How to buy an apartment with a mortgage in another city - procedure

Conditions for obtaining a mortgage

A mortgage loan is issued against purchased or owned real estate. The collateral must be insured against the risks of loss or damage. Life insurance, as well as the risk of loss of property rights, is taken out voluntarily.

The remaining conditions of a mortgage in another city also do not differ from the standard ones:

• The minimum rate in VTB and UBRD will be 8.9%, in Alfa-Bank - from 8.99%, in Promsvyazbank - from 9.05%, in Sberbank - from 9.5% (for apartments from partner developers - from 7 .5%), in Rosselkhozbank - from 9.3%, and in Raiffeisenbank - from 10.25%. If you cancel life insurance, the rate will increase by 1%.
• The down payment on a mortgage at VTB must be at least 10%, at Sberbank, Alfa-Bank, Rosselkhozbank and Raiffeisenbank - from 15%, at UBRD - from 20%, and at Promsvyazbank it is possible to obtain a mortgage loan without a down payment.
• The maximum loan amount in Raiffeisenbank is 26 million rubles, in UBRD and Promsvyazbank - 30 million rubles, in Alfa-Bank - 50 million rubles, in Rosselkhozbank and VTB - 60 million rubles, and in Sberbank it is limited only by your solvency and the cost of the purchased property. To increase the approved loan amount, you can attract co-borrowers. The spouse, in the absence of a marriage contract, is required to act as a co-borrower.

How to transfer a mortgage to another region

So, if a mortgage is planned in another city, the borrower’s procedure is as follows:

1. Determine what type of real estate you are interested in: apartments in new buildings or secondary real estate. Note the market value of the home, the amount of initial savings, and the term of the loan.
2. Contact one of the banks in your region of residence that has remote mortgage lending programs and submit a preliminary request.
3. Select an apartment and collect a complete package of documents for the property. If an apartment is registered in a new building, the developer provides the documentation directly to the office where the transaction will take place.
4. The bank checks the documents for the purchased living space, approves the transaction and sets a date for signing the mortgage agreement.
5. The borrower signs documents in 3-4 copies in the same branch where he submitted the application. The courier delivers the contract to the developer to carry out registration activities in Rosreestr under the buyer's power of attorney.
6. After registering the purchase and sale of an apartment, a bank employee transfers an amount equal to the full value of the collateral property to the seller’s accounts. When purchasing a home from the owner, payments through a safe deposit box are possible.

So, is it possible to take out a mortgage in one city and buy an apartment in another city? Certainly. Many southern developers have been working on such schemes for a long time, since local residents often cannot afford apartments on the seashore, and the main buyers of new buildings are residents of Siberia and the Far East.

Then how can you buy an apartment in another city without leaving your region if you plan to purchase secondary housing? In this case, you cannot do without the help of a trusted person - a reliable realtor or relative who could provide the bank with permitting documentation.

Requirements for the borrower

A mortgage can be issued by citizens of Russia, but citizens of any other countries living and working in the Russian Federation can receive it from VTB, Raiffeisenbank, Alfa-Bank. To receive a positive decision on your application, you must meet the following minimum bank requirements:

• age at the time of application - from 21 years (in UBRD - from 23 years), and on the date of planned full repayment of the debt - no more than 65 years (in UBRD - up to 70 years, and in Sberbank - up to 75 years);
• having an official place of work and income that allows you to fulfill your mortgage loan obligations;
• work experience at the current place - from six months (at UBRD - from 3 months);
• total experience – from one year.

Advantages of Sberbank

We can say that every second mortgage in Russia is issued by Sberbank. And this is not just like that. The bank has a lot of advantages that are important to mortgage borrowers:

• a huge number of branches and ATMs, applying for a mortgage and its further servicing are convenient, you don’t need to run far;
• most often it is Sberbank that offers the best interest rates on mortgages;
• all possible forms and types of federal and regional state subsidies are used here;
• Sber has many salary clients, and they are offered improved lending conditions and simplified mortgage issuance;
• you can always count on support in the form of restructuring, the bank makes every effort to accommodate borrowers who find themselves in a difficult situation;
• the largest range of accredited new buildings. This means that you can buy an apartment in almost any new building in the country;
• it is possible to obtain a mortgage without certificates;
• You can use maternity capital as 100% of the down payment.

