Buying a Home with No Money: 20 Key Mortgage Questions

Residents of Yekaterinburg in a live broadcast on E1.RU bombarded our studio guest with questions — realtor and owner of the Kviko real estate agency Anna Yermakova.

The discussion covered the reduction of the key rate, the new rules for the family mortgage, whether there are any loopholes to buy an apartment profitably now, and much more. We have collected all the questions and answers in one article and grouped them by topic.

General Questions

— I have 50% of the cost of a one-room apartment on hand. What is more profitable now: to put this money in an interest-bearing account and save up further for the purchase, or to take out a mortgage, despite the fact that the rate is high?

— Actually, you can even take an interest-free installment plan. If you have 50%, some developers offer plans with no payments at all for one to two years. That is, you pay half the cost of the apartment, fix the price, and only start paying in two years.

The second option: if you need to live in an apartment here and now, then, of course, it is better to consider the secondary market. The third option: if it is, say, an apartment for renting out and you want to start getting income from it now, you can buy from a developer at a subsidized reduced rate, say for 3–5 years, and rent it out right away. It all depends on the goal.

— How can people who do not qualify for preferential categories buy an apartment?

— The main ways to buy an apartment now are preferential programs, especially the family mortgage, the second is installment plans. This is a great alternative when you buy an apartment, fix the cost, and without any markup, without paying interest to the bank, you make equal payments of 30 to 50 thousand rubles ($400–$700 at current rates) for the construction period, and then transition to a mortgage.

The classic installment plan scheme is paying for the entire apartment before the end of construction with large payments. That is, while the building is being constructed for two years, you need to pay the full cost of the apartment.

Besides installments, there is the standard mortgage. While everyone thinks the base mortgage is at some crazy 20% per annum, many don«t go to buy an apartment, but in fact developers are now subsidizing it. There are great programs like 6% for three years, 8% for five years, and 0.1% for one year, 13.9% for the full term. So, if you don»t qualify for preferential programs, today it is really possible to buy an apartment profitably and without overpaying. Developers are agreeing to this.

— Will property prices finally decrease due to falling demand because of expensive mortgages?

— There are a huge number of options for how you can buy real estate without using an expensive mortgage, and prices will not decrease.

Mortgage

— When will the interest rate finally go down?

— Sberbank announced that by the end of the year they expect 12% per annum. But this is not a guarantee: these are their expectations, their forecast. But still, we see a trend towards a reduction in the key rate.

— If I don«t want to, can I not pay the mortgage? Is there a period during which I can skip payments without consequences?

— If you don«t pay, you worsen your credit history, you immediately have arrears from the first month. The bank will most likely, after about six months, reflect that you are a willful defaulter, meaning after six months, pre-trial procedures will begin, then court proceedings, and the apartment will be put up for auction.

Actually, we are entering such an era of credit history where it is very important. Many employers, when hiring, check with credit bureaus, so I would advise, if you can«t afford to pay the mortgage, to rent out the apartment, come up with other ways, but pay.

— Can I still get a payment holiday?

— Payment holidays exist, but don«t forget that you will pay for them in the future. They will recalculate and restructure this loan, and then you will pay more. And also: when you have payment holidays, this is reflected in your future credit history, and if you take out a mortgage, it will be taken into account. Therefore, payment holidays are not profitable.

— The bank where I took out the mortgage was renamed. I have not taken anything from the bank with the new name. Can I not pay the mortgage?

— No, you cannot. You have a loan agreement, and you are obligated under that agreement to pay the mortgage. Most likely, you were notified, a new settlement account appeared, and you must fulfill your obligations.

— How to get a mortgage with a salary of 90 thousand rubles ($1,200 at current rates)? How much do you need to earn to afford a mortgage today?

— The question here is more about how much you are actually willing to pay per month to take out a mortgage. It«s no secret that today in banks you can indicate unconfirmed additional income. So, if your official salary is 90 thousand, then you will 100% be approved for a mortgage with a maximum payment of 45 thousand, if your credit history is really good.

— When will mortgages become unnecessary? Will times come when everyone will prefer renting to buying?

— Actually, it all comes down simply to the cost of real estate. The more real estate prices rise, the more renting will flourish. The question is how we will pay for this rent in retirement age when we can no longer work. How will we be protected from this?

In my practice, a client who did not want to buy an apartment and rented housing once came and said: «In five years, I changed 13 apartments, because one was put up for sale, the second was flooded, in the third something happened with the owner, and so on. Please, can I just buy an apartment and not move from it?»

And this is also such a moment: there is no lifelong apartment rental. Everything ends, and the lease agreement too.

— Can you bequeath a mortgaged apartment if it is on the bank«s balance sheet?

— It is not on the bank«s balance sheet, but pledged to it, but the owner is you, and you can bequeath it.

— When will the state«s preferential mortgage for new builds return for everyone?

— The preferential mortgage, as it was, will never return. It is worth understanding this, because this state support maximally drove up real estate prices. Prices will not fall because of this anyway, because inflation is quite high.

— Tell me, is there any mortgage benefit for people with disabilities?

— If there are children with disabilities under 18, you can take out a family mortgage. For adults with disabilities, there are no benefits, but mortgages are issued without problems. It all comes down to employment and payment ability.

Family Mortgage

— If spouses were married, divorced, and remarried, do the conditions for the family mortgage for this couple reset, or is that it?

— No, they do not reset. You bought an apartment, you signed a loan agreement, your loan agreement is valid for the term it was signed for.

— They said the rate will change based on family composition: one child — 10%, second — 6%, third — 4%. What loan amount to expect — still the same 6 million?

— This is being discussed, but these conditions have not yet been adopted. Most likely, in the first half of the year we will see a change in the rate. And of course, there is a lot of talk right now about writing off the mortgage for the birth of a fourth child. I am very much in favor of this initiative actually appearing, because, no matter how you look at it, the housing issue is very important for the family.

The limit remains the same, but there is a combo mortgage that can be arranged for up to 15 million. There will be a weighted average rate: 6 million at a 6% rate, and the remaining tail — at the market mortgage rate. It turns out to be about 18%.

— Why can«t they make a small mortgage percentage for a family that is married but does not yet have a child? After all, we want to get married, have children. What support options are there for those who just got married?

— There used to be a mortgage for young families, and its feature was precisely that parents participated in the combined income. There is no such thing now and there won«t be. Many people speculate on the topic of family mortgage, saying: »Let«s give a mortgage on credit, and then they must give birth.» But it seems to me this will not be implemented. And if births don«t happen or happen not at the right time? There are many questions, and I am more than sure that the state will not play with this.

— Is an official marriage required to get a family mortgage?

— What is the minimum down payment for a preferential mortgage and at what rates will it be in the next year or two?

— The down payment is 20%, and the rate for now is what it is — 6%. But we will see a differentiated rate — most likely this year.

— What are the conditions for approving a mortgage without a down payment?

— Having a family mortgage. And not all developers work with this program. As a rule, the developer allocates a certain pool of apartments, and there are already clients with approved mortgages who are sitting and waiting. These apartments do not appear in open sources. So, if you want to take out a mortgage without a down payment, you«d better contact agents who work with this.

— If I already have a family mortgage now, after it is paid off, can I get another apartment after the birth of a third child?

— This is precisely such a life hack. After repaying the previous family mortgage and the birth of a new child, you can take out a new family mortgage. This opportunity exists until 2030.

Also read Anna«s recent column on E1.RU, where she told how families with children can get a tax cashback.

All news about the situation on the real estate market, including mortgages, we collect in a special section.