Obtaining a mortgage is an important and responsible step that should be taken with particular seriousness. Before you go to the bank, you must carefully weigh the pros and cons, carefully studying all the pros and cons of mortgage lending.
What is a mortgage?
The main point of a mortgage loan is to provide the borrower with mortgaged real estate as a guarantee for the fulfillment of the loan obligations assumed. The bank provides a loan for the purchase of residential real estate, and the borrower undertakes to pay the principal, interest and other related payments. Although almost any valuable property (residential and non-residential real estate, land plot, etc.) can act as collateral, borrowers most often prefer to register in this capacity property acquired using credit funds.
Despite the fact that each bank sets its own lending conditions and requirements for the borrower when applying for a mortgage, this procedure is strictly regulated by Russian law and is controlled by the work of specially created mortgage agencies.
Obtaining a mortgage loan is a very complex and multi-stage process, which includes collecting a large number of documents, finding a suitable apartment, real estate appraisal, insurance and a long bank check of the borrower for his reliability. To facilitate this process, many borrowers turn to real estate agencies and mortgage brokers for help.
After signing the loan agreement for the borrower, credit "weekdays" begin, namely, the repayment of the loan. Depending on the conditions of the lending bank, the borrower will be able to deposit funds into the account in cash or repay the loan by bank transfer, do it on a specific date or simply on any day of the month, etc.
Benefits of a mortgage loan
The main advantage of a mortgage is the ability to immediately move into your own apartment, and not save money for it for many years, while giving away a significant part of the family budget for rental housing. Real estate purchased on credit immediately becomes the property of the borrower and he can register for himself and his family members.
The safety of such long-term lending (usually a mortgage is issued for 15-20 years) is ensured by insurance of real estate, life and working capacity of the borrower.
Another undoubted plus is the opportunity to receive a tax deduction of 13% of the cost of the purchased apartment. This benefit actually reduces the cost of the mortgage, since the funds received can be used for partial early repayment of the loan. In addition, some categories of citizens have the opportunity to borrow housing on special preferential terms. Today, young families, budget workers and the military can apply for a mortgage under a special program.
Disadvantages of mortgage lending
As with any other form of bank lending, the main disadvantage of mortgages is the large amount of overpayment. So, in some cases, the total amount of loan payments may exceed the original cost of the apartment by 100%. The amount of the overpayment is made up of interest on the loan and annual insurance premiums. In addition, when applying for a mortgage loan, the borrower will have to pay from his own funds the costs of notary fees, appraisal of the acquired real estate and additional bank commissions. All these expenses are quite impressive.
Since the acquired property will be pledged by the bank, restrictions will be imposed on it, that is, the owner of the property will not be able to sell, exchange, rent, redevelop, etc. until the loan is fully repaid.
The disadvantages of mortgage lending can also be attributed to the excessive requirements of banks in relation to the acquired housing, work experience and income level of the potential borrower.