Sberbank is issuing mortgage loans “like clockwork”, issuance is on stream. Therefore, registration is quick, mortgage managers accompany the transaction from start to finish, help with assessment and collection of documents. The borrower is provided with full support at all stages.

Real estate requirements

You can purchase an apartment in a finished or under construction building, a townhouse, apartments, or an individual house with a mortgage. At Sberbank it is possible to use mortgage funds to purchase a garage, parking space, and land.

The purchased property should not be pledged to third parties or have restrictions imposed by judicial authorities. The purchased housing must be suitable for year-round use. It is not allowed for a house to be recognized as unsafe or included in the lists for demolition, reconstruction, or major repairs.

It is necessary that the kitchen and bathroom be separate. The apartment or house must have a connection to communications (water, sewerage, electricity, etc.). Plumbing equipment, windows, doors, etc. must be in good technical condition. And any redevelopment can only be done legally.

Also read: Which apartment is suitable for a mortgage and how to find out why the bank did not approve the housing

How to calculate a Sberbank mortgage online

You can use the calculator on the financial institution’s website. Each individual mortgage product has its own calculation service. You need to enter the mortgage parameters, specify the data, and then the system will immediately give you a breakdown.

But calculations using Sber’s own program will not always be as accurate as possible. For example, it does not take into account increasing coefficients for registration without certificates. Therefore, many people prefer to use universal third-party programs.

You can use our mortgage calculator and calculate Sberbank's offer. Look at the base rate for the product you need, study the coefficients grid and determine what percentage will be relevant for you. Enter this value into the program.

Based on the calculation results, you will see a preliminary payment schedule. Using online calculators, you can play with the terms and determine which terms of the contract will be optimal for you and how much you can pay.

Sberbank and other banks rarely approve a mortgage if the borrower will spend more than 50% of his income on paying off the mortgage loan.

What documents are needed?

When applying for a mortgage in another city, you must provide a passport, SNILS, salary certificate and a copy of your work record. It is advisable to document additional income, for example, using a tax return. Men of military age must present a military ID to the bank. When receiving a salary through the bank where you apply for a mortgage, it is not necessary to confirm your income and employment.

Once your application is approved, you will need to collect real estate documents. If it is purchased at the construction stage, then you need to submit to the bank an agreement on shared participation in construction and a package of constituent documents for the developer (Charter, decision/protocol on establishment, etc.).

If you are purchasing housing on the secondary market, the following documents are required:

• assessment report;
• the seller’s certificate of ownership of the property (if available);
• extract from the Unified State Register of Real Estate;
• extract from the house register;
• technical and cadastral passport;
• a document providing the basis for the emergence of property rights of the seller, for example, a certificate of inheritance.

Which banks will formalize an interregional transaction?

In fact, large banks are not surprised by such transactions - even employees of regional branches apply for remote mortgages several times a week. Therefore, you can contact any network institution whose branch operates both in the city of residence of the borrower and in the region where the property is purchased.

Important! To obtain approval for a mortgage on a new building, the property being built must be accredited by the bank.

All developers you can trust cooperate with the country's leading financial institutions - Sberbank, VTB, Rosselkhozbank, Raiffeisenbank, etc.

Before buying an apartment in another city, check with the developer in which banks the property has been accredited. From the list presented, select those organizations whose branches are open in both cities. Make your final choice in favor of 1-3 financial institutions whose services you have used before.

