Very often, banks lure people with favorable loan terms, when they can very quickly acquire their own home. At the same time, consultants are modestly silent about what a mortgage is, what its features are, and what the risk of losing both housing and invested money is. Before taking out a loan, it is a good idea to first study the terms and conditions of mortgage loans from several financial institutions.

What is a mortgage and how does it work?

The word “mortgage” was borrowed from the Greeks and translated means “collateral”. Even when studying bank offers, not all people understand how a mortgage works. When deciding whether to issue money, some banks also take into account the total family income, considering the husband or wife as co-borrowers. The mortgage scheme is very simple:

1. The client takes money from the bank and as soon as the payment is fully paid, the deposit is removed, and the apartment or car becomes his possession.
2. If the client cannot pay, the property is put up for sale, and part of the proceeds is used to pay off the debt, including interest.

What is a home mortgage?

Often people take out loans to buy an apartment, and banks are willing to meet them halfway. This is one of the most common banking services - a mortgage loan for housing. What's so tempting about a home mortgage? The bank issues ownership of the apartment immediately, and not when the entire amount is paid. If we are talking about housing with a mortgage, then it is worth carefully calculating the following points in advance:

• will it be possible to pay the monthly required amounts for many years;
• Will you be able to pay the bank if you lose your job?

When deciding whether to issue a loan or not, the bank takes into account whether the client will be able to repay the required amount monthly, so salary plays a primary role, only official income is taken into account. Some financial institutions also take into account additional income, which increases the borrower’s chances, but not all clients agree to advertise this amount.

What is a social mortgage?

In many countries, the state is meeting the needs of families who need housing; appropriate projects have been developed and mortgages have been taken into account. What is a mortgage under social programs and who is eligible to participate:

1. Those on a waiting list who do not have access to housing under the terms of a commercial mortgage.
2. People who are in line to improve their living space.
3. Large families.
4. Graduates of orphanages.
5. Public sector workers.

The state allows such people to take out a loan on preferential terms, which are provided for by a social mortgage. The main decision remains with the bank; if the family does not have a stable income that will allow them to repay the loan, then the financial institution has the right to refuse. Social mortgages also include programs for military and young families; the following mortgage conditions are provided for them:

1. Military mortgage. The bank issues money that has been accumulated in the officer’s account specifically for the purchase of housing. The rest of the amount is paid by the state.
2. Mortgage for young families. The state pays only a third of the amount for them. There are two important conditions:
   • age – no higher than 35 years;
   • have to wait in line for an apartment.

Types of mortgage

Experts list several popular types of mortgages:

1. For real estate.
2. For an apartment or a country house.
3. For housing.
4. For new buildings.
5. For the room.
6. To the cottage.

Mortgages for secondary housing are the practice of many banks, rates range from 8 to 15%. There are different types of mortgage lending, the only difference is in the contribution: from 10 to 50%. Lenders carefully examine both the collateral and the financial condition of the borrower and may refuse if:

• housing is purchased from relatives;
• less than six months have passed since the death of the former owner;
• the borrower has children under 18 years of age;
• one of the co-owners is disabled.

Banks are very attentive to the technical condition of the building when issuing a mortgage for the purchase of housing. Therefore, the chances that they will give you money for an apartment in a communal apartment, hotel type or in a hostel are extremely small. The depreciation of the house cannot exceed 55 years. The layout of the apartment must coincide with the BTI drawings. Therefore, if there was a redevelopment, the bank has the right to order the changes made to be legalized.

Is it worth taking out a mortgage?

A profitable mortgage is directly dependent on the average interest rate on deposits. It is believed that mortgage conditions are favorable if the deposit rate decreases, because the interest on payments also decreases. But most banks take into account all the points, so the largest figure is noted in the contract, above which the interest rate cannot rise. If you're lucky, the bank can issue a mortgage at a floating interest rate, but not everyone is so lucky and not always.

