How to get an interest-free mortgage?

Is it possible to get an interest-free mortgage?

All banking organizations are aimed at making a profit, so a zero-rate mortgage is a completely unacceptable concept for them.

But since interest-free lending is provided by the state, it looks like this:

1. The borrower receives a large sum of money from the bank at zero interest and without a required down payment.
2. The bank receives its profit from public funds, which are paid to the bank when applying for mortgages to citizens from the preferential category.

Thus, all lending participants get what they want.

To get an interest-free mortgage, potential borrowers will need:

• contact your local municipality or administration;
• clarify the availability of existing programs and requirements for participation in them;
• collect the required package of documents;
• write an application to your partner bank.

Initiative to introduce interest-free mortgages in Russia

Interest-free mortgages may soon be introduced in Russia. However, it will become available exclusively to certain categories of citizens. This initiative was voiced by a group of deputies from A Just Russia.

First of all, we are talking about young families who have decided to purchase housing in new buildings or secondary housing stock. It is proposed not to charge them additional interest, but to make the terms of mortgage lending more flexible.

The argument for putting forward such an initiative was the improvement of the demographic situation in the country. The fact is that current mortgage conditions, with an interest rate of 6.5% per annum, do not allow young people to purchase housing en masse. Thus, some of them are forced to live in rented apartments for a long time, without planning the future fate of the family.

“In our opinion, the state should as actively as possible develop programs for providing interest-free loans for the purchase of housing for young families,” emphasized the head of A Just Russia, Sergei Mironov.

In general, Mironov said, party members are categorically against mortgages for young families, which provide for the constant accrual of interest on debt balances, as well as a high down payment.

Who is entitled to

First of all, an interest-free mortgage is necessary for those Russians who cannot buy housing on their own due to a difficult financial situation:

• young and large families;
• single mothers raising children without the support of a second parent;
• young specialists and public sector workers who receive low wages due to the specifics of their profession and lack of necessary experience.

These categories of citizens can get a mortgage loan for an apartment under the social mortgage program. We discussed this program in detail earlier.

Young family

At the legislative level, a young family is considered to be a couple under the age of 35 who are officially married. It does not matter whether they have children or not. Families with or without children can apply for an interest-free loan, but calculations for the number of required square meters per family will be carried out differently.

At the federal and regional levels, many programs have been developed to provide housing to young couples. From budget funds, families are allocated from 30 to 50% of the total cost of the mortgage. These funds can be used to pay for:

• down payment;
• mortgage interest.

After this, the married couple only needs to repay the loan amount, without overpayment or additional fees.

Single mother

There are no separate federal programs designed specifically for single parents in Russia. Single mothers of the appropriate age can receive a preferential loan under programs for young families as part of a social mortgage. In addition, certain regions support single mothers and provide them with special cash certificates that can be used to repay loans or purchase their own housing at a reduced price.

The large family

Large families with three or more children are entitled to various benefits and privileges from the federal and regional authorities (receiving a free plot of land, participation in housing programs for young families, etc.). Comfortable and comfortable housing for families with many children is an urgent need.

But obtaining a mortgage loan for such families is possible under certain conditions:

• availability of monthly income to repay the principal debt on the mortgage;
• official status of a large family;
• the need to improve the existing living space or the complete lack of real estate ownership;
• placing on a waiting list for housing as those in need.

For young professionals

Young specialists are yesterday’s graduates of higher educational institutions who studied at the expense of budget funds. Doctors, teachers, educators, scientists and nurses and other specialties are in demand in rural areas and remote regions of the country.

To attract young professionals, regional authorities are developing special social programs to help them purchase housing in the shortest possible time. Applicants may receive cash to help pay their mortgage down payment and/or interest.

Mortgages for young professionals will be discussed in detail further on the pages of the site.

State employees

Public sector employees have low monthly income, which does not allow them to take advantage of standard bank loan programs. Therefore, a special mortgage has been developed and is available for public sector employees.

To obtain it, a number of conditions must be met:

• employment in a state or municipal organization;
• At least 3 years of work experience in the public sector;
• availability of income sufficient to repay the “body” of the loan;
• official status of someone in need of improved housing conditions.

Mortgages for public sector employees were discussed in detail in the previous post.

Russian Railways employees

Unlike the above categories of citizens, employees of JSC Russian Railways receive preferential loans, which are financed not from public funds, but from the company’s budget.

Railway workers can count on the following preferential conditions when taking out a mortgage for their home:

• no down payment;
• low interest on the loan (from 2 to 4.5% per annum, the difference between the standard bank rate is covered by Russian Railways OJSC);
• additional subsidies at the expense of the company for the birth of a child during the period of validity of the apartment .

