Mortgage with state support at 6% per annum: how to get
At the end of 2017 on the initiative of the President of the Russian Federation. Russia has developed and adopted a state program to support families in which a second (third, fourth, and so on) child appeared. Such families were able to get a mortgage at a reduced rate of 6% per annum. The parents of a newborn child (if there are more than one child in the family) will be able to purchase an apartment in a new or newly built house. The program also suggests the possibility of refinancing an existing mortgage at a new discount rate.
However, the project has many nuances. In this article we will tell you how to become a member of this program if you:
- only going to draw up a mortgage;
- already have a valid mortgage loan.
How the preferential mortgage program works
First, let’s calculate what effect the family budget will entail a mortgage at a lower rate. At the end of 2018, Russian banks offered mortgage loans to borrowers at an average rate of 9.5 to 10.5% per annum. The average loan amount for the purchase of real estate in 2018 was 2 million rubles.
If the borrower issues a loan in the amount of 2 million rubles for 15 years at an average market bank rate of 10% per annum, his monthly payment will be 21,492 rubles . If a family with a newborn child is able to issue a mortgage with the same parameters, but at a reduced rate of 6% , then the monthly payment for it will be 16,877 rubles . Monthly contributions to the creditor bank will be reduced by 4,615 rubles. If you do not extinguish the mortgage ahead of time, then in 15 years the total amount of savings will amount to 830,700 rubles!
Moreover, banks actually lend to citizens under this program at a higher rate. It is equal to the key rate of the Central Bank in force at the time of the conclusion of the contract, plus 2 percentage points from the top. At the moment, the key rate of the Central Bank is 7.75%. That is, the bank issues a mortgage to the borrower at 9.75% per annum. The borrower who participates in the program pays the loan at the rate of 6% per annum. The remaining 3.75% of the bank receives from the state in the form of subsidies . In total, the state has allocated 600 billion rubles to subsidize preferential mortgage loans for large families. The limits are distributed among various banks that have expressed a desire to participate in the program for issuing preferential mortgages.
Who can get a mortgage at a reduced rate
The most important requirement for borrowers who want to get a mortgage loan at a reduced rate is the birth of the second, third (fourth and any subsequent) child in the family from January 1, 2018 to December 31, 2022 . Only citizens of the Russian Federation can get a loan at a reduced rate.
Apply for a loan with a reduced rate can any of the parents of children alone. If the family has a child who was born by one of the spouses before entering into a valid marriage, and then the couple had another common child, then such a family has the right to apply for a preferential mortgage.
All other requirements for program participants are standard for borrowers who apply to banks for mortgage processing.
Requirements for acquired property
Important: subsidizing the preferential rate on a loan is applied only when buying a home in the primary market . This type of property includes ready-made apartments in newly commissioned new buildings, as well as housing that is under construction. The transaction for the purchase of real estate must be concluded without fail with a legal entity – a construction company.
Thus, a state-backed mortgage cannot be issued for purchase:
- secondary housing;
- private house;
- new buildings under a contract of assignment of rights of claim from an ordinary person — a physical person;
- A new apartment owned by, for example, a mutual fund.
The developer company must be accredited with a bank operating under the program of issuing preferential mortgages. The price of an apartment purchased can not exceed 12 million rubles (for the regions of Moscow, St. Petersburg, Moscow Region, Leningrad Region) or 6 million rubles for all other regions of Russia.
Duration of the discount rate
According to the rules in force until April 2019, the 6% discount rate for a loan did not extend over the entire term of the contract. The period of state subsidization of the interest rate ranged from 3 to 8 years, depending on the number of children in the family and the time of their birth.
In April 2019, the program was improved and improved. Now, according to the order of the Government of the Russian Federation, the reduced rate of 6% per annum will be valid until the loan is fully closed .
Features of a loan with state support
Now let’s take a closer look at which credit organizations you can apply for a mortgage at 6% per annum, what the program contains the nuances in terms of collecting documents, the size of the down payment, the use of maternity capital, insurance.
To receive a preferential mortgage, a citizen must apply to the bank that participates in the program . The current list of credit institutions can be found on the website of the company “Dom.RF”, which implements this state program.
When applying for a preferential loan to the borrower, in addition to the standard set of documents, you will need to add only birth certificates of children , and nothing more.
As a down payment, the buyer will have to contribute at least 20% of the apartment price . You can use both personal savings and funds allocated from the state or municipal budget. Including maternity capital funds .
As with the registration of any other mortgage loan, it is obligatory to insure the acquired property (or the rights of claim of a participant in shared construction). It is also advisable to insure the life and health of borrowers. The project provides that in the absence of personal insurance mortgage subsidy can be reduced, and the rate , on the contrary, increased .
In practice, all banks participating in the program approach insurance in a different way. In some credit institutions, mandatory co-insurance is required for all co-borrowers, in some – only the main borrower. According to the internal rules of JSC “Dom.RF”, the life and health insurance of borrowers is provided on a voluntary basis. The nuances of insurance must be clarified with the specialists of the institution to which you intend to apply.
Payment of insurance, of course, will make a soft loan less profitable. However, in case of unforeseen situations, it will be able to protect the borrower.
Features of on-lending existing mortgage loan
The program of state support for large families at the birth of another child provides for the possibility of re-financing an existing mortgage loan. The main requirements for the allocation of subsidies are the same as for the registration of the primary mortgage:
- the appearance in the family from January 1, 2018 to December 31, 2022 of the second (third and any subsequent child) ;
- a valid loan was obtained for the purchase of housing in a new building from a legal entity .
Additional requirements for those who are going to refinance their loans are:
- the balance of the loan debt should not exceed 80% of the price of the apartment at the time of purchase;
- the borrower has made at least 6 payments ;
- There is no loan debt and overdue payments for more than 30 days.
If your mortgage loan meets these requirements, then you can apply for refinancing to the bank where you made the loan . If your application is satisfied, the bank will sign an additional loan refinancing agreement with you at the new rate. With such a development of events, you do not even have to re-assemble the package of documents.
However, not all financial institutions wish to refinance previously issued loans at a rate of 6%. For a bank, participation in the program is only an opportunity to provide loans to citizens and receive subsidies from the state. But this is not their responsibility. For example, the country’s largest credit organizations, Sberbank and VTB, do not refinance their clients a mortgage on this program. They are engaged only in registration of new loans.
What if the bank refused to lend you on concessional terms? The easiest way out of this situation is to apply to another credit institution . Banks operating under the Family Mortgage program are in almost every major city. However, in this case you will have to re-assemble the entire package of documents (including again, you will need to confirm your income). For families in which the spouse is on maternity leave, this can cause certain difficulties.
You can apply for refinancing on concessional terms directly at Home. RF “. In this organization, mandatory confirmation of employment and income from the borrower is not required. If the loan debt does not exceed 65% of the appraised value of the apartment, then it will be possible to get a new loan on two documents – a passport and SNILS (or driver’s license). It is necessary to attach a certificate to the package of documents, which confirms the timely payment of the previously issued loan.