Mortgage restructuring: program conditions, required documents, list of banks

Having found himself in a difficult life situation, the borrower comes to the conclusion that further servicing of the loan is impossible. Refusal of payments and accumulated arrears will not be a solution - the lender will simply sell the purchased home. For the bank, late payments are also unprofitable. It is in his interests to resolve the problem by revising the terms of the loan. Initially designed for very specific problems with loss of income, mortgage restructuring is available to few. The bank must be provided with evidence that the client is truly unable to fulfill his obligations due to negative events.

What is mortgage restructuring

The concept of restructuring is not familiar to everyone, since banks are in no hurry to advertise the possibility of revising credit obligations in favor of the client. However, almost every lender is interested in the borrower remaining in service and continuing loan payments along with interest, albeit on less favorable terms.

If we formulate the term “restructuring” in simple words, this is a revision of the terms of the contract taking into account the changed financial situation of the borrower who has lost his job or has become disabled. The loan parameters are changed so that the borrower can continue to make regular monthly payments, ensuring financial stability for the bank.

As a result of the restructuring, the borrower receives a reduction in payments, relief of the credit burden, and the bank fixes new agreements and expects timely receipt of monthly payments, planning its future activities.

By convincing the bank to reconsider the current agreement, the borrower can:

• increase the loan term by distributing the load over a longer period;
• reduce the interest rate;
• receive a temporary deferment to resolve financial issues (for example, looking for a new job).

Banks are reluctant to renegotiate the contract, as this leads to a decrease in their profits. However, in some circumstances (sudden illness, need to care for a young child, loss of earnings), the lender understands that restructuring is the only way out to save the client, interest profits from the use of borrowed funds, without litigation and forced sale.

If the borrower demonstrates his willingness to be responsible for his mortgage obligations, there is a chance of approval from the bank. The success of the event largely depends on the behavior of the borrower. If he presents evidence of a deterioration in his financial situation and declares his agreement to repay the loan to the best of his ability, without allowing long delays and without avoiding negotiations with representatives of the creditor, there is a high probability that the bank will accommodate.

The financial benefit of the borrower is obvious when the bank reduces the rate on “expensive” mortgages by 15-17%, since overpayments on new mortgages have halved in recent years. By restructuring the debt, the debtor can save up to 5-7% per year if the bank agrees to apply the current rate on the old loan.

It is important to remember that each mortgage review involves additional refinancing costs that must be included in the calculations. If the final overpayment on the loan has decreased by less than 1%, such restructuring is not economically feasible.

More often, the bank does not agree to restructure the debt of its existing client, but will readily finance a new mortgage borrower who has transferred servicing from another lender. There are offers for refinancing in all banks working with mortgages, and the terms of the program, unlike individual restructuring, are the same for all.

When faced with financial difficulties, you should not remain silent about them and wait for the bailiff service to force the sale of your home in order to pay the bank’s expenses. It would be more correct to contact the bank and discuss the current situation. If the client’s reputation is not satisfactory, and all previous payments were made on time, there is every chance to resolve the issue of debt servicing without going to trial and losing the property.

What is refinancing and why is it needed?

Refinancing is the issuance of a new loan on more favorable terms, through which the previous debt is paid off. Some people mistakenly believe that this is the same as restructuring, but it is important to understand the differences.

How is refinancing different from restructuring? Refinancing is a separate type of assistance to debtors. Despite the fact that some classify it as a type of restructuring, please note that this is not so. Moreover, a citizen can apply for mortgage refinancing after restructuring. The difference is that in the first case, a person is provided with a targeted loan from a new bank on favorable terms. Targeted, this means that it can only be spent on paying off one or more existing debts. In the second case, debtors contact the credit institution directly, changing the loan terms to more favorable ones.

Pros and cons of restructuring

The bank will never act to its detriment, so restructuring a mortgage loan is beneficial not only to the client:

• firstly, the bank controls the revision of the terms of the mortgage, offering only such conditions that will maintain maximum profit, albeit with some reservations;
• secondly, the bank sets a new repayment schedule based on the current solvency of the borrower, expecting regular income while maintaining interest income.

For the borrower, mortgage debt restructuring means:

1. Reducing payments to an acceptable level.
2. Reducing interest overpayment.
3. Preserving your payment reputation, which will allow you to count on new loans with favorable conditions in the future.
4. When you receive a deferment, you have the opportunity to find a job and continue to successfully repay your mortgage without penalties or aggravating circumstances.
5. The apartment remains the property of the borrower without the risk of forced sale.

Of course, it will not be possible to completely get rid of interest or the debt itself, and an extended financing period threatens to increase the final overpayment, but a restructured mortgage is often the only way to resolve the situation with the least losses.