Who can apply for a social mortgage?

Not all categories of citizens can qualify for a social mortgage. This is an important aspect, because first you should find out whether, in accordance with modern legislation, you are entitled to this type of lending or not. Let's consider several conditions that must be met to obtain this type of lending:

• The applicant does not have his own home. As a rule, such people live either in a communal apartment or in a dormitory, and sometimes they rent housing.
• People live in cramped conditions, which means less than 14 square meters for each family member.
• There is a special set of requirements that the bank puts forward. Citizenship, length of work experience, registration, etc. may be taken into account here. You must find out this set of requirements directly from the bank with which the state cooperates as part of the program.

These are the basic requirements for applicants, but additional ones are also noted, which are presented separately for each social category of citizens.

How to obtain a state subsidy certificate

The algorithm of actions for receiving a government subsidy, which can be used to pay off a mortgage, is as follows:

1. Contacting local authorities. Administration representatives provide everyone with lists of required documents.
2. Providing a package of papers for consideration for registration as those in need. The administration's decision will be ready within 1 month. The applicant will receive an official letter with a document confirming participation in the program or a reasoned refusal.
3. Waiting in line may take a long time (depending on the number of participants). When the time comes for a particular participant, he is notified by mail or by telephone and invited to the administration, where he is presented with a certificate of state subsidy.
4. Contacting the selected banking institution to obtain a mortgage.

Documents for social mortgage

Depending on which social group you belong to, the package of documents for you may vary. However, there is a certain documentary base, that is, a set of documents that you will definitely need. This includes:

• Application for a social mortgage. It should be noted that this document is a regular application for a loan. Its form can be downloaded here.
• A document confirming tax registration.
• A certificate from your place of employment, which contains information about your current income and work experience.
• Passports of each family member (children under 14 years old usually require a birth certificate).
• Certificate from the house register in the prescribed form.
• Title document for the apartment.
• A copy of the work record book.
• Certificate confirming family composition.
• A certificate confirming the registration of ownership of the purchased property.
• Extract from the Unified State Register for the purchased living space.
• Bank account details.

Some situations imply that the property has already been purchased with a mortgage. That is, in this case, as part of a social program, the state will help pay off part of the existing debt or in another way help in simplifying the payment of the established amount. Check with your local authorities to find out which type of support you may qualify for.

Which bank should I contact?

The most trusted banks that have an impeccable business and financial reputation and have earned the trust of Russians become partners in state housing programs for preferential categories of citizens.

These include:

• Sberbank of the Russian Federation;
• VTB 24;
• Gazprombank;
• Bank of Moscow;
• Svyazbank;
• Raiffeisenbank.

Mortgages from these banks are provided on the following terms:

• down payment from 10 to 20% of the total cost of the loan;
• the mortgage rate does not exceed 11% per annum;
• The loan duration is up to 30 years;
• possibility of early repayment.

AHML and partner banks should be considered as a priority as a creditor because It is this structure that is responsible for the implementation of social mortgages and supporting the population in the housing issue.

What is a social mortgage?

Social mortgage is a form of mortgage lending in which part of the amount of money is paid by the state. What are the features of a social mortgage and how profitable is it? Let's try to answer these questions:

• The main advantage and most attractive factor of a social mortgage is the reduced cost per square meter of housing. That is, it turns out that the same housing purchased under the social or standard mortgage program will cost differently.
• Before approving a loan, the bank checks the apartment for “cleanliness” and also provides life insurance for the borrower and the apartment.
• If you managed to get a social mortgage, then now you have another advantage on your side - guarantees from the government and the bank itself.
• The interest rate set at the beginning remains the same for the entire loan period.
• Preferential mortgages are issued at a low interest rate. It varies from bank to bank and starts at approximately 9%.
• People can choose a loan period of up to 30 years.

Please note that the form of this support varies from region to region. For example, this may be not just the purchase of housing at a low cost on credit, but also compensation of a certain amount from a loan for already purchased housing or reimbursement of a certain part of the mortgage interest.

It’s interesting to know how a mortgage differs from a loan: .

Requirements for the borrower

Interest-free mortgages are provided to different categories of citizens on different conditions, so the list of requirements for the borrower may change.

But there are general ones that apply to all preferential lending programs:

• the age of the borrower is up to 65-80 years;
• having the status of someone in need of improved housing conditions;
• confirmation of a special situation that allows you to participate in preferential lending (large family, budget employee, railway worker, etc.);
• work experience in the last place for at least 1 year;
• availability of the required level of income, confirmed by official documents (2NDFL certificate, bank account statement, etc.).

