Where is the best place to get a mortgage for a room? Review of profitable offers from Russian banks

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Not all citizens can afford to purchase a full-fledged separate property. Therefore, they decide to buy a room in a dorm or communal apartment. However, there is often not enough money for such needs. Then a mortgage is issued for the room.

Attention

In 2020, banking organizations do not always provide loans in the form of a mortgage for a room. This is due to the risk of the transaction and the low level of liquidity of the property. It is important to know which credit institutions you can contact, as well as the rules for applying for a mortgage.

Is it possible to buy a room with a mortgage?

Among the types of premises in which you can purchase a separate room are dormitories and communal apartments. Both types of property have their own characteristics.

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Communal apartments are sold in shares, rather than by specific rooms. For example, you can buy 1/8 of the entire apartment. In this case, purchase or sale is carried out only upon receipt of signatures from the citizen-owners of neighboring rooms. The signed document must be certified by a notary office.

In the dormitory you can purchase a separate room with all communications. In 2020, a mortgage for such a room is easier to obtain, and the cost will be less than that of a full-fledged one-room apartment.

IMPORTANT

Banks often refuse to issue a mortgage for a room. But it is still possible to obtain a loan if the purchased object meets the established requirements. Therefore, in 2020 it is worth trying to take out a loan if there is a suitable option for purchase.

Where can I buy a room?

The type of housing for this type of lending is determined only by the type of property in which there is the possibility of purchasing one room.

Among these are dormitories and communal apartments, as well as parts of an ordinary apartment in which there is more than one owner.

In dorm

A mortgage for the purchase of a dorm room is quite a risky undertaking for banks, since the liquidity of such real estate is very questionable.

Therefore, the borrower may be required to provide a document confirming the availability of additional real estate that can be considered by the bank as collateral.

Also, the possibility of opening a mortgage increases if the borrower wants to buy the last room in the hostel in order to become the full owner of the entire complex.

In a communal apartment

For communal apartments, as well as dormitories, banking institutions set increased requirements.

The object must not be demolished, nor be unfit for habitation.

You will also need written confirmation of the consent of other owners to buy out part of the communal apartment.

You can also significantly increase your chances of successfully obtaining a mortgage loan by purchasing additional real estate or purchasing the last part of the apartment.

Bank conditions

A mortgage loan for a room is not issued by all credit institutions. But if a bank offers such a service, it sets its own conditions for lending.

Depending on which banking organization the applicant applies to, the following may change:

• annual interest rate;
• duration of lending;
• the maximum possible amount.

The amount of the down payment also varies. But this condition is standard for all credit institutions.

Some banks may provide loans without a down payment. In this case, the loan will need to be secured with collateral, which can be any real estate the citizen owns. You can also attract maternity capital as a PV. Preferential conditions are provided to citizens who use government subsidies (young families).

Requirements for the borrower

Applying for a mortgage loan for a room in 2020 is available only to citizens who meet the bank’s criteria. Among the standard conditions are:

• minimum age – 21 years;
• the maximum age at the end of making payments is 65-70 years;
• presence of Russian citizenship;
• current official place of employment where the person has been working for at least six months;
• total work experience of 1 year;
• income level that allows you to pay the amount required for the loan.

Please note:
Age criteria are averaged. Typically, banks issue mortgages to persons who will not be 65 years old at the time of full repayment.

Often banks require the involvement of co-borrowers or citizens who are ready to guarantee the repayment of the loan. In the absence of payments from the borrower, they are obligated to deposit funds.

They check banks and credit history. The institution must be sure that it is issuing a loan to a reliable person. Even if there is no credit history, either negative or positive, this may be grounds for refusal. Banks are not ready to trust newcomers whose first loan is a mortgage for a room.

Requirements

To the borrower

When applying for a mortgage, banks that provide loans impose standard requirements on the client:

• age from 21 to 65 years;
• availability of Russian citizenship and registration in the territory where the loan was issued;
• work experience – from 6 months at the current place, total experience for 5 years – at least 12 months;
• having a permanent income and place of work.

To the premises

When choosing living space, the borrower should be guided by the requirements imposed by banks for rooms:

• The area should not be less than 12 sq.m.
• Housing must be located in the region where the loan is issued.
• According to its purpose, the apartment in which the room is located must be residential. The status of the premises can be found out from the title documents.
• Availability of a bathroom and kitchen in the apartment.
• Availability of running water, electricity, heating.
• Housing should not be dilapidated or in disrepair.
• The percentage of wear is no more than 55%.
• Wooden floors are not allowed.
• Mortgages are only possible for housing on the secondary market (we talked about mortgages for secondary housing here).

Banks have a separate requirement for real estate documents.

Important! The living space must have only one owner.

