Mortgage with state support - from A to Z
State support for mortgage loans started in 2020, allowing the least financially protected segments of the population to have the opportunity to purchase real estate without monstrous overpayments. But many borrowers still have questions about what it is, how it works and how difficult it is to get a government-backed mortgage. In addition, important changes were made to the bill in March 2020.
A mortgage with state support (or, as it is also called, “children’s”) is when you receive a loan to purchase real estate, but pay off the debt at a rate of 6%, regardless of the interest specified in the agreement. All overpayments above this 6% are paid for by the state.
There are also special programs for obtaining a military mortgage loan and a mortgage loan with maternity capital.
Under what conditions can you get a preferential mortgage?
There are several programs designed to help families buy a home. However, the conditions for receiving funds are approximately the same, only the categories of support recipients differ.
Mortgages with the participation of state capital are issued on the following conditions:
- The mortgage interest rate cannot exceed 12%;
- The debt repayment period is limited to 30 years (the minimum loan period is 5 years);
- The maximum amount of assistance for the regions is 3,000,000 rubles, and for Moscow – up to 8,000,000 rubles;
- Housing can only be purchased from a developer who is included in the affiliate program;
- Banks are not entitled to charge a fee for opening, maintaining and servicing a mortgage account;
- If the potential borrower’s income level is insufficient, up to three guarantors are involved;
- Age restrictions for future homeowners are 21 years old at the time of receiving funds, and at the end of debt repayment, a male borrower should not be more than 65 years old, and a female borrower should not be more than 50;
- Up to 20% of the cost of housing must be provided as a down payment.
In 2020, the state offers two ways to reduce the borrower’s burden:
- Obtaining a low mortgage interest rate;
- Receiving some compensating amount (for example, maternity capital for a second newborn. The amount of compensation cannot exceed 30% of the value of the property, which in monetary terms is limited to 1,500,000 rubles).
How can those who fall under several programs get a mortgage with state support? In this case there are restrictions. For example, if you are an employee of a municipal clinic and have recently given birth to a second child, you will not be able to take advantage of two types of assistance (for public sector workers and mothers of two children). Choose what is more profitable for you.
Who can get it?
According to Decree No. 1711, families with children who have had a second or third child can take advantage of state assistance.
For how many years does state mortgage assistance apply in 2020:
- addition of a second child – for 3 years
- addition of a third child – for 5 years
- addition of a second and third child – for 8 years
Only families in which the second/third or second and third child were born from 2018 to 2022 .
You can apply for a mortgage with government support at any time, at least until 2022. There are government statements according to which the program is planned to be extended. However, when planning a pregnancy, you should focus on the already approved dates.
Military mortgage
Program: mortgages with state support for military personnel have long become a familiar sales tool for banks and a reliable assistant in solving the housing problem for military personnel. A special military mortgage condition was launched especially for this category.
The mortgage under this program for the military is paid by the state. The serviceman also has a special account; money from the state is regularly credited to it for the purpose of selling it for the purchase of housing. These funds can also be used for a down payment.
You can learn more about how to apply for a military mortgage, under what conditions in which banks, from our special post.
An example of calculating a mortgage with state support
Let's take for example the following source data:
- In 2020, the family welcomed a second child
- Parents decided to buy a two-room apartment in a residential area of Moscow
- The average cost of such an apartment for 2020 is 8,000,000 rubles
- Family makes a minimum contribution of 15% (1.2 million)
- Next, they issue a loan of 6.8 million at a rate of 10%
- The loan term is 10 years
- Under the annuity system (when equal amounts are paid every month), the payment will be 93,670 rubles
- Annual payment – 1,124,040 rubles
- But thanks to the state support program, the family will need to pay off the debt at a rate of 6% for the first 3 years - that is, approximately 75,500 per month or 906,000 per year.
The total savings will be about 650,000 rubles.
This example does not take into account insurance and other related expenses. But in any case, the savings are decent.
How to save the maximum amount?
Obviously, the higher the payment, the more you can save . But this is a double-edged sword.
On the one hand , by choosing a shorter period, you save more during the grace period for repayment of the amount (when you pay at a rate of 6%, and the state takes over everything from above). Plus - the shorter the term, the lower the final overpayment on the loan.
On the other hand , after the grace period expires, you will have to make payments in accordance with the rate specified in the contract. And they may be unaffordable for a family with children. You can hope for refinancing. But, firstly, it is not always possible to find a program with more favorable conditions. Secondly, the original agreement may contain restrictions on refinancing (high commissions and even a complete ban).
Conclusion : Before applying for a mortgage with state support, weigh the pros and cons, and initially choose a rate that will be affordable for your family. This will avoid unnecessary stress and sudden financial crises.