Pros of a mortgage

The advantage of a mortgage is that you can get housing right away. You can also take advantage of a form of government support such as mortgage interest compensation. Everyone has the right to a property tax deduction, which both reimburses funds and compensates interest. Once a month, the amount of income tax from the client’s salary is returned.

To obtain this opportunity, you must annually submit to the tax service:

• ownership documents;
• act of acceptance and transfer;
• information on loan repayments.

Cons of a mortgage

The advantages of such a loan are obvious, but there are also disadvantages, the most noticeable being the overpayment of the mortgage. Considering that the loan is issued for several years, the amount accrues is quite significant. There are also such negative sides:

1. You cannot buy or sell housing, or register other family members.
2. If there is no money for payments, the bank has the right to sell the mortgaged apartment.
3. It is prohibited to rent out housing.

What is better - a mortgage or a loan?

People often hesitate: what is more profitable: a loan or a mortgage? The answer is very simple: a loan is more profitable for the buyer, and a mortgage is more profitable for the bank. A mortgage loan imposes restrictions on the use of housing, if violated, the lender may terminate the contract and demand payment of the entire debt. And with an unsecured loan, you can sell your home and pay off the creditor; disposal of the property is not prohibited. Therefore, the answer is obvious, but the client's decision depends on many factors.

What is better - a mortgage or a loan?

Taking into account the strict requirements of a mortgage, many clients take a long time to choose, hesitating between a mortgage and a loan. And more often they choose the latter. The main thing is to find guarantors, at least one of whom must have an income no lower than that of the person taking the loan. What are the benefits of a home mortgage:

1. The apartment is transferred into ownership.
2. The bank can no longer take away the apartment.

What do you need to get a mortgage?

To apply for a mortgage, you need to prepare the necessary package of documents. The lender may also require additional documents for the mortgage, photocopies of family members’ passports. Co-borrowers and guarantors also submit photocopies of documents. After all, what is a mortgage? This is a long-term secured loan. Therefore, you need to provide an application for a mortgage, a bank application form and photocopies of:

• passports;
• insurance certificate of state pension insurance;
• identification code;
• military ID for men of military age;
• educational documents;
• marriage or divorce certificates;
• children's birth certificates;
• work book certified by the employer;
• income documents.

Is it possible to pay off a mortgage early?

Sometimes people take out a loan hoping for a large income that will allow them to repay the loan earlier. Banks allow you to pay off your mortgage using one of the systems.

1. Differentiated. The entire amount of interest and principal is repaid in equal shares during the term of the agreement. This option is more profitable for the consumer, since there is a simultaneous reduction in debt and interest.
2. Annuity. First, the interest is repaid, and then the main part; the cost of the loan can be paid only after paying the interest. Interest is calculated for the entire term of the mortgage.

To apply for early repayment of a mortgage, you need to write an application to the financial institution 30 days in advance. It is worth studying the clauses about insurance premiums, since the client has the right to reimburse the amount of paid but not used insurance. This may apply to both loan obligations and property. After full settlement with the bank, you need to take a certificate of full fulfillment of obligations.

How to get your mortgage interest back?

Few people know that the client has a chance to return the mortgage interest if he takes advantage of such a benefit as a “tax deduction”. The main thing is to indicate that the purpose of the mortgage is to purchase an apartment. Then the issue with the subsequent return of interest is easily resolved. This opportunity can only be used once. In what cases is the benefit not provided?

1. If the home owner is retired.
2. If the housing was purchased by an entrepreneur for business.
3. If the seller and buyer are in a family or work relationship.

You need to submit documents to the tax office, the decision on the return of money is made within a month. What should be the main papers?

What is a mortgage and what are its main advantages? How to calculate mortgage payments by interest rate (online)? Which banks offer the best mortgage programs in Moscow?

Hello, dear readers of the HeatherBeaver business magazine! Denis Kuderin is with you.