Legislation 2021

In 2021, a bill is being prepared according to which issues of mortgage loan restructuring may be entrusted to banks. Clients will have the right to change the loan (mortgage) payment schedule. For example, if the total family income has decreased by 30% over the last 3 months or mortgage payments have increased by 30%, citizens have the right to reduce the monthly payment and change the repayment schedule. At the same time, the delay should not be more than 60 days, and the total amount of debt should not exceed 10 million rubles.

In addition, since July 2021, a law on mortgage restructuring has come into force in the Russian Federation, namely, on a separate form of procedure - mortgage holidays. This is a suspension of mortgage payments for a period of 1 to 6 months. Now citizens have the right not to pay contributions for a specified period if the bank has agreed to this. Penalties will not be accrued during this period, and your credit history will not deteriorate. This procedure can be combined with restructuring.

Let's pay attention! Please take into account Government Decree No. 1345 of 2018 on the restructuring of military mortgages. It is aimed at those military personnel who have already completed their service or retired without having time to pay off their mortgage. In this case, they remain debtors; the Resolution reduces the interest rate for them and provides preferential conditions.

How the government helps mortgage borrowers

Deterioration in the economy, the birth of a child and a decrease in available funds with rising prices led to the fact that some borrowers could no longer cope with obligations assumed long before the crisis began. People who took out a mortgage in foreign currency were faced with the depreciation of the ruble in relation to the dollar, which led to a multiple increase in payments. In such conditions, the government program was vital for mortgage holders.

In 2015, the Government adopted a resolution that made it possible to solve the hopeless situation at the expense of the state. As part of the restructuring program launched in 2009, the Russian government tripled assistance to citizens who found themselves in difficult life circumstances. About 4.5 billion rubles were sent to 9.5 thousand people in need, which made it possible to reduce foreign currency debts by 2 times.

The program is limited to May 2021, so only those who have already taken out a loan and are facing problems at the moment can use budget funds. The fact that out of 14 thousand borrower families, assistance was provided to 9.5 thousand indicates a high chance of relying on government support.

In 2021, not only borrowers with contracts concluded more than a year ago have the right to review the terms of their mortgage, but also those who encountered problems almost immediately after registration.

Formally, clients who have borrowed amounts in rubles also have the right to restructuring, but in practice the target is to help clients with loans in foreign currency.

To restructure a debt with the help of the state, you must meet the established criteria and apply to the Mortgage Restructuring Agency (abbreviated as ARHK).

Main program parameters:

1. The right to participate in the program is granted to families with minor children, veterans, persons with disabilities, and parents of such people.
2. The amount of assistance is limited to 600-1500 thousand rubles (depending on the number of children), and the interest rate after revision is reduced to 12%.
3. A one-time application of the benefit is allowed (payment at once), or the amount is distributed over the entire loan period.
4. The reduction in the amount of payment is determined in the amount of 20% (if there is one child), or 30% (if there are at least 2 children).
5. The state provides a deferment for a period of 1.5 years if necessary.
6. Recipients of foreign currency mortgages convert it to ruble ones, setting the average rate.
7. The income of citizens must allow them to pay the mortgage, leaving at the disposal of the borrower’s family 2 subsistence minimums per person.
8. The object of the loan purchase must be the borrower’s only home, although family members can own shares in other real estate (no more than half).
9. The cost of housing cannot be 60% higher than the average market price.

State assistance is available to traditional beneficiaries, including borrowers from large families, while children are allowed to reach the age of majority if they continue to study full-time at a university.

As for military mortgage programs issued in rubles, borrowers are recommended to restructure the debt by contacting the bank directly, submitting documents on a general basis.

Forms of implementation

Before moving on to the procedure for restructuring an existing mortgage, it is necessary to understand that there are several forms available to a citizen to choose from. Thus, the bank can offer such activities as:

1. Extension of the term of the mortgage, that is, the schedule is subject to changes and is extended.
2. Credit holidays, we have already talked about them earlier. Please note that during the period of their validity, a person does not make a payment, but must pay interest. The question of which is better, mortgage restructuring or credit holidays, is incorrect, because one is a component of the other.
3. Changing the payment schedule, for example, a person can deposit money once a quarter, half a year or another time period.
4. Cancellation of fines and penalties for the period of the program.
5. If the mortgage was taken out in a foreign currency, it can be converted into national currency.
6. Reduced annual interest.
7. Reducing the monthly payment amount.
8. Paying off your mortgage early is another form of restructuring, and it has its pitfalls. The citizen pays the loan amount at a time, thereby avoiding paying interest. The difficulty is that it is unlikely that a person will be able to deposit the entire amount, so banks sometimes offer the following option. Selling acquired real estate, paying off debt and purchasing more affordable property.
9. Mortgage restructuring under the state program - partial repayment at the expense of the state.

Is it possible to contact another bank for mortgage restructuring? Restructuring is the process of drawing up a new agreement, updating the payment schedule with the credit institution from which the mortgage was taken out. It is strictly forbidden to complete this procedure in another bank.

