000 rubles, of which 400,000 rubles. - this is interest on the loan, then the deduction is made from the last value. Calculation scheme: 400,000 * 13% = 52,000 rub. This amount is refundable. In this case, this value is maximum; the remainder of the deduction cannot be transferred to another tax period.
What are the differences between a co-borrower and a guarantor?
Both concepts are really similar, because in both cases, both participants are guarantors of the receipt and return of the borrowed funds.
But there is still a difference, and it is as follows:
- The bank can apply for collection of funds from the guarantor only through the judicial authorities. In the case of a co-borrower, a court decision is not required;
- The guarantor for any loan has no rights to financial assets and collateral;
- When issuing loans with a guarantor, his income is never taken into account.
What will be the basis for calculating the deduction?
Let's start with whether a co-borrower can get a tax deduction on mortgage interest. There is a big difference between a tax refund on interest payments and on the purchase of the home itself.
The maximum deduction when purchasing real estate is 2 million rubles (deduction base). If not everything is returned, you can transfer the remainder to other objects. In addition, it is possible to receive a tax refund in installments within three years, but only on the condition that no more than three years have passed from the date of purchase of the home to the receipt of the last refund.
The interest deduction is larger - 3 million rubles, but transferring the balance and “spreading” payments over several years is impossible. And it should be remembered that in both cases a repeated tax refund is not allowed.
Payments are made from taxes paid to the state in the form of personal income tax. Thus, citizens with salaries in an envelope and self-employed people who have not completed the appropriate paperwork will not be able to receive a deduction at all or will not receive everything that they could receive under the law.
Requirements for a co-borrower to be able to take out a mortgage
The requirements for a co-borrower may be different, depending on the wishes of the lender.
But, most often, they are given a standard format and look like this:
- Not younger than 21 and not older than 70. The co-borrower cannot be younger than 21, but the upper threshold often varies;
- Official employment. It is worth understanding that any entrepreneur can be a co-borrower;
- The co-borrower has income that makes it possible to repay the mortgage loan on his own if for some reason the borrower does not do so.
It is important to note that verification of a co-borrower is often formal. For example, if a co-borrower has a high level of income, the bank often turns a blind eye to the rest. And vice versa, the lower the income, the more additional conditions and checks arise. Often, only a passport is required from the co-borrower.
Mortgage for a large family.
Read how to get a military mortgage here.
How to buy an apartment with a mortgage, read the link:
But many credit institutions, in addition to it, may require the following package of documents:
- A questionnaire, the same as that of the borrower;
- A copy of the work book;
- SNILS;
- Certificate of income.
Sample application form for obtaining a mortgage loan.
Sometimes banks may require diplomas from educational institutions or even references from the place of work. But this is very rare.
It is worth understanding that the list of attached documents is formed exclusively by the lender, which means that the co-borrower will have to agree with it or refuse it.
List of required documents
Co-borrowers should collect documents for the bank only after the borrower receives a preliminary positive response. You are given 3 months to prepare for the transaction and bring to the attention of the bank all participants in the loan agreement.
The documents you will need are:
- passport;
- certificate 2-NDFL or according to the bank form;
- a document confirming employment, for example, a work book.
If the bank does not have any additional questions for you, then this package will be sufficient. Sometimes the requirements may become more stringent.
When applying for a mortgage with a family, it is better to collect a complete package of documents at once. This can have a positive impact on the preliminary decision on the application, the loan amount and even the annual interest rate.
Rights and obligations of a co-borrower
As stated earlier, a co-borrower is responsible for the loan in the same way as the primary borrower. All this means that if the borrower, for any reason, is unable to repay the debt, it will fall entirely on the shoulders of the co-borrower.
An important feature is that although both partners bear the same responsibility, often their shares in the acquired property are not equal. It is because of this that many disputes arise, because often the borrower has a large share and does not want to pay, and the co-borrower has to overpay.
In order to resolve such disagreements quickly, the bank often requires the conclusion of a prenuptial agreement (if the loan is issued by a married couple), which describes the share of each spouse in the acquired property.
In the case where the partners are not spouses, it is necessary to draw up an additional agreement under the loan agreement, which describes the share of each participant. The bank itself can often help with drawing up such an agreement.
What to do if the tax service refuses to pay a deduction
All actions of employees of this organization occur within the framework of the legislative framework of the Russian Federation. If a refusal is received, the reason will be announced. However, not all citizens agree with this decision. Some feel that they were treated with prejudice and given a biased reason for refusal.
If there is significant evidence, you can file an application with the prosecutor's office or court. To do this, you will need to prepare a solid documentary base. It will take a lot of effort to prove the illegality of the actions of a tax officer.