The topic of the new publication is Mortgage. The article will provide a detailed overview of this concept and discuss all the advantages, types and conditions of mortgage lending.

The material will be useful to anyone who is planning to purchase a home with a mortgage (no matter in the near or distant future), as well as to those who want to improve their level of financial literacy.

And now – first things first!

1. What is a mortgage - definition and essence

A mortgage is a type of collateral that serves as insurance for the lender lending money. The collateral is the property purchased by the borrower - as a rule, this is real estate (apartment, house, cottage, share in an apartment).

The property itself remains the property of the buyer, but in the event of a breach of debt obligations, the creditor has the right to sue it in his favor.

The owner does not have the right to dispose of housing (sell, donate, exchange) without the lender’s permission for such operations.

Professional assistance in choosing a mortgage is provided by Mortgage Agencies and Centers, which are located in every major city.

2. Types of mortgage

There are several options for classifying a mortgage. There are two fundamentally different types - a pledge for the property being purchased and a pledge for the housing that is already owned.

Another criterion for differentiation concerns the type of housing purchased.

In particular, with a mortgage you can purchase:

• apartments in new buildings or a house under construction;
• apartments on the secondary market;
• houses, dachas and summer cottages, cottages;
• real estate shares.

Some banks issue mortgages for housing construction on their own or with the help of contractors.

Competition among credit institutions leads to an extreme variety of credit programs. Each financial company offers "exclusive" products, but the differences between mortgage offerings are rarely fundamental.

A little more about some truly unique mortgage options.

Military mortgage

The purpose of such a mortgage is to provide adequate housing for military personnel of the Russian Federation. The project has no analogues in world practice. Officers, midshipmen and privates of the Russian army serving under contract can become participants.

Military personnel join the Savings Mortgage System and after just three years of membership they can apply for funds for a mortgage loan. Then they contact the bank and draw up a loan agreement.

The down payment is paid by the Russian Ministry of Defense, and the same structure makes regular payments on the loan. Thus, military personnel do not invest any funds in real estate at all.

True, there is a restriction on the cost of purchased living space - this year the price of an apartment should not exceed 2.4 million rubles.

Read detailed material on the topic “” and “” on our website.

Mortgage with state support

Another unique project is a mortgage with government support. The program has been operating since 2015 and allows everyone to take advantage of preferential conditions, regardless of their social status.

The goal of the program is to provide support to construction organizations and revive the economic situation in the country during a period of protracted crisis. The state partially pays the mortgage loan, allowing borrowers to sign contracts with a lower interest rate.

Choosing a mortgage program is an event that should be approached with maximum responsibility. To take out a loan on truly favorable terms, you should carry out some preliminary preparation.

Banking offers are a product of marketing, so you should not believe all promises and figures unconditionally. You should find out in advance the real lending conditions, and not just those announced by financial companies.

More details on this topic in the articles “”, “” and “”.

This is the first thing a borrower looks at when choosing a loan program. Interest rates in Russian banks are currently quite high - 12-15%. It is believed that Russia has the highest overpayments on loans, but this is partly explained by the level of inflation in the country.

For the rate to be a “civilized” 7-9%, it is necessary to achieve stability in the economy for at least 10-15 years. Only then will credit institutions be able to reduce annual interest rates.

Example

You have decided to take out a mortgage for an apartment worth 3 million rubles. for a period of 20 years with an interest rate of 13%. By entering the data into the mortgage calculator, we get 35,147 rubles in monthly payments and an overpayment on the loan of about 5.4 million.

Tip 2. Explore the possibility of early repayment

Statistics show that most loan recipients strive to pay off their debt ahead of schedule. Often, a loan taken out for 20 years is repaid in 7-10 years or even earlier.

Not all credit companies are delighted with early payment of debt. The sooner the client repays the loan amount, the less profit the bank receives.

For this reason, financial institutions try to avoid unscheduled contributions. They may generally prohibit making payments beyond the required amount for a certain period (this is called a moratorium on early repayment).

