Inflating the cost of an apartment with a mortgage and understating its price: is it possible, why and how to do it

An overpriced mortgage is a phenomenon in which the purchase and sale agreement specifies a deliberately exaggerated market value of the collateral property. This scheme is mainly used by people who do not have the funds for a down payment or who want to earn an additional amount for their own needs.

True, overvaluing an apartment to obtain a mortgage if used incorrectly is fraught with consequences, so it is advisable to seek qualified help from trusted credit brokers of the Royal Finance company.

Is it possible to inflate or decrease the value of real estate to obtain a loan?

When completing a transaction when buying an apartment with a mortgage, both the seller and the buyer may seek to change the price of the property in order to obtain benefits .

If in the purchase and sale agreement the price is indicated significantly lower or higher than the market price of housing, then this indicates an underestimation or overestimation.

Responsibility

In case of underestimation, the tax office can prove the fact of tax evasion. In this case, the seller will have to pay a fine in addition to the tax. Its size is determined by Article 122 of the Tax Code of the Russian Federation. For underestimation of tax or its erroneous calculation, the fine is 20% of the unpaid amount.

If it is proven that the action was intentional, then 40% of the amount. In addition, the tax office has the right to hold people accountable for tax evasion (Article 198 of the Criminal Code of the Russian Federation).

If the cost of an apartment is inflated, both the seller and the buyer face criminal liability for fraud in the field of lending (Article 159.1 of the Criminal Code of the Russian Federation).

Why use such a scheme?

Although inflating the cost of housing is a fraudulent scheme, if the result is positive, the buyer can achieve short-term benefits. The reasons why buyers resort to overestimation are:

The buyer does not have the funds to pay the down payment to the bank. One way to solve this problem is to inflate the cost of an apartment with a mortgage. The price is fictitiously inflated, and the bank issues a larger loan without an advance.
The property is sold without renovation. The buyer cannot immediately move in and live, and there is no extra money to put the apartment in order. In this case, the buyer may also resort to overestimation.
The buyer needs cash. It can be absolutely any need - buying a car, a wedding, a trip. Taking out both a mortgage and a consumer loan at the same time is unprofitable.

Sellers want to sell their home at a reduced price for the following reasons:

When selling housing that meets certain criteria, the seller, by understating its price, can save on paying personal income tax. The criteria include:
has been in possession for no more than 3 years;
The period of ownership is no more than 5 years for housing purchased after 01/01/2016.
In case of litigation. One of the former spouses may underestimate the value of real estate under an agreement in order to reduce payments when dividing property.

Accurate calculations for a mortgage loan at Mosinvestfinance

It is important for the borrower to understand that when applying for a mortgage, the final percentage of overpayment will allow you to more accurately predict the future. For example, you can try to save money by reducing the duration of the loan. However, the bank is able to respond to shortening the term by increasing the loan rate, so it is important to calculate the nuances before you sign a loan agreement.

Mosinvestfinance credit brokers will help you make the necessary calculations and find a favorable ratio of the proposed terms and rates. This approach will reduce costs to the possible minimum, ensuring a moderate credit burden on the borrower. By entrusting calculations to the employees of this company, you will save thousands and thousands of rubles in personal income.

How to increase and decrease the price of living space?

The scheme for purchasing an apartment with an overpriced mortgage is as follows:

The buyer agrees with the seller to inflate the price of the home in the purchase and sale agreement. In addition, the seller writes a receipt for the amount of money in the amount of the difference between the inflated price and the actual price, which is indicated as the down payment.
Since, in the event of termination of the transaction, the seller will have to reimburse not the actual amount, but the amount specified in the purchase and sale agreement, he should protect himself. For this purpose, a receipt is written indicating that the buyer is borrowing the same amount.
The buyer takes the receipt to the bank, receives a mortgage loan and pays the seller the entire actual cost of the home.

The scheme for purchasing a home using a mortgage with an undervaluation is drawn up as follows:

The purchase and sale agreement specifies a price less than the actual cost of the property.
The remaining amount is recorded as the price for inseparable improvements. For example, this could be a renovation or redevelopment.

Important! Changes in home values may result in criminal liability. You should be aware of the legal risks before engaging in such transactions.

How to take it?

First of all, you need to find a seller who will be ready for such a deal. Next, you should contact specialists who can correctly prepare documents for a mortgage and help at all stages of this procedure. Mortgage brokers thoroughly study the client’s credit history, assist in collecting papers, find independent experts who will overestimate the property, and select a profitable mortgage product.

Cooperation with us will allow you to save your own time, money and quickly purchase a home with a mortgage without an accreditation payment. Our specialists are professionals in their field who are well versed in mortgage lending. With their support, you will avoid pitfalls and avoid mistakes that could negatively affect the decisions of bank employees.

The attitude of banks towards such mortgage transactions

In order to complete a transaction with an understatement, you must select a credit institution that would agree to participate in this. Several years ago, banks categorically refused; at the moment, many still adhere to the same position. Nevertheless, you can find banks that will agree to accommodate the client halfway, however, there are certain nuances.

