Mortgage for an apartment in a new building in Moscow 2021

In cases where you cannot afford to pay a large sum for the purchase of a brand new apartment, you can take advantage of shared participation in construction, namely, take out a mortgage. Buying a new building with a mortgage is an excellent solution for many Russians, because very often such an investment is cheaper than lending for secondary housing.

But, like any process related to bank lending, there are many pitfalls, which can be avoided if you study the step-by-step instructions on mortgage lending for housing at the construction stage.

What documents do the bank need to approve a mortgage in a new building?

Let us immediately note that there is no single list of documents for a bank; each individual organization may have its own package and the list of necessary documents and requirements for them can be found at a bank branch or on the official website. But, we can highlight those that are required in 95 percent:

An identification document, namely a passport of a citizen of the Russian Federation;
Written consent of the spouse for lending;
A certified copy of the employment contract or book;
Certificate 2 Personal income tax or tax return;
Agreement on the client’s participation in shared construction of a new building;
A solution from the developer with full technical characteristics of housing.

In cases where a mortgage is taken out on the security of other real estate of the borrower, the bank also has the right to demand documents confirming ownership rights.

How is a mortgage from a developer different from a regular mortgage?

Typically, only the bank determines the terms of the mortgage program. He decides how much money he is willing to lend and on what terms. Applying for a regular mortgage will require some legwork. At a minimum, you need to prove your solvency. To do this, you will have to collect a package of documents, confirm your income, and then wait for bank employees to check the legal purity of the purchased property.

Complete turnkey apartment renovation

Everything is included The cost of repairs includes everything: work, materials, documents.
Without your participation After agreeing on the project, we only bother the owners when the repairs are completed.
The price is known in advance. The cost of repairs is fixed in the contract.
Fixed repair period Turnkey apartment renovation in 3.5 months. The term is fixed in the contract.

Why can a bank refuse a mortgage for a home under construction?

When issuing any loan, the bank must be convinced of the borrower’s solvency for the entire loan period, therefore banks usually refuse to issue any loan to unemployed citizens or those who already have loans, as well as a damaged credit history.

As a rule, in order to minimize its risks, the bank analyzes the full length of service, and not just potential income.

Recommended article: Early repayment of a mortgage: is it more profitable to shorten the term or payment?

A mortgage will be denied one hundred percent if the client previously had unfulfilled debt obligations to the bank, in this case it does not matter which one you applied to, since banks have a common system for checking a bona fide payer.

It is also worth considering that it is much easier to get a mortgage for housing under construction, which is already at the construction stage, than for one that is at the foundation pit level, this is again caused by minimizing the bank’s risk.

In addition, banks pay attention to the history of the developer, analyzing the number of objects already completed.

Where to start to buy an apartment with a mortgage at the construction stage

Due to the fact that this is an excellent option to save money, the demand for this type of lending is very wide and before asking the question of how to get a mortgage in a new building, you need to find a house in which there are still available apartments for sale.

It is worth choosing only trusted developers, this is the only way you will be able to move into your own home in the next couple of years; due to the unstable economic situation, this is a game of Russian roulette, which can delay construction for ten years.

To make it easier for you to understand how to proceed, use the step-by-step instructions for purchasing an apartment in a new building using a mortgage:

The first step is to monitor all houses under construction and, based on their technical characteristics, as well as the desired infrastructure, select the appropriate option;
Next, go to the representative office of the development organization, where a complete list of partners and banks is provided with the conditions under which mortgage lending is provided;
Ask your bank for a list of accredited developers. Otherwise, the process of checking documents for an apartment at the bank may be delayed;
After discussing the conditions under which the bank agrees to participate in the process of mortgage lending for an apartment in a new building, it is necessary to book it and proceed to the official stage of paperwork;
An agreement is concluded on participation in shared construction or assignment of claims.

In case of assignment of rights, be sure to ensure that there is no debt under the equity participation agreement. Registration will require a certificate from the developer that the contractor or investor has no debt to pay for the contract.

Just four simple steps that must be followed consistently will help you smoothly purchase a home in a new home.

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Features and stages of buying an apartment in unfinished housing

The procedure for purchasing an apartment with a mortgage in a new building that has not yet been completed will be a little more complicated.

First, a package of documents is prepared for lending and applying for a mortgage (a mortgage application is filled out online and the borrower’s documents are provided);
After receiving a positive response from the bank, documents are prepared for the selected loan object;
The next stage is the stage at which an agreement is concluded (an agreement for shared participation in construction or an agreement for the assignment of shareholders’ claims), where all the necessary technical characteristics from the developer’s company, the final price of the apartment, and various conditions for completing the transaction must be clearly stated;
Conclusion of a bilateral loan agreement with the bank on mortgage and life insurance of the borrower. The apartment itself is not insured, because it does not yet exist documented. Insurance for the property is issued after the house is put into operation and the borrower's ownership is registered.
Transfer of the down payment to the developer or contractor if the borrower pays it with his own funds. Maternity capital can also be used as a down payment.
The next step is submitting documents for registration to the MFC, and at the same time a pledge is registered in favor of the bank. You can apply for registration unilaterally.
After receiving the registered contracts, the borrower presents them to the bank, and the latter transfers the money to the developer or investor (contractor).
All that remains is to wait for the house to be put into operation, then sign the transfer deeds with the developer and register ownership of the apartment.
Insure a property
After full repayment of the debt to the bank, you need to remove the encumbrance - the mortgage by force of law.