If the court takes the applicant’s side, the Federal Tax Service employee will be charged with abuse of power. In such a situation, the civil service employee will be fired and will have to pay a fine. He will also be prohibited from engaging in such activities for the next 5 years.
All tax officials know these rules, so they try to prevent violations. In this case, a desk audit is carried out by several specialists, so the decision is made collectively.
Important! You can find out about the status of the submitted application on the official website of the tax service in your personal account.
Does the borrower claim a share in the mortgaged apartment?
This is the question that most often worries almost every co-borrower and does not allow you to sleep peacefully throughout the entire loan period.
If spouses take out a mortgage loan, they a priori become co-owners of the property in equal parts. The fact is that the purchased apartment will be jointly acquired property, regardless of whose funds it was purchased for.
If we are talking about partners who are not married, then they must enter into an additional agreement between the co-borrower and the borrower on shares in the purchased apartment.
But often when signing documents, partners are on good terms and do not assume that there may be conflicts, which means they do not enter into any additional agreements.
In this case, you can defend your share only in court. To do this, the co-borrower will have to provide loan payment receipts, an agreement and other documents confirming his right to a share in the mortgaged apartment.
Who is a co-borrower?
A person who expresses a voluntary desire to fulfill financial obligations to the bank on the same basis as its client who has taken out a mortgage for the purchase of real estate is called a co-borrower in legal terminology. This type of liability is joint and several. Within the framework of current legislation, credit institutions have the right to insist on engaging at least 4 citizens in this capacity (except for the mortgage owner himself). The main requirement for each of them is the ability to repay current payments instead of the main client.
The company that executed the agreement has the right to demand this from each of the co-borrowers, who in return can claim a share of the real estate as its potential owners. Its value is equivalent to the amount paid for the main debtor in monetary terms. The final decision on the approval of the candidate is made by the bank.
How to exit the status of co-borrower under a mortgage agreement
It is possible to stop being a co-borrower, but doing so is quite problematic. The fact is that personal initiative alone is not enough for this. The main thing is that the credit institution that issued the loan agrees with the refusal.
Credit institutions most often do not like this very much, because in fact, the terms of the agreement will sharply change to the disadvantage of the creditor. There is always the option of finding another co-borrower, but often this is also problematic.
And yet there is an option to leave the co-borrowers. To do this, you must write a waiver of your share in the housing to the credit institution where the agreement was concluded and, if desired, demand compensation.
Sample application for exclusion of a co-borrower from a loan agreement.
Sometimes the bank may agree, for example, if the borrower pays regularly and the remaining loan amount is quite small. But this is still a risk for banks, which means they almost always refuse. The refusal is also sent to the co-borrower in writing.
Don’t be afraid of refusal, because almost everyone gets it. Such a refusal should be addressed to the district court with the same requirements.
As practice shows, it is important to provide compelling evidence as to why a person no longer wants or cannot be a co-borrower (moving, divorce, serious illness, job loss, etc.). If the plaintiff’s position is clear, reasoned and understandable, the court will most likely grant the claim.
Registration procedure
The specified list of documents must be submitted to the tax authority. The co-borrower can do this independently, regardless of the actions of the title borrower. The personal income tax refund is processed remotely (via the official website of the Federal Tax Service or by a valuable letter with an inventory), in the accounting department at the place of work or during a personal visit to the Federal Tax Service office.
Review of the documents will take no more than three months, after which, within 10 days, a written response to the decision will be sent. In case of refusal, you must personally contact the tax inspector and clarify the reason. If the answer is positive, you will need to write a return application, if it has not been submitted previously, along with all the documents. The timing of the transfer is determined by clause 6 of Art. 78 of the Tax Code of the Russian Federation - no more than one month .
If the co-borrower is the sole owner of the property, then he can apply for an income tax refund both in the form of a property deduction (13% of the cost of housing) and in the form of a deduction for interest paid.
Risks of a co-borrower in mortgage lending
The risks of the co-borrower can be fully equated to the risks of the borrower. First of all, this is, of course, the danger of losing the housing purchased under a mortgage loan agreement. This is possible if both partners are unable to make payments.
In addition to the loss of real estate, the co-borrower can ruin his or her credit history. This will lead to the fact that in the future he will not be able to take out a loan not only from this lender, but also from others, because he will be entered into the database as a defaulter.
Banks also often force the co-borrower to insure his life in the same way as the borrower. To summarize, it should be said that being a co-borrower is quite difficult, so you need to think carefully before agreeing to act in this role.
