How to buy an apartment: Buying an apartment is not easy, unless, of course, you are an Arsenal footballer. At least Tula. But there are always options: accumulate, take a mortgage or use additional opportunities if they are supposed to you, for example, subsidies or maternity capital. Consider how to use the capabilities of your budget to buy a home and what to do if you decide on a mortgage.
- Saving or taking a mortgage?
- How to buy housing without a mortgage?
- What if you decide to buy an apartment on a mortgage?
- What to look for when buying an apartment?
Saving or taking a mortgage?
What is more profitable – to have a special account, save money and receive interest or take a mortgage and pay interest to the bank? To answer this question, you need to evaluate all the factors: do you have a down payment and what, do you have where to live, are you paying rent now, are you willing to invest in a building project, or are you considering only finished housing.
Let’s say your family needs 12 years to defer the amount that is enough to buy an apartment. If you decide to save, try to make sure that the savings work for you – overtake inflation and generate income. Accumulating a large amount of money is also a certain technology.
Advantages of accumulation: you do not overpay interest, but, on the contrary, receive them and do not become a debtor to the bank for many years (in addition, in case of financial problems, you can lose your mortgage apartment).
Cons of savings: it takes a very long time to wait, and in case of economic shocks (for example, inflation spikes or rising real estate prices), your savings may depreciate.
Suppose another: your family, which needs to save up for an apartment of 12 years, will have three years to save up for an initial payment and take a mortgage. Is the loan overpayment worth the nine years saved? Suddenly, real estate prices will rise sharply or will inflation depreciate your savings? Nobody can guarantee stability.
The advantages of a mortgage: you fix the price of the apartment and the costs of it for many years to come. Rising property prices will not affect you.
Cons of a mortgage: a substantial overpayment to the bank. But if you take into account inflation and rising real estate prices, then, perhaps, the overpayment will not be as impressive as it seems at the moment when you are calculating the schedule of mortgage payments. Of course, real estate prices may collapse, and monthly payments will become inadequate to the value of the apartment, but no one can predict this situation.
How to buy housing without a mortgage?
Many developers offer interest-free installments for several months or even years. But installments are suitable for people who have large monthly incomes and who are confident in the future. This option is fraught with pitfalls: the price of apartments when buying in installments is often higher than with 100% payment, and you will only receive ownership right after all payments are completed.
There are also subsidies for the purchase of housing and the program “maternity capital”, in the regions these amounts can be a significant help when buying an apartment.
Check to see if you are on the list of people who may be granted housing subsidies. General information about this can be found on the Public Services Portal in the section “Providing Subsidies for Housing and Utilities”. But there are no uniform conditions for the country; it is better to look for information about regional programs on the site of the local administration. Amounts issued by the state, on average, are 40%, but can reach up to 100% of the average cost of housing – this also depends on the regions and specific situations.
Maternal (family) capital is one of the types of state support for families with two children. In some regions, maternity capital is able to cover the full cost of housing, but most often it goes in conjunction with a mortgage, and this is quite a down payment.
What if you decide to buy an apartment on a mortgage?
How to buy an apartment: The decision to take a mortgage is quite justified – recently, housing loans are becoming more accessible. As of December 2019 , the average rate was a little over 9%. This is due to a decrease in the key rate . The main thing is to evaluate your strength sensibly and make sure that loan repayments do not exceed 30% of your income. And remember that a mortgage apartment is a long-term investment: it is possible to sell a property with an encumbrance, but it is not easy to do it. So where to start?
1) Choose a bank and a suitable mortgage offer
Carefully study the offers of different banks, pay attention to the size of the down payment, the age of the borrower, the ability to attract a co-borrower , interest rates. Check, suddenly you fit the conditions of one of the special programs – there is a mortgage with state support for families with children, a military mortgage, a “young family” program, and even options for senior citizens. Examine the mortgage offers of the bank where you get your salary – perhaps there are more favorable conditions and a simplified procedure for processing documents.