Let's compare the conditions

These can be banks with an extensive network of branches:

• Rosbank will issue a housing loan for an apartment or share with a payment of 9.5% to the bank annually. If there is an initial payment, citizens 21-64 years old will be provided with 0.3 million rubles for 3-25 years. The recipient must present a passport and provide 3 original documents, including a certificate from the employer in form 2NDFL.
• Delta-Credit offers a tariff of 9.5% per year for an apartment in a new building or on the secondary market. The loan amount exceeds 0.3 million, the debt repayment period is no more than 25 years. The recipient of the loan can be any working client no older than 64 years of age, regardless of citizenship. The application will be reviewed within 3 days.
• VTB Bank motivates borrowers to take out mortgages for apartments of increased square footage. The transaction can be completed remotely at a rate of 9.7% per year for a period from 1 year to 30 years. The maximum loan is 60 million rubles. The request will be considered within a week from a client 21-70 years old with a total work experience of more than 1 year.
• Alfa-Bank offers to buy finished housing with an overpayment of 9.9% for each year of the mortgage. The duration of cancellation is from 3 to 30 years, the purchase amount is no more than 50 million. At the request of a citizen 21-70 years old, a decision will be made within a day. The loan recipient must have worked in the last place for more than 4 months, and have documented experience of more than 1 year.

VTB mortgage terms - to help the borrower

Alfa-Bank mortgage conditions

How to get a mortgage in another city?

The bank reviews your mortgage application within 1-10 days. When purchasing real estate in another region, the processing time may be extended.

Once your mortgage application is approved, you must complete the following steps:

1. Order a real estate valuation report and submit it along with housing documents to the bank for approval. The report must be ordered from a company licensed for this type of activity. The bank may provide a list of recommended appraisers. Real estate documents can be sent electronically.
2. Obtaining approval for real estate from the bank and purchasing the necessary insurance policies. The insurance contract must be concluded with companies that have been accredited by the selected bank.
3. Making a down payment and concluding a loan agreement. Usually you need to open a special bank account to make a down payment.
4. Conclusion and registration of the transaction.

What risks may the borrower face?

Mortgage transactions with a contribution of 20% carry minimal risks for the bank. The lender will always be able to sell the property slightly below the market price if the client refuses to pay. The risks when applying remotely are the same as when approving a regular mortgage loan. However, loan recipients may face some inconveniences:

• Sometimes there are delays in approving an application due to lengthy document verification;
• There are often no effective communication and document flow systems within institutions;
• you will have to spend a little money on paying for the courier service that delivers the papers.

Inconsistency in the actions of managers, lengthy checks of documents, the need to involve a third party to send papers - all this can cause a delay in completing a transaction. As a result, the recipient will experience inconvenience as he will have to update his employment certificates or re-apply for bank approval.

Pitfalls of buying an apartment in another region

Let's consider what pitfalls can await when applying for a mortgage for an apartment in another region:

• Increased rates. Banks consider issuing a mortgage to purchase real estate in another region more risky, and the loan rate may be higher because of this.
• Increased time for consideration of applications and processing of loan documentation. Inter-branch interaction in the bank is not always worked out well. It happens that documents are lost or employees “forget” about a client from another region. All procedures must be constantly monitored.
• Different approaches to conducting a transaction in a bank and realtors. Even if the bank is well-executed in processing a mortgage for the purchase of housing in another region, difficulties may arise when interacting with the seller or realtor. You may have to come to the city where you are purchasing real estate for a transaction in person.

Recommendations for borrowers when applying for a mortgage

If you are not sure whether they will give you a mortgage in another region, choose an institution with a developed network of branches. Make sure that at your place of registration, employment, or home purchase, bank offices are open and have a mortgage lending department. If you have a good credit history and there are no arrears on previous loans, the bank will not find fault with where you live.

When applying for a mortgage in another region, the following are possible:

1. Risks that the deadline for sending documents will be delayed. If at least one link in the chain of transaction participants fails - they make a mistake, fail to send the papers on time, the transaction will drag on for weeks and even months.
2. Risks associated with low professionalism of employees. Branch employees, developer managers, and realtors can mislead the client already during the consultation.
3. Additional costs associated with the need to pay for the services of an intermediary or representative, expenses for a notary, sending documents, insurance, and registering a transaction.