How to restructure your mortgage in 2021

If the borrower can no longer cope with servicing the mortgage debt for reasons beyond his control, he must act immediately, without waiting for fines and negative entries in the credit book.

Restructuring schemes through a bank and with the help of the state will be different, since in the latter case the mortgage will be restructured through AHML, which is authorized to resolve such issues.

The procedure is presented in the following steps:

1. Consult with the bank about the possibility of restructuring directly or participating in the state program.
2. Through the MFC, obtain an extract from the Unified State Register indicating the presence of a lien and generalized rights.
3. Ordering a document confirming the absence of other real estate for residence.
4. An application is submitted to AHML or a bank branch with a request to restructure the debt, attaching collected documents proving the existence of compelling reasons for non-payment.
5. According to the established rules, the bank or AHML decides on the possibility of restructuring the debt within 30 days. However, more often applications are considered no longer than 10 days.
6. After a positive decision, the client is invited to re-register and sign the papers.
7. When participating in the state program, you will need to appear at the registration authority along with the mortgage from the bank and update information about the collateral.

When signing the document, new documents with a repayment schedule for the restructured debt will be provided.

When applying under a state program, the chances of approval are much greater, since the state assumes part of the financial obligations, however, when applying to a bank (when the parameters of the program are not met), the likelihood of a loan revision is less, and depends on reasonable argumentation and confirmation of the facts with documentation.

Banks that can undergo restructuring

Since restructuring is an extreme measure that borrowers count on when they find themselves in a difficult situation, not a single bank will promise in advance that it will restructure the mortgage debt on demand. Moreover, agreement is possible only when the bank is convinced that there is no other option to return the borrowed funds and save interest.

However, difficulties do not mean that restructuring will be denied. Having received guarantees from the state, the bank has no right to refuse assistance to the borrower. It is known that the credit institutions participating in state programs include Sberbank, Rosselkhozbank, VTB and other institutions.

If you cannot obtain consent from your lender, you still have the chance to refinance the debt by contacting other credit institutions. It is worth considering programs from Bank Vozrozhdenie or Sovcombank. Under the general refinancing program, VTB promises to reduce the rate to 8%, subject to certain parameters.

Since restructuring involves an individual approach that takes into account the debt balance and the borrower’s solvency, the terms of such programs are determined during negotiations with the bank.

Mortgage restructuring conditions

There are several ways to reduce your mortgage payment through restructuring:

1. Extend the loan term by spreading the debt load over several additional years.
2. Reducing the overpayment percentage. This method is used by banks extremely reluctantly, as it leads to losses. This option is the most preferable for clients.
3. Transferring a foreign currency mortgage to a ruble one. Anyone who has chosen a low rate with a lower interest rate on dollar loans is especially vulnerable during periods of exchange rate fluctuations. Meanwhile, all lenders advise choosing a foreign currency mortgage only if you receive earnings in the currency of another country. Then the fall of the ruble will not lead to the borrower's insolvency. Since mortgage holders mostly receive their salaries in rubles, issuing debt in another currency is dangerous.
4. Providing deferment (credit holidays). It comes in three varieties - a complete deferment of mandatory and interest payments, a temporary break in the payment of the principal debt, and a cessation of interest payments. For banks, the more profitable option is to maintain interest payments, while the principal debt is not reduced.

During the revision of the terms, the bank will propose a new payment schedule, which must be adhered to after signing the restructuring papers.

List of required documents

The documentation package depends on the selected scheme. During the discussion of possible options, the bank representative will inform you what documents will need to be prepared.

Taking into account that the restructuring involves the re-signing of loan documents, the borrower will be asked to submit:

1. Application requesting debt restructuring.
2. Passport.
3. Certificate of income (2-personal income tax, certificate in bank form, other certificates).
4. A certificate from the employer (if available), or a paper confirming the loss of employment (the original employment record with a record of dismissal for reasons beyond the control of the person).

For individual entrepreneurs, you will need to provide a certificate of registration and papers confirming a decrease in income of at least 1/3 of previous earnings. Additionally, the bank may ask for medical certificates confirming loss of ability to work, dismissal orders, tax returns with a note of acceptance by the Federal Tax Service.

Implementation procedure

Surely you have wondered how to restructure your mortgage? To do this you need to follow 5 simple steps:

1. If you have any difficulties, select the basis on which you are going through, and also contact the credit institution. Check with specialists to see if you can get help and complete the procedure.
2. Collect the necessary documents, write an application for mortgage restructuring under the AHML program.
3. Provide the collected documents to the bank. Please note that you can submit not only in person, but also by registered mail if there is no branch in your city. Some banks, for example, Sberbank, allow you to fill out an application online through the website.
4. After acceptance and verification by a specialist, enter into an additional agreement aimed at assisting the borrower. At the same time, you need to discuss which forms you choose, establish and agree on a new schedule.
5. Make mortgage payments in full and on time. Otherwise, bank employees will revise the terms of the loan in the opposite direction, which is not beneficial for the payer.