Difficulties during registration may arise if many people were registered in the room. Before purchasing such an object, the buyer and the bank must make sure that the living space is free from the claims of third parties.

There are often cases when, after some time, former residents discharged in connection with serving a sentence in a colony, or people considered missing, begin to claim the purchased room.

The borrower will need to obtain a certificate from the passport office of the management company about all previously registered residents. This will help avoid problems in the future.

Requirements for living space

You can take out a mortgage loan from a bank to buy a room if the loan object meets the established requirements. These are the following criteria.

1. The utility must be located in a house that is not considered unsafe. It should not be included in the list of objects for demolition, major repairs or reconstruction with eviction of residents.
2. The hostel must be located in a region where there is a bank branch.
3. The area that has been chosen for the purchase of real estate must have developed infrastructure.
4. The room must have all the conditions for a comfortable stay. This rule also applies to public places.
5. The property must have a separate kitchen and a bathroom.
6. Utility debts should be excluded.
7. There should be no third parties who can express their right to receive the room.

Set of documents for obtaining a loan

Applying for a mortgage for a room in a communal apartment follows the same procedure as when purchasing a separate ready-made apartment. Therefore, the set of papers provided to the bank will be similar.

1. The citizen draws up an application, which has the template established by the bank.
2. An identification card (civil passport) with copies is attached.
3. To confirm income, a 2-NDFL certificate is required. If a citizen cannot provide it, he has the right to confirm the presence of a permanent income with a certificate in the form of a bank.
4. Guarantors need to have identification documents, an application, and proof of income.
5. Military personnel must have a contract with them, which indicates the period of its conclusion.
6. If a pensioner applies to the bank, a pension certificate is attached.
7. Title documents are required for the property.
8. To clarify that there are no third parties as possible owners, you need to take an extract from the house register.
9. A technical passport may be required for the room. If there is none, you can register it at the BTI.

Please note:
If benefits will be used when applying for a mortgage for a room, documents confirming them will be provided. These include a certificate for maternity capital and a certificate of participation in the program for young families.

Registration of a mortgage

After choosing a banking institution that is ready to provide a mortgage for the purchase of part of the housing in a communal apartment, the potential borrower must submit an application form.

After approval of the client’s candidacy and approval of the mortgage loan, the borrower selects a room and provides all the necessary documents for this property.

The bank carries out the assessment at the borrower's expense. If it is planned to pledge not only the purchased housing, but also existing property, then it is also assessed by a professional appraiser.

Step-by-step procedure for obtaining a loan for a room in 2020

You can get a loan to buy a room by following all stages of the procedure:

1. The first thing an applicant needs to do is choose a room. It is important that it meets the criteria of a particular bank.
2. You need to select a lender who issues loans for rooms.
3. You must submit a preliminary application indicating the loan object.
4. The banking organization must approve this object.
5. Next, consent is obtained from all owners of neighboring rooms, if we are talking about a communal apartment.
6. The lender evaluates the living space and checks its compliance with established requirements.
7. If the parties agree with the choice, then a mortgage loan agreement for the room is drawn up.
8. An agreement is signed with the seller under which the purchase and sale of housing is carried out.
9. A security deposit is required for the property. Also, the borrower can use another object as collateral.
10. Documents after the transaction are transferred to Rosreestr to officially secure ownership of the buyer.
11. After registering the property with Rosreestr, the bank is provided with an extract on the availability of the property.
12. The necessary insurance is taken out and the funds are transferred to the account of the former owner of the premises.
13. The room is given to the client. From this moment, obligations to repay the loan begin.

The procedure for obtaining a mortgage for a room in 2020 may take about 2-3 months. If serious checks are not required, everything goes through in an expedited manner.

Registration of insurance

When a citizen goes to get a mortgage for a room, he needs to remember the need to take out an insurance policy. With its help, the bank protects itself from possible non-payment of the loan, as well as violation of the integrity of the loan object.

There are 3 types of mortgage insurance policies:

• a property registered as collateral;
• property rights;
• life and health of the borrower.

It is mandatory to take out the first type of policy. This is due to the fact that until the loan is fully repaid, the room is the property of the bank and is considered collateral.

IMPORTANT

The cost of an insurance policy varies depending on the company and the amount that is issued to the citizen. It is important to choose trusted insurers in order to protect your interests as much as possible.

Which bank gives a mortgage for a room?

Mortgages with housing of this type are issued by large banks. The table shows comparative mortgage lending conditions for a room in each of them.

Advantages and disadvantages

It seems that it is better to purchase a full-fledged apartment with a mortgage instead of a room, but for some this is the only opportunity to stay in the city or find housing after a divorce.