For a buyer with money and a good credit history, there is no question of whether it is possible to take out a mortgage in another region - the bank is no less interested in each loan than the client. Large financial institutions study the needs of the market and expand the package of services, trying to satisfy the needs of all market participants. Moreover, Russians will increasingly migrate within the country, so the demand for intercity mortgage transactions will continue to grow, and the procedure for registering remote purchase and sale of real estate will be improved and simplified.

Rate the author

Share on social networks

Author:

Mortgage specialist Maria Yurievna Sokhan

Date of publication May 6, 2020 May 6, 2020

Non-existent housing on debt: is there a future for preferential mortgages in Russia?

May 28, 2021, 20:15 - Public news service - OSN Thanks to the preferential mortgage program for new buildings, thousands of families in Russia were able to buy an apartment that they would not have been able to afford at previous bank rates. However, a possible extension of the preferential mortgage program at 6.5% until the end of 2021 could lead to an increase in prices for primary housing in Russia, guests of the program spoke about this on the Public News Service :

• President of the International Academy of Mortgage and Real Estate Irina Radchenko;
• Vice-President of the Guild of Realtors of Russia Konstantin Aprelev;
• Expert of the thematic platform of the All-Russian Popular Front “Housing and Urban Environment” Pavel Sklyanchuk;
• President of the Association of Russian Banks, Academician of the Russian Academy of Sciences Garegin Tosunyan .

What is a preferential mortgage? How is it different from a consumer loan?

Irina Radchenko: – A consumer loan is not secured by collateral, the rates are always higher, because the bank’s risks are significantly higher. The mortgage is secured by an apartment, residential building, or commercial real estate. Banks are very fond of this type of lending. Now, according to statistics, more than half of the population’s loans are made up of banks’ mortgage portfolio. Therefore, they are happy to increase this type of lending, since in the event of a borrower’s default, they can get rid of the asset (collateral) and, accordingly, return the money they lent. Therefore, mortgages are very convenient for banks. Preferential mortgage is a program that was launched in April 2020. 6.5% is the rate that the state compensates the bank. Plus, of course, this includes both the bank’s margin and the product itself. I want to emphasize that the preferential rate, by and large, was not preferential, because for a whole year our key rate was 4.5%, it began to rise only recently. Therefore, it was beneficial for the state to announce such a support measure; they lost nothing. The excitement that was caused in the real estate market last year, which caused a 20% increase in property values, is not related to this program.

Preferential mortgage is a sweepstakes for a marketing plan.

People bought everything. In the secondary real estate market, prices for everything increased by exactly the same 20%: food, cars, and household appliances. The reason is the devaluation of the ruble. Therefore, citizens who had savings preferred to convert them into square meters.

Konstantin Aprelev: – Preferential mortgages cover one fifth of all mortgage purchases. Let me add that a preferential mortgage is a mortgage provided exclusively for the purchase of new housing in apartment buildings in accordance with this program. The second thing I really don’t like about this tool is that it does not support the purchase of finished housing, but rather supports the demand for housing under construction. People took out a mortgage loan, the funds from this loan, 100% of the cost of the future property, were placed in accounts, and then they waited two or three years for this house to be built. That is, in fact, people received a preferential rate for waiting for future housing to be built. In fact, this is quite a dubious pleasure. In my view, this model of what needs to be supported with preferential rate subsidies is a point for discussion. It is necessary to maintain the preferential mortgage, but not to extend it to escrow accounts, but to already completed and constructed housing.