If the initial payment is transferred to the developer’s current account, then pay attention to the bank’s commission for the transfer. Mortgage money as a targeted transfer is carried out without commissions. Therefore, an option is to place the down payment into a current account and ask the credit manager to transfer the entire amount, along with the mortgage, after registration. This way you can avoid additional fees.

As a rule, assistance in preparing documents and collecting all the necessary information is provided by the real estate agency that is involved in concluding the transaction.

Recommended article: What is more profitable: a new building or a secondary mortgage?

Checking the developer and the facility under construction

Before providing a borrower with a mortgage to purchase housing in a new building, the bank is obliged to make sure of the reliability of the developer. This explains the lender’s interest in audit assessments of large objects, because the opinion of experts greatly expands the possibilities of mortgage lending. The security service checks all documentation related to the facility under construction:

Agreement for long-term lease or ownership of a land plot;
Permission to develop the land plot chosen by the company;
Approved development project;
Documents to confirm the intended use of funds.

Accreditation is carried out in two stages: first of all, the reputation of the developer is checked, and then the quality of the facility under construction. If the expert opinion is positive, the terms of a lending program for a specific facility are developed.

It is important to consider that at the zero construction cycle, when the object looks like a foundation pit dug, there is unlikely to be a bank willing to lend on such terms. The new building must be at least 20 percent ready.

The developer's investors are also subject to audit. It’s good if the investment is made by the bank that the client has chosen. This allows the borrower to obtain a housing loan at a reduced rate, because the lender aims to quickly sell apartments in its new building so that the investment pays off faster.

Look at the same topic: How to get advice on a mortgage at Sberbank: contacts and phone numbers

Documents to be requested from the developer

In order to move into a new home as soon as possible and minimize your risks, as well as losses even at the stage of the procedure for purchasing an apartment with a mortgage in a new building, you need to choose a reliable developer. It’s worth risking your investments only if you have checked all the necessary documentation and read the reviews of real clients of the developer. The ending can be accepted in favor of one of the development companies on the basis of the following documents:

The right to land for construction work must be attached directly with the constituent documents;
Permission from the local municipality for construction;
Project declaration for the development site;
Decision on the distribution of apartments in a new building;
Investment agreement.

It is worth paying attention not only to the reliability and legality of all documents, but also to the reputation of the developer himself. To do this, study already completed projects and ask the shared owners of completed houses for any negative aspects, as well as possible delays in construction.

Input data for calculation

All parameters are average. It is almost impossible to perform calculations for individual cases. After all, even price comparisons can be made for two apartments with different classes. Accordingly, in one case housing on the secondary market will be cheaper, and in another case it will be more expensive than in a new building.

Property value

Latest price data for 1 sq.m:

New building - 64,059 rubles;
Resale - 58,528 rubles.

The final price of the apartment, taking into account its area of 60 sq.m:

New building - 3,843,540 rubles;
Resale - 3,511,680 rubles.

The change in the price of 1 sq.m over the past 10 years is 10.7%. Applicable to both apartments, since after purchasing a new building it automatically switches to secondary status upon further sale.

Terms of the mortgage agreement

Term – 220.8 months. For a simpler calculation, and also taking into account the market tendency to increase the contract period, the agreement provides for a duration of 18.5 years. That is 222 months.

The rate is 8.69% per annum for new buildings. Often, base rates, excluding subsidized programs, for secondary housing are 0.2% per annum higher. Accordingly, for an apartment on the secondary market the commission will be set at 8.89% per annum.

The payment schedule is annuity. That is, monthly in equal amounts.

Additionally, for secondary properties, title insurance is taken into account, which is not included in the requirements of banks for a mortgage for a new building. The average price of the service is 1% of the cost of housing. Accordingly, the client will pay 35,117 rubles for its registration. Other associated expenses are approximately comparable in both loan options.

Down payment – 30% of the housing price. Accordingly, the loan, taking into account rounding, is issued for the purchase of a new building - 2,691,000 rubles, a secondary one - 2,460,000 rubles.

Any changes to the terms of the contract are excluded from consideration. For example, early repayment, arrears and credit holidays are not included in the assessment of which is better - a resale or a new building for a mortgage in 2021.

What difficulties may arise

The real risks that are hidden behind all the benefits of a mortgage in a house under construction should not be underestimated. We will not talk about the fact that problems can begin even in the process of buying an apartment with a mortgage in a new building at the lending stage, but we will pay attention to the most common risks that initially seem obvious, but are not worth paying attention to:

Suspension of construction due to non-compliance with documentation, it may drag on indefinitely;
Fraudsters can sell the same residential space to several buyers at once;
Failure to comply with technological standards;
Prohibition to put a building into operation due to non-compliance with state standards.

A mortgage in a new building during the construction phase is one of the most attractive ways to buy your own home, and sometimes the only one you can afford. But, at the same time, this is a justified risk, which may be accompanied by various factors delaying the moment of long-awaited settlement, so weigh all the pros and cons by analyzing the project background.

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Author:

Maria Yurievna Sokhan

Date of publicationDecember 21, 2018February 25, 2019