Note! When signing an additional agreement, it is necessary to make sure that the previous agreement has been canceled; as a general rule, a certificate from the bank is issued confirming this. In addition, first of all, familiarize yourself with the new payment schedule, and only then agree to sign the document.

How many times can you restructure your mortgage? An important condition for completing the procedure is that previously no form of restructuring should have been used for this mortgage. That is, you can complete this process only once; the next time you do so, you will simply receive a refusal. Thus, refinancing a mortgage after restructuring and vice versa is not allowed.

Restructuring percentage calculator

Restructuring will not always help, and then you will have to look for additional sources of financing or coordinate the sale of mortgage housing in order to pay off the bank.

Before applying, it is worth making a preliminary calculation of what the payment amount will be after revising the terms of the contract. Using the loan calculator on the bank’s website, the client determines what period will help reduce the payment to an acceptable level. Similarly, they calculate what mortgage payment will remain if a credit holiday is provided for the payment of the principal debt, a temporary waiver of interest, or a complete cessation of payments for a certain period of time.

When it was not possible to restructure the mortgage, it is recommended to consider the possibility of early partial repayment of the debt through maternity capital or a tax deduction. If you pay part of the mortgage early, the bank will reconsider the payment, maintaining the loan term. Some banks provide the possibility of reducing the term of the agreement. This condition is beneficial when the borrower is not experiencing financial difficulties, but is not suitable for those who have lost their job, income, or began to earn much less.

Package of necessary documents

An important step is collecting documents for mortgage restructuring. To do this, it is important to understand what needs to be provided to bank employees. The list depends on the reason and conditions of the procedure, that is, the circumstances in which the family or person finds themselves.

The universal list of documents is listed at the link above, it includes different cases for providing individual documents, for example:

1. If a person is fired, a copy of the work record book; it is advisable to provide the original for verification. You can also provide an extract from the employment center confirming that the person is registered as unemployed.
2. Transfer to another, lower paid position, or reduction in salary - certificate of form 2NDFL.
3. Liquidation of the organization in which the borrower worked - a copy of the work record book, if the mortgage is on the employee, or a certificate of liquidation of individual entrepreneurship for the owner.
4. Disability, disease - a certificate from a doctor, or a conclusion of a medical and social commission on the assignment of disability.
5. Birth of a baby - birth certificate.
6. The death of a relative is evidence.

In addition to supporting documents, a passport, a loan agreement in its original form, which was concluded during the period of registration of the mortgage, and an application are also submitted. In some cases, employees may request documents for the apartment.

Important! A sample (form) of an application for mortgage restructuring can be found at a bank branch or on the website. However, a general form that reflects all the borrower’s requirements is also suitable.

using the example of Sberbank.

Banks providing restructuring services

In the given list of banks, customer reviews and convenience for people were taken into account; in addition, the list is open, that is, not all banks will be considered further. The most common are:

1. Sberbank is the most convenient and widespread bank, which has achieved a lot in matters of obtaining a mortgage, for example, the DomClick system has been formed. She helps a family choose a house, an apartment and apply for a mortgage directly on the bank’s website, and DomClick will also help sell real estate. In addition, you can submit an application online at Sberbank, as already mentioned. Quite often, Sberbank approves applications for mortgage restructuring at a lower percentage. For detailed advice, you can call the hotline.
2. In 2021, Gazprombank is no exception in providing mortgage restructuring. The website presents the bank's conditions and requirements for completing the procedure; an online application is not provided, but you can also call and find out all the information over the phone.
3. VTB 24 provides the service in a very unusual form; it is possible to receive a stabilization loan. This is a loan that allows you to cover your mortgage, but unlike refinancing, you can only get it at VTB.
4. Along with the usual forms of restructuring, SvyazBank offers the service of concluding a settlement agreement between the organization and the debtor. Within it, new conditions are envisaged and a compromise is reached.
5. Quite a lot of positive feedback concerns the process of restructuring foreign currency mortgages at Absolut Bank. Employees always treat each situation individually, look at the reasons and offer solutions. You can only contact Absolut Bank by phone or in person.
6. Alfa-Bank offers a service such as restructuring a business portfolio, when the essential terms of an organization’s loans are revised in order to avoid the bankruptcy process. A convenient service has become a mortgage restructuring calculator, which is available directly on the bank’s website. Using it, you can calculate a favorable rate and repayment schedule.

In addition, restructuring services are provided by a bank such as Dom.rf. Promsvyazbank, Rosselkhozbank, Vozrozhdenie, and Otkrytie Bank recently began providing the service in question, but such cases are becoming more and more common.