Among other advantages

Private financial organizations attract educators because they really help them improve their living conditions. This decision of the applicants is based on the following reasons:

• Large and free choice of housing.

Previously, banks only “let through” urban housing on the primary market, but now the situation has changed radically. Today you can find apartments on the secondary market, as well as houses in the suburbs that lenders will “accept.” Borrowers manage to obtain completely unexpected loan options, and therefore fewer and fewer people are taking advantage of government offers.

What salary is needed to get a mortgage at Sberbank ⇒

• Convenient and flexible registration conditions.

When receiving such a mortgage, you can use all sorts of ways to confirm your solvency (certificate from an unofficial place of work, deposit agreements, etc.). In addition, you can attract co-borrowers and guarantors. So, the spouse can act as the first. An extended insurance program also helps to win over the credit institution.

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We should not forget that a teacher, like other categories of borrowers, can use maternity capital. Read about how to pay off your mortgage using MK here.

List of banks with the lowest mortgage rates today ⇒

• A small package of necessary documents.

state banks will require more certificates and other evidence to receive the minimum social benefit. Obviously, commercial banks have more advantages than the federal program.

In addition, representatives of a financial institution can force you to go to different authorities and stand in long lines. Therefore, if you contact a commercial lender, the move will be faster. This point is very important for many borrowers.

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List of documents

The most time-consuming part of lending is collecting the necessary papers and certificates.

The list of documents includes:

• original and copies of all pages of the borrower’s and co-borrowers’ passports;
• marriage or divorce certificate;
• documents confirming the presence of children;
• certificate of family composition;
• documents confirming the special status of the borrower (single mother, large family, low-income, etc.);
• an extract from the Unified State Register of Real Estate about the absence of real estate ownership;
• documents confirming the level of family income sufficient to repay the loan;
• a copy of the work book.

Required documents

• Passport of a citizen of the Russian Federation, SNILS, INN and other papers that confirm registration in Russia, if there is no stamp in the passport. You need to make photocopies of all these documents, but the bank specialist will also have to present the originals.

How to get a mortgage officially without working ⇒

• A copy of the work book.
• Certificate of income from permanent place of work. If the applicant still works somewhere, then he will need to provide an employment agreement and a document on wages at this place.
• Military ID - for male borrowers.
• Application form (can be obtained from the bank.
• Marriage and birth certificates (if any), certificate for MK (read this link for information on how to obtain it).
• Other papers that the lender may require.

Among the disadvantages of a mortgage on standard terms:

The lender will not be able to issue a large amount if the client has a small income. For example, an employee with a salary of about 40 thousand rubles should expect housing no more expensive than 1 million 800 thousand rubles. Therefore, you will have to look for a more modest apartment or contribute more of your own funds to the rent.

Which bank will give a mortgage with a bad credit history ⇒

How to get an interest-free mortgage

It is necessary to consider a standard lending scheme:

1. Contacting the bank. A potential borrower fills out an initial application form and provides a minimum set of documents (passport, second identity document and income certificate).
2. Consideration of the applicant's candidacy by the bank's security service and making a decision on the loan.
3. If the bank approves the application, the borrower will need to provide an expanded package of documents, as well as a certificate of government subsidies.
4. Find suitable housing and provide the bank with a preliminary purchase and sale agreement.
5. After checking the legal purity of the presented property, a transaction date will be set.
6. After signing the purchase and sale agreement, the necessary funds will be transferred to the seller, and the borrower will receive an apartment or house. The property will be pledged to the bank until the loan is fully repaid.

How to get in line

The procedure will vary depending on the social group to which you are assigned. But the standard scheme is as follows:

1. First, you should make sure that you belong to a specific category of beneficiaries.
2. Then a package of papers is formed and an appeal is submitted to the authorities or to the bank.
3. After generating lists for receiving social mortgages for public sector employees, apply for a loan.
4. Before receiving money from the state, you must submit a loan agreement to the municipality.

Military personnel will be able to take out a public sector mortgage after joining the NIS (Savings System) program. From it, funds are transferred to the bank.

Successful completion of the initial check means entry into the queue. But it may take several years. Based on the results, you will receive a certificate of participation in the program. You need to come with it to AHML, where they will provide a list of financial organizations working under the social mortgage program. The decision to be included in the lists is made on the basis of the papers provided by the applicant.

Recommended article: Is it possible to get a mortgage to buy and renovate an apartment?