The advantages and disadvantages of mortgage lending for such real estate are shown in the table:

Mortgage for a room in Sberbank

A possible option for obtaining a mortgage for a room in Sberbank is available under the “Ready Housing” program. It provides for the purchase of objects on the secondary market under the following conditions:

• interest rate within 11.1-11.4%;
• the loan agreement is drawn up for a period from 1 year to 30 years;
• there is no maximum allowable amount;
• the starting payment is at least 20%.

The requirements for the loan recipient are standard. The set of documents submitted to the bank also does not have any special features.

Pros and cons of a single room mortgage

They highlight some of the advantages of lending to buy a room with a mortgage in 2020.

1. The purchase is less burdensome from a financial point of view than purchasing a house or apartment. This is especially important when the applicant does not have enough funds to even make a down payment on a mortgage on a separate property.
2. The loan amount per room will be less. Therefore, the monthly payment will be smaller if the loan term is the same.
3. After the debt is fully repaid, you can sell the room. The funds can be used as a down payment on a mortgage to purchase an apartment.

Despite some advantages, there are also negative aspects of such mortgage lending.

1. The main disadvantage is that you will have to live next to other room owners. But if the premises are purchased for the purpose of investment, then this inconvenience disappears.
2. The second obvious disadvantage is the low liquidity of rooms in a communal apartment or dormitory. If a person wants to sell it, it will not be easy to find buyers. However, it is not always possible to sell for an adequate price.
3. In 2020, banks do not always agree to issue a loan for a room. If there are no more funds, then a person will have no other option.
4. The property has special requirements. The room must have a separate certificate of ownership. Also, there should be no encumbrances on it. And the house in which the object is located must be equipped with reinforced concrete floors and have proper communications.

Can I take advantage of a preferential mortgage?

A mortgage for the purchase of part of the housing in a communal apartment can be obtained using preferential programs, since they do not prohibit the purchase of this type of real estate.

You just have to find a suitable bank that cooperates with programs and this type of housing.

Is it possible to buy a room with a military mortgage?

A military mortgage provides for payments under the mortgage-savings system to the military personnel participating in it.

Quite large amounts of these savings, as well as the period for starting to use them after 3 years of participation, allow you to purchase separate housing, but to buy out the last part of a communal apartment in order to become its sole owner, you can obtain this right quite profitably without your own investments.

Is it possible to buy a room with a mortgage using maternity capital?

Maternity capital is provided to families after the birth of two or more children.

This amount is enough to buy out a room, but banking institutions are more willing to agree to buy out the last part of the apartment if the client is already the owner.

What to do if the bank refused a mortgage for a room?

Banking organizations may make a negative decision on a citizen’s application. This is provided for:

• the presence of errors in the papers sent to the bank, as well as incorrectly reflected information;
• fictitiousness of the transferred documents;
• the client receives a low score according to the scoring system (the program conducts a check, after which it may issue a low score, which will be considered unreliable);
• inability to verify the transmitted information (if bank employees were unable to contact the applicant’s boss);
• presence of debts on previous loans;
• tarnished credit history;
• the borrower's criminal record.

First you need to check whether the above reasons exist in this case. If there are shortcomings, then the person has 2 months to correct them. After this, you can resubmit the papers. You can submit an online application through the credit institution’s website.

If in the second case the mortgage for the room is rejected, the following actions can be taken:

• increase the down payment to reduce the loan amount;
• look for a new property to reduce the loan amount;
• establish a credit history (pay off debt, find and eliminate erroneously entered entries, if any);
• visit other credit institutions;
• take out a consumer loan;
• offer co-borrowers.

Alternative options

If you were unable to get a mortgage for a room, in 2020 you can use other alternative options for purchasing a room.

1. You can take out a consumer loan to buy a room. Without guarantors, the maximum amount is provided. In this case, no collateral is required. The rate will be higher than for mortgage lending.
2. A citizen can participate in a housing program from an employer. If a company has its own mortgage program, then it is possible to obtain a loan at a minimum rate even in the absence of a loan. It is important that the employee meets the requirements.
3. Purchasing real estate in a housing cooperative. You can take a finished object or at the construction stage. In this case, there are a number of advantages and a small package of documents. You can also always leave the cooperative by returning your contributions.
4. Housing can be purchased in installments. The interest rate does not apply in this case. Installment plans can be arranged for a short period.

A little about bank risks

Banks are reluctant to agree to issue a mortgage loan for the purchase of a room in a communal apartment or dormitory, since the liquidity of such housing is called into question.

Even if, when assessing the real estate, compliance with all conditions is established, the bank is unlikely to receive much benefit from such a transaction.

And if the borrower fails to repay the loan, the sale of such real estate will be quite difficult.

Therefore, banks often dissuade clients from purchasing part of the housing in a communal apartment, even if they have such a right and meet all the requirements.