Pavel Sklyanchuk: – Preferential mortgages were initially intended as an anti-crisis measure to support the economy during a pandemic. If it were not for the preferential mortgage, this housing might not have been built at all; there would have been nothing to expect. In my opinion, a mortgage with state subsidies, specifically in the primary market, as an incentive to ensure that housing construction does not stop, is one of the most effective support measures both in terms of the ratio of budget funds and investments in the economy. Another point is that we have a bias related to the volume of construction. Today, in markets such as Moscow and the Moscow region, demand exists even without government support. And in those regions where demand is weak, it needs to be maintained today, I know that any day a decision will be made to further extend this program. But, most likely, not in all subjects, but only in those regions where it is most necessary.

Konstantin Aprelev: – I don’t agree that there is no need to make a preferential mortgage for already finished housing, because at the moment it could then support not only the monopolists in this market, who are building multi-storey buildings in the largest cities of Russia, but also consumer demand for individual housing. This preferential mortgage program does not support individual housing at all. Rural mortgages, which make up 0.7% of the total financing from preferential mortgages, are generally crumbs.

Garegin Tosunyan: – Here a wider range of opportunities is provided to the borrower and consumer. It would be much more important to stimulate the purchase of ready-made housing. It is mechanisms such as preferential mortgages that are being increasingly promoted. Because housing under construction, of course, draws in its favor the benefits that are provided. The bank's risks cannot be ignored, since housing under construction may not be completed and will not meet consumer requirements.

Pavel Sklyanchuk: – We conducted a study together with a rating agency for the construction industry. In our 800 cities across the country, virtually no new housing is being built. Perhaps our mortgage system differs from Western countries, but our mortgage market is quite young, it has been formed since the early 2000s. If these funds from the budget are directed to housing that has already been built, then with the same success you can take wads of money and throw them into the fire. Speculation and heating up the market will be absolutely ineffective. The main task is for funds from the budget to circulate in the economy and create additional jobs and support related industries.

What are the conditions for obtaining a preferential mortgage?

Irina Radchenko: – Despite the fact that mortgage is a fairly young institution in Russia, it is developing very rapidly. I have been following this since the last century and I believe that this is one of the industries that is developing very well. Today, the system of benefits provided is fairly balanced. Benefits exist in four areas: first, certain professions are subsidized (military personnel, rural doctors and teachers), second, support for certain regions (for example, Far Eastern mortgages), third, family mortgages, fourth, for a specific type of real estate.

Is the consumer defenseless?

Pavel Sklyanchuk: – We cannot say that. Still, all programs that involve government participation mean the adoption of transparent rules of the game that are not subject to revision in the future. If we talk about preferential mortgages, the rate is fixed for the entire loan term. The President set a task: every year 5 million families should improve their living conditions by 2024. Today this figure is 3.5 million families. As a rule, for a family to have an additional child to improve their living conditions, they need to find a down payment somewhere. They sell the apartment they live in, then invest in a mortgage, then wait a year or a year and a half for their apartment to be built. This system needs to be somehow changed so that the family does not bear the burden of paying the mortgage and at the same time does not pay rent.

Why are banks less willing to issue preferential mortgages?

Garegin Tosunyan: – Banks understand that people are carried away by preferential mortgages without fully calculating all the consequences of this benefit. Builders actually took up most of the benefit. On the one hand, this benefit stimulated active development at a time when there was a sharp market decline at the beginning of last year. This mortgage at that moment forced people to take advantage of the benefit.

Konstantin Aprelev: – Developers and banks that deal with project financing are not interested in demand sharply increasing and then declining. The story is much more comfortable for everyone when the capital inflow market is balanced and stabilized. For this reason, it is impossible to say that this demand will continue. In this picture of the world, when we talk about the last stage, developers do not understand for how long the demand will continue in such a volume. Against the backdrop of a lack of household income, maintaining a rise in real estate prices is not a long-term story. It will definitely lead to the fact that after some period of time the demand for this housing will begin to significantly adjust, and the price will begin to decline.

A period of unpredictability is the worst story for developers.

Many of them have prepared for worse times when this period ends. Many of them are in no hurry to develop their sites. In this situation, nothing good happens for the population.