Another option is to complicate the procedure for processing early repayment and charge an additional commission for this.

When choosing a program, you should study all these points in as much detail as possible.

Tip 3. Pay attention to the amount of commissions

Customers are always aware of the interest rate on their mortgage, but not everyone knows what fees are charged for regularly servicing bank transactions. Meanwhile, these amounts often add up to tens, or even hundreds of thousands of rubles every year.

Example

The bank offers a profitable (at first glance) loan for 13% per annum with quick execution of the agreement - what is called “with two documents”. The borrower agrees to all terms and conditions of the mortgage, including the commission rate of 0.4% monthly.

“What is 0.4% is nonsense” - approximately this thought flashes through the mind of the loan recipient when he signs the agreement. However, per year the figure of 0.4 turns into 4.8%. This is the number that should be added to 13% per annum. Thus, the interest rate will be 17.8%, and this is completely different money.

There are also one-time transaction fees. It is also useful to know their sizes in advance.

By law, mortgage property insurance is mandatory. However, banks, in addition to the clause provided for by law, include other types of insurance in the contract - the life of the borrower, his ability to work and health.

All types of insurance are paid and are issued at the expense of the loan recipient. Often regular payments amount to up to 1% per annum of the loan amount, and this is a considerable amount over the years of the mortgage.

Clients have the right to refuse voluntary insurance, but in this case banks may increase the interest rate. All these nuances require prior approval.

It is worth finding out in advance under what conditions the bank has the right to terminate the contract and demand the return of the collateral.

Typically, banks take this step after late payments more than 3 times a year, but it happens that even a one-time delay is already a reason for serious repression from the credit institution.

4. What is needed to get a mortgage - basic conditions and requirements of banks

The time when banks handed out mortgage loans left and right to almost everyone who wanted them is irrevocably gone. Now, in order to get a mortgage, citizens need to satisfy numerous requirements and conditions of credit companies.

The main ones:

• age (the borrower must be over 21 years old at the time of receiving a mortgage and under 65 at the time of expected repayment of the debt);
• availability of a stable job - the client must have worked in his last place for more than 6 months;
• the level of monthly income of the borrower or family must be 2.5 times the amount of regular payments;
• availability of funds for the down payment (on average it is 10-30%);
• the presence of co-borrowers (if the income is less than what the bank requires).

Some lending institutions require medical certificates confirming mental health and proof of residence in the city receiving the loan for a certain period.

Watch an informative video about mortgages from an expert.

5. What happens if you don’t pay your mortgage?

It is in the interests of each borrower to make payments on time and in the proper amount. But... man proposes, but God disposes. Or, to put it another way, circumstances are often not in the borrower’s favor.

Money that should go into a bank account suddenly becomes urgently needed elsewhere. Or they simply don’t exist - the person’s salary was delayed or he was fired altogether. It was not possible to borrow money from relatives or friends to pay the monthly installment, the result is a delay.

If such actions are one-time and not regular, the creditor simply applies sanctions - charges fines and penalties.

If violations of the terms of the agreement by the borrower are repeated, the bank has the right to go to court and seize the collateral. It does not matter whether the person (family) has another apartment.

True, credit companies take such a step only in extreme situations, when all other options for influencing the debtor have already been exhausted. This option is not very profitable for the financial institutions themselves, since the sale of living space does not cover all costs.

Borrowers who know that they will not be able to repay the next payment should notify the bank in advance and discuss the terms of loan restructuring with managers. This will help to achieve a reduction in payments when extending the term or to obtain the right to a credit holiday.

6. Mortgage in Moscow - TOP 5 banks with the most profitable mortgage programs

Dozens of financial companies offer to obtain a mortgage loan in the capital. Choosing an organization with truly decent conditions among them is not an easy task.