Bank selection rules
Not all banks operate mortgage programs with government support. Since debt repayment is subsidized by the state, the Russian Ministry of Finance has compiled an official list of approved institutions, which include:
- Rosbank
- Sovcombank
- Sberbank
- Bank Raiffeisen
- Bank opening"
Financer warns - apply for state support for a mortgage loan only to banks designated by the Ministry of Finance. A lending institution may, for advertising purposes, formulate an offer in such a way as to give the borrower a false impression of the possibility of obtaining a mortgage with government support.
However, in accordance with the law, you can only count on loan subsidies when you contact the banks listed in the list above. In all other cases, the borrower will be able to count on a maximum preferential rate established by the financial institution itself. But it will certainly be higher than 6% (in 90% of cases - significantly higher).
What to do after processing the application?
If you have received a positive decision from the subsidy distributor, you should obtain a certificate from him about this. In the case of family capital and the housing program, this is a certificate. The certificate for the Housing program can be taken to the bank within 2 years after receipt, and with its help you will receive the benefits promised by the state. Maternity capital can be used to improve housing conditions within two years after receiving the certificate.
In the case of obtaining a mortgage with the support of a state corporation, you should similarly contact the bank cooperating with the organization with a certificate of a positive decision to receive a subsidy.
Let's summarize. You can get government assistance to pay off your mortgage in several ways . To qualify for assistance, you must either be a member of a large family or live in conditions that do not comply with the Housing Code. If you receive a positive decision, you can significantly simplify your mortgage repayment.
State support and credit holidays
In accordance with Federal Law N 76-FZ, if the financial situation deteriorates significantly, the borrower has the right to receive a mortgage holiday for up to 6 months.
Financial force majeure events include:
- a drop in income of 30% or more;
- loss of job (with official registration at the employment center);
- receipt of incapacity for work for a period of more than 2 months (for health reasons);
- receipt of disability (I or II degree);
- increase in the number of dependents under the care of the borrower.
According to changes made to the law, during mortgage holidays, monthly payments are reduced to amounts feasible for the borrower (usually until partial/full repayment of interest charges only).
Is it possible to take advantage of credit holidays with a mortgage with state support? According to the law, only borrowers who have not previously changed the terms of the loan agreement on their own initiative can receive holidays.
It is important to understand that state mortgage assistance is not the initiative of the borrower. Therefore, a family with children who received a loan on preferential terms can also take advantage of the right to a credit holiday in the event of force majeure.
However, to ensure maximum security, Financer recommends that you only apply after the grace period has ended. This will allow you not to miss out on savings due to the benefit and minimize the financial burden during a difficult period for the family.
Requirements for the recipient
Sberbank can provide mortgages to persons over 21 years of age. The income of the person planning to apply for a loan has a great influence on the approval of the application.
The following factors can increase the chances of your application being approved::
- work experience from 1 to 3 years;
- salary, the amount of which must be at least twice the monthly loan payment;
- official work with the conclusion of an employment contract.
If you have changed jobs, your mortgage application must be approved for at least six months.
Credit history also plays a big role. The bank may refuse to provide a mortgage not only to persons with a bad credit history, but also to those who do not have one.
Why might an application be refused?
- housing is purchased not from a legal entity, but from a private person;
- you are not buying an apartment in a new building, but a resale apartment or a country house;
- the application is submitted by a family with children born before 2020;
- parents under 21 years of age;
- the application was submitted to a bank that is not accredited by the Ministry of Finance to work with the state mortgage support program;
- borrowers cannot verify income;
- one of the parents is an individual entrepreneur.
The last point is not legislative. However, few banks are willing to lend to individual entrepreneurs, considering their income unreliable and unpredictable.
Among the organizations that willingly cooperate with individual entrepreneurs are Otkritie Bank and Rosbank. To apply to these companies, you will need to provide proof of income (for example, a copy of the declaration) for the last 12 months.
How to get a mortgage with government support. Registration procedure
To receive the benefit, a citizen must submit the following documents to the administrative district unit:
- passport details;
- statement;
- children's birth certificates;
- an extract from the house register;
- marriage documents;
- if there is property, an extract from the Unified State Register.
Applications are reviewed within 1 month. If the verdict is positive, a certificate is provided with which you can receive a mortgage loan.
You must first obtain a certificate from the administration stating that the citizen needs living space. You also need to visit the bank and apply for borrowed funds. The application should indicate:
- the amount of the amount and the purpose of its acquisition;
- Full name of all parties to the transaction;
- place of residence;
- place of work;
- Contact details;
- criminal record information;
- information about relatives from a banking institution;
- data on other existing loans.
If at least one discrepancy is detected, the bank will refuse receipt.
The verification of documents for the property of interest is reviewed by the bank for no more than 1 week. After this period, the credit institution sets a transaction date. On this day, the funds will be transferred to the seller, but he will not be able to take them until the transaction is registered with Rosreestr. Until then, the funds are stored in a safe deposit box rented by the buyer.
In the future, the borrower is classified as a debtor, i.e., he is obliged to properly comply with the agreements. If they are regularly violated, the bank has the right to terminate the agreement unilaterally and oblige the person to repay the debt in a lump sum.