In some cases, it is first better to decide on the apartment, and only then with the bank. For example, if you want to live in a specific new building, find out which banks offer a mortgage for it, and choose one of them.
2) Collect a package of documents and apply to the bank
Requirements for age, length of service, income and package of documents may vary – as a rule, the rate also depends on them. The more reliable you are, the more official evidence of your solvency you can provide, the lower your rate. Some banks are ready to issue a mortgage under two documents, but in such cases a large down payment is usually required, for example 50%, and the rate will be quite high.
3) Choose an apartment
After the approval of the bank, you can safely search for an apartment, there are usually 90, and sometimes up to 180 days, depending on the conditions of the bank.
What to look for when buying an apartment?
The main question to ask yourself at the very beginning is a new building or a secondary? Everyone has different arguments for the choice: someone does not want to live in an apartment “with history”, and someone is not ready to endure the endless repair work of neighbors after moving into a new building. Estimate how much the decoration of the apartment costs – sometimes it’s more profitable to take with it, and sometimes without it.
Each one selects the infrastructure depending on the needs: for some, the school within walking distance is relevant, for some it is a shopping center. It is also worth paying close attention to the type of house, layout, neighbors.
Choosing the right area means saving time and often money. Look for harmful businesses and noisy roads nearby. If you are driving, try to come to the house when you are back from work and look for a parking place.
If you are buying an apartment in a new building
It is necessary to check the two main documents of the new building – a building permit and a project declaration, they must be on the site of the developer. If the object is accredited by a reliable bank, this gives you certain guarantees. Roughly speaking, the bank has already bought an apartment from the developer, and you are buying it from the bank. Examine the contract that you sign with the developer – it should list its warranty obligations. For example, if your apartment has defective windows or dead batteries, the developer must replace or repair them within a specified time.
If you buy a second home
Before approving a loan for a specific secondary real estate, the bank checks that the apartment owner will have to prepare a number of documents and provide them to your mortgage manager. But before sending to the bank for consideration the apartment you want to buy, try to figure out the main details yourself.
- Check seller’s documents and ownership. If the owner inherited the apartment and immediately sells it, there is a risk that another heir will appear who does not get a share. By law, he has the right to challenge the transaction. If the owner bought the apartment alone a few years ago, find out if he was married at the time of purchase – according to the law, spouses have equal rights to real estate, and this can also be a reason to challenge the transaction.
- There are various options with encumbrance, limitation of the rights of the owner in favor of a third party – make sure that this is not indicated in the documents, consult with a lawyer if possible. For example, if there is a minor among the owners, then you can sell such an apartment only with the permission of the guardianship authorities, and this is not the easiest and quickest procedure.
- To find out who owned the apartment, who owns it now and how ownership was transferred, order an extract from the Unified State Register of Real Estate. This can be done in one of the multifunctional centers for the provision of state and municipal services (MFC). The form can be downloaded in advance on the website of Rosreestr . In some banks, mortgage managers order it themselves. An ideal scenario for buying an apartment: one adult owner, property for more than three years and an understandable history of the property.
- The bank may not approve an object with unauthorized redevelopment. Compare the condition of the apartment and the plan from BTI – the owner of the apartment should have it. If, according to the BTI plan, the apartment should be a two-room apartment with a storage room, but in reality it is one-room apartment without walls – before you is an unlawful redevelopment.
- If there are fears and doubts about the apartment, you can order an additional analysis of the property documents – lawyers at real estate agencies usually provide such services. But even such a check cannot be a 100% guarantee that there will be no legal incidents with the apartment – the heir or possible applicant for the apartment (for example, who did not participate in privatization) will not appear. Therefore, it makes sense to insure your property rights – to issue the so-called title insurance policy . If the transaction is subsequently declared invalid, this insurance will protect you from losses.
And do not miss the opportunities that the state provides – you can apply for a tax deduction when buying an apartment.