The table shows the 5 most attractive mortgage programs in Moscow and the region for 2016:

№	Bank	The name of the program	Peculiarities	Interest rate
1	Sberbank	Mortgage with state support	The program is valid until January 1, 2017	12%
2	VTB 24	New buildings with state support	New apartments in prestigious areas of the capital	11,9%
3	Credit Bank of Moscow	Mortgage on the secondary market	Apartments in all districts of Moscow	12,9%
4	RosEvroBank	Mortgage Apartment	Loan processing in 7 days	11,45%
5	Tinkoff Bank	New building with government support	Possibility to apply for a loan online	10,9%

Today, banks offer a large selection of lending programs that allow them to solve a wide variety of customer problems. Among all existing products, mortgage lending deserves special attention. Most often, a mortgage is used to purchase a home, but in practice it can also be used to implement a number of other tasks.

Subject of mortgage

Mortgage lending covers all real estate: buildings, buildings, houses and structures, cottages, garages, etc. Most often, residential buildings and apartments are purchased with a mortgage.

Individual land plots can also act as the subject of a mortgage and perform the functions of ensuring the repayment of loan funds by the borrower, i.e. collateral

A mortgaged apartment can be used as collateral for a loan. If the borrower has other real estate in his possession, it can also be used as collateral. Non-residential objects, for example, office premises and other commercial real estate, vehicles, and land plots, can also be used as collateral.

If the borrower uses the funds received under a mortgage loan to purchase real estate, he receives ownership of the property from the moment the relevant agreement is concluded.

Thus, a mortgage allows, first of all, to solve housing problems that are relevant to many citizens.

A mortgage allows you to own an apartment or even a whole house without wasting time on accumulating the required amount - this is its main advantage.

At the same time, the property purchased with a mortgage can be used at your own discretion immediately after the conclusion of the relevant agreements - there are no restrictions on the use of housing, except for the moments established by the contract.

Mortgage lending programs are designed so that the borrower is insured against possible risks (loss of property rights, loss of ability to work, etc.). The procedure for action in such situations is established separately by banks and is additionally regulated at the legislative level.

An important advantage for the borrower is also the presence of the so-called. tax deduction, according to which money spent on the purchase of real estate, as well as interest on such a loan, are not subject to taxation. This lowers your mortgage interest rate.

Also, the inherent advantages of a mortgage include long loan terms, due to which the amount of regular mandatory payments is relatively low.

In addition, there are special mortgage lending programs for certain categories of citizens, for example, young families, for maternity capital, etc. The features of such programs should be studied separately.

The main disadvantage of a mortgage, like any loan, is a fairly serious overpayment. In total, the amount of the overpayment may even exceed the amount of the loan itself. At the same time, the overpayment takes into account not only interest, but also mandatory annual insurance, payment for the services of specialists hired to evaluate real estate and support transactions for its registration, etc.

Also among the disadvantages is the difficulty of obtaining such a loan. Banks that issue mortgages have very serious requirements for potential borrowers. They may differ in different institutions, but general provisions such as citizenship and registration, income certificates, certain work experience, positive credit history, etc. remain the same for all financial institutions.

The standard procedure for obtaining a mortgage loan is as follows:

• A search for a bank with a suitable lending program is carried out. At this stage, you need to pay attention not only to the features of the available products, but also to your compliance with the requirements of the financial institution;
• documents are prepared about the loan recipient and his guarantors (at the request of the bank). The list of required documents is established by the financial institution. Based on the data received, the lender will be able to establish the maximum loan size and the conditions for its issuance;
• an insurance agreement is concluded that provides protection for the borrower and the mortgaged property;
• a mortgage loan agreement is concluded. At this stage, it is necessary to carefully study all the provisions of the document so as not to encounter unexpected problems in the future.

As a rule, after studying information about the borrower and making a positive decision, the bank informs the client about the maximum possible loan amount and gives a certain period (set by the financial institution) to search for an apartment or other object to purchase with a mortgage.