All banks can be divided into four categories in relation to undervaluation transactions:

Banks that agree to apply such schemes without restrictions and additional penalties are Ak Bars, Vneshtorgbank, Moskommertsbank.
Banks that agree, but have their own conditions. This may be an understatement only up to the loan amount, or an individual consideration taking into account the situation of a particular borrower and the amount of understatement. These include Sberbank, VTB 24, Rosbank.
Banks that carefully hide their participation in such schemes, but under certain conditions can offer their clients a solution to the problem. For example, Deltacredit, Raiffeisenbank.
Banks that categorically refuse – Absolut Bank, SKB.

It is unlikely that an understatement will be processed without notifying the bank and its assistance , since any bank has its own appraisers.

When the value is overstated, as opposed to understated, the buyer, on the contrary, seeks to reach an agreement with the seller and the appraiser without informing the bank. However, banks have now tightened their control over appraisers. Some banks themselves order an apartment appraisal in order to be aware of its real value, for example, VTB 24.

The overpriced scheme can be used not only when purchasing an apartment on the secondary market, but also in new buildings from the developer. In this case, two contracts are filled out. One is between the developer and the borrower and the other is between the borrower and the bank. The developer confirms to the bank that the down payment has been paid, and the bank issues a loan. Subsequently, an additional agreement to the first agreement on changing the amount is signed. As a rule, banks are well aware of this scheme, but no official confirmation of this can be found.

Credit organizations also need clients and can actually issue a loan without a down payment in such situations, but everything is individual. A big role is played not so much by the choice of the bank itself, but by the specific borrower and the amount of overstatement.

Let's draw - we'll live

Banks began to refuse to issue mortgages without a down payment after the Central Bank tightened the requirements for the capital load under programs with a down payment of less than 20%, says Tatyana Ushkova, Chairman of the Board of Absolut Bank. This is also an echo of global events - mortgage lending rules have been tightened almost all over the world since 2008. Then the practice of subprime lending (providing loans to people who may have difficulty meeting the repayment schedule) in the United States became one of the main causes of the global financial crisis, says Dmitry Tarasov, advisor to the general director of Frank RG.

Of course, there is demand for a mortgage without a down payment, notes Alexey Prosvirin, deputy head of Rosbank Dom. But banks evaluate not only demand, but also risks - and the presence of a down payment from the borrower provides a certain guarantee, he says. Previously, lending without a down payment was more common, but statistics showed that borrowers who took out such a mortgage made the greatest number of delays, says Prosvirin.

Now the average down payment on a mortgage is 30%

The main disadvantage of a mortgage without a down payment for clients is the limited supply, Prosvirin believes. No down payment mortgage programs are almost always specific to homes and developers. Often, such programs offer apartments in buildings that have just begun to be built - and these are also pitfalls. The risks of issuing such loans can be compensated by the increased cost - it is logical for them to set rates commensurate with the rates on consumer loans, says Prosvirin.

According to Tarasov, the Central Bank considers the minimum level of down payment on a mortgage of 20% acceptable, because housing prices have decreased approximately this much in recent crises. “And yet, economic research has established that this is a borderline indicator of a change in the responsible behavior of the borrower,” he adds. According to Ushkova, the average down payment on a mortgage is now 30% - usually due to people who sell an apartment to buy a larger property.

RG's interlocutors rule out that the supply of mortgages without a down payment could increase in the future. First of all, due to price fluctuations in the housing market and the attractiveness of this type of lending for borrowers with low financial literacy, says Prosvirin.

Mortgage insurance price calculation

The mortgage insurance calculator will help you find out the total amount of payments . He calculates using a simple formula: D=S*A. Let's look at the formula in more detail:

D is the required insurance amount;
A is the tariff of the insurance company;
S is the amount of the mortgage loan.
For example, if you owe 100,000 rubles on your mortgage, then the cost of insurance will be 100,000 x 0.0025 = 250 rubles

Let's show it with an example. Let’s imagine that the total balance to be paid on the mortgage is 2,000,000 rubles, and the insurance company’s rate is 0.0025. We use the resulting formula:

2,000,000*0.0025 = 5,000 rubles.

Note that the figure at the beginning of mortgage payments is the largest. The less debt a person has, the less he must pay for insurance; the final result decreases proportionally.

Objects of insurance

Mortgage insurance may cover:

Property. A must-have item that even includes cheap mortgage insurance . The policy is issued for a year or several years, so it must be renewed. This type of mortgage insurance is beneficial. For example, if a fire occurs in the purchased home through no fault of the borrower, the insurer will pay the bank the entire amount along with interest. Please note that the list of risks may vary.
Life and health. An additional item that is highly recommended to be included. If you use a mortgage insurance calculator , you must additionally indicate age, occupation, and still the amount will not be accurate. The insurer is interested in the complete state of health, presence of dangerous hobbies and type of employment.
Title. This type of mortgage insurance is not considered common in our country. If housing is purchased in a new building, no one except the buyer can claim it. In this case, insurance is not required. But if a resale property is purchased, the previous owners could potentially lay claim to the apartment.

Banks most often recommend obtaining a full package of services. But usually this is not necessary. It is beneficial for the buyer to refuse some additional services in the almost complete absence of new risks.