Having found a suitable property, the client notifies the bank. Next, the necessary contracts are concluded. The bank pays the real estate seller, and the client receives information about the procedure for repaying the debt.

The package of documents may vary depending on the requirements of a particular bank, but in general it remains standard. In total, you need to prepare two sets of certificates: the first - about the potential client, the second - about the property that you plan to buy with a mortgage.

The standard set of documents about the borrower includes:

• basic documents: passport, tax payer code, military ID, marriage certificate, etc. The full list is reported separately by the bank;
• documents on employment and income. This category, first of all, includes a standard 2-NDFL certificate or a document on a bank form, copies of employment contracts, documents from the place of employment, information about other regular earnings, etc.;
• documents confirming the presence of valuable assets in the borrower's property. This includes: documents for vehicles, real estate and other expensive things, statements of cash deposits, accounts and deposits, documents on shared ownership, availability of land shares, securities, etc.;
• information about guarantors. Typically, the list of documents regarding these persons is similar to the package for a potential borrower.

Real estate documents usually include:

• standard title documentation (certificates of registration, purchase and sale transactions, etc.), as well as documents of property owners;
• extracts from the cadastral or technical passport. Also, if necessary, an extract from the land registry is submitted;
• certificates confirming the absence of possible encumbrances. For example, the bank may require confirmation that the apartment is not pledged, the owner has no debts for various types of obligatory payments, etc.

The lists of documents provided may differ from the package specifically requested by your bank. Therefore, it is better to clarify the required list of certificates individually. Bank employees usually do not refuse assistance and explain in detail where you can obtain certain necessary documents.

When can a mortgage be refused?

After the borrower submits all the necessary documents and certificates, the bank will carefully check the information provided for accuracy.

For example, authorized employees can submit a request to the Pension Fund to clarify the amount of contributions made by the borrower, etc. If deliberately false or erroneous information is discovered (if the inaccuracies are the fault of the client), the bank will refuse to issue a cash loan.

The most common reason for refusals to issue a mortgage is the discrepancy between the borrower’s income and the size of the requested loan. In such situations, the bank either refuses to issue a loan or offers its own conditions to the potential client.

An aggravating factor when applying for any loans is the presence of a damaged credit history. To clarify such information about the client, banks contact the authorized organization - the Credit History Bureau. The base is common to all banks, so past violations of the terms of cooperation with one financial institution may make it impossible to work with another organization.

You can also get information about your credit history and assess your chances of getting a mortgage before visiting the bank. To do this, personally appear at the representative office of the Credit History Bureau and write an application there, or send an online request through the official website of the Bank of Russia.

Citizens who have had their mortgage application rejected have the opportunity to resubmit it after a time set by a specific bank. Most often it is 2-3 months.

The concept of “mortgage” thoroughly entered our lives about ten years ago. Almost everyone is familiar with the operating principles, pros and cons of this type of lending. But few people know the history of the origin and meaning of the word.

Concept

A mortgage is collateral that remains the property of the borrower. If the debtor fails to fulfill the required obligations, the property may be sold by a banking institution.

It is worth considering that the concepts of mortgage and mortgage loan are significantly different.

Mortgage lending is the issuance of funds for the purchase of real estate secured by the debtor's property, which subsequently acts as a guarantor in the event of non-payment of obligations by the borrower.

The system works quite simply:

1. The client takes the necessary amount of money from the bank in order to purchase real estate as collateral.
2. When the loan obligation is fully repaid, the collateral from the property is removed, and the house, apartment or car becomes the full possession of the borrower.

If a bank client cannot repay the debt, the property is put up for sale, and the income from its sale covers the debt under the loan agreement.

To obtain a mortgage loan, banking institutions require the following documents:

• completed application form (issued by the bank);
• application for a loan (it is possible to submit an application online);
• Passport (copy);
• SNILS (copy);
• TIN (copy);
• a copy of the marriage/divorce/birth certificate;
• copies of education documents (certificate, diploma, etc.);
• copies of completed pages of the work book;
• military ID copy (if the borrower is of military age);
• salary certificate 2 personal income tax;
• any documents reflecting additional earnings or income.

In most banks, the above documents are sufficient, but depending on the individual case and the terms of the loan, the institution’s employees may require additional information.

The role of mortgages in accessible language

Massive use of credit services among the population has a positive effect on the development of the country's economy. But conventional lending can create risks of non-payment, and the use of collateral provides good guarantees.

In addition to the interests of the state, the needs of the population are no less priority. Real estate is prone to a sharp rise in price, so purchasing it through savings is extremely problematic. For this reason, paying off the borrowed debt in installments is one of the best options. Of course, there is a risk of losing value, but it is unknown how inflation will behave during the time it takes to accumulate funds to make a large purchase.

History of mortgage

According to ancient history, the concept of mortgage appeared in Greece in the distant 6th century BC, and was introduced into use by the politician Solon. The program worked on the principle in which the borrower acted as collateral in his own person, that is, if he did not repay the debt, he fell into slavery to the creditor.

Subsequently, to change the system, Solon proposed using movable and immovable property of citizens as collateral. The transaction was certified by installing pillars on the debtor's land plot with the terms and amount of the transaction. That is why the meaning of the word mortgage translated from the Greek (ancient Greek) language “hypotheka” means “foundation”, “support” or “column”. Then the process continued to develop in other countries, and the pillars were replaced with books in which all related records were kept.

In Russia, the first noble bank that began providing secured loans opened in 1754, and already in 1870 there were about 11 financial institutions operating in the country.

Briefly speaking about the origin of the word mortgage, it dates back to the times of Ancient Greece and means a “pillar” that was located on the debtor’s land plot and served to display information about the collateral and the terms of the loan.

The Soviet system did not want to accept mortgages, and this is proven by the interpretation of the definition. The term mortgage first appeared in the USSR on the pages of an explanatory dictionary, and meant a loan in cash equivalent, which is issued by capitalist banks secured by land, structures and buildings. The definition sounded something like this: “Mortgage is a weapon for ruining peasants of medium and low income.”

After the Great Patriotic War, active urban development began, and although the fact of the presence of a mortgage was masterfully veiled, these moments can be traced.

After 1990, commercial banks began to actively appear providing various loans to the population, and with them the mortgage system developed. The shortage has passed, many new goods have appeared, respectively, supply and demand are growing, but incomes cannot keep up. Loans come to the rescue, and banks prosper accordingly.

What is a home mortgage in simple words? The bottom line is that the bank pays the buyer for the purchased property, and the owner (buyer) must repay the debt in certain installments over a specified period of time. Moreover, the bank takes a repayment guarantor in the form of the debtor’s collateral property.

Meaning of the word "mortgage"

Mortgage in Ozhegov’s explanatory dictionary has several designations, such as a pledge of real estate or a loan issued against this pledge.

The description of a mortgage on Wikipedia is not very different from the standard one and describes it as a form of collateral that belongs to the debtor, and the creditor has the right to receive it only if the borrowers fail to pay their financial obligations.

Mortgage in English mortage characterizes a mortgage or loan.

In France, mortgage lending was started in 1852 by the CCF (Credit Foncier de France) bank. Translation of mortgage from the French word hypothèque.

How do you spell

The word “mortgage” in Russian has no spelling rules, as it is a dictionary type. For a correct guideline, you should start from the Greek “hypotheka” with an emphasis on the letter “o”, but it’s easier to just remember it in order to avoid mistakes.

Let's look at sentences with the word "mortgage" in correct use.

1. Mortgage is one of the priority types in lending.
2. There is a decline in housing construction due to a sharp increase in mortgage interest rates.
3. It is necessary to contact the bank for information about possible mortgage programs.
4. The borrower agrees to all terms and conditions of the mortgage, including a commission rate of 0.6% monthly.

Despite the fact that during the Soviet era, mortgages were perceived as an unfavorable system introduced by capitalist countries, today it is a serious assistance to citizens for their families in purchasing their own real estate or housing.

Mortgage credit lending

Mortgage credit lending- a long-term loan provided to a legal entity or individual by banks secured by real estate: land, industrial and residential buildings, premises, structures. The most common option for using a mortgage in Russia is for an individual to purchase an apartment on credit. In this case, as a rule, newly purchased housing is mortgaged, although it is also possible to mortgage an already owned apartment. Please note that a mortgage is a public security. When real estate is mortgaged, the authorities registering the transactions make appropriate entries indicating that the property is encumbered with a pledge. Any interested person may request an extract from the State Register of Rights to Real Estate and Transactions with It. In this extract, if the property is mortgaged, it will be indicated that there is an encumbrance: pledge.

Mortgage loan classification

Mortgage loans are classified according to various criteria.

By property:

• enterprises, buildings, structures and other real estate used in business activities;
• residential buildings, apartments and parts of residential buildings and apartments, consisting of one or more isolated rooms;
• dachas, garden houses, garages and other consumer buildings;
• air, sea, coastal navigation vessels and space objects; unfinished construction projects*

• purchase of finished housing in an apartment building or a separate house for one or more families as the main or additional place of residence;
• purchasing a house for seasonal living, a summer house, garden houses with plots of land; acquisition of land for development.

By type of creditor:

• banking and non-banking

• as subjects of lending: loans provided to developers and builders; loans provided directly to the future owner of the property;
• loans can be provided to bank employees, employees of companies that are bank clients, clients of real estate firms and persons living in the region, as well as to everyone.

Mortgage lending is provided by various credit institutions. The peculiarities of their activities lie in the method of refinancing issued loans

Rights and obligations of the borrower

By purchasing an apartment with the help of a mortgage, a citizen becomes the owner of this home. However, his rights as an owner are limited because the premises are collateral. The debtor has the right to register his family members, as well as to make a will. But at the same time, you need to remember that the heir will receive not only square meters, but also your obligations. Permission from the lender/mortgage holder is required if:

• it is planned to issue permanent registration for family members,
• there is a desire to remodel,
• Borrowers intend to rent out, sell or exchange housing.

Factors on which the loan amount depends

The amount of mortgage you can get depends on:

• the amount of your income;
• loan term;
• the cost of the purchased property;
• down payment.

The loan payment cannot exceed a certain percentage of your income, usually 40–50% (payment/income ratio). At the same time, taxes and expenses on existing financial obligations (payments on previously received credits, borrowings, loans, alimony, etc.) are pre-deducted from your income. Much depends on the program of the bank itself, the object of the loan: primary, secondary market, country real estate or just land. When calculating the specific characteristics of a mortgage loan, you also need to take into account the terms of the loan, which provide for different repayment schemes. Main forms of repayment:

Mortgage system participants

Participants in the mortgage system are:

• banks that check the borrower's solvency;
• appraisal companies that assess the market value of an apartment;
• insurance companies that are required to insure risks arising during mortgage lending;
• mortgage brokers who help the borrower choose the most suitable lending program.

History of mortgages in Russia - main milestones

Current situation

According to the Expert RA agency, the volume of the mortgage lending market at the end of 2012 will amount to a record 1.1 trillion rubles. As experts note, in the first half of the year the volume of the mortgage market amounted to 430 billion rubles, which is 57 percent higher than the results of the same period last year. According to analysts, the steady growth of the market was ensured by low rates, the entry of new players into the market and an increase in the pace of housing construction.

Main trends

• Rising interest rates
• Tightening requirements for borrowers
• Reduced competition.
• Development of social mortgage.
• Increase in mortgage issuance in the primary market

Main players

Sources

Wikimedia Foundation. 2010.

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