Due to the unstable economic situation, the only option to become the owner of your own apartment or house in the near future is to take out a mortgage. Whether it is worth taking out a mortgage in 2020, when there is practically no hope of buying a home with your own money, is up to the borrower to decide. To make an informed decision, you need to analyze the situation and evaluate all the possible consequences of this step.
On the one hand, taking out a loan for a long period of time is a rather risky undertaking that requires the most careful attitude. On the other hand, the fall in real estate prices and the reduction of rates by most banks create optimal conditions in order to positively resolve the issue of whether a borrower should take out a mortgage. With the help of various measures, a thorough assessment of one’s own solvency, and the stability of one’s financial situation, one can ensure greater security by reducing the risk of debt to the bank to a minimum.
Before deciding on a mortgage, you need to thoroughly study the issue and find out all the features of this type of lending.
A mortgage is a targeted type of loan, funds for which are taken exclusively for the purchase of housing.
Mortgage as a loan has its own characteristics:
- Mortgages are characterized by large loan amounts.
- The purchased property is registered as collateral for the lender until full payment is made and the credit line is closed.
- Additional registration of collateral on other real estate of the client is allowed.
- Insurance is provided for the collateral for the entire duration of the contract.
- The interest rate, due to the lower risk of non-repayment, is much lower than other loan programs.
- The repayment period can reach 25-30 years, during which the borrower will not be able to fully dispose of the property (while the object is pledged, any transactions with this property must be agreed upon with the bank, which is not interested in the loss of the pledged object).
There is no consensus regarding the justification of borrowing funds for the purchase of housing. On the one hand, an apartment or house is purchased with a mortgage with an overpayment of interest, which over many years of payments can exceed the principal amount of the loan. On the other hand, for some families, borrowing money is practically the only chance to buy their first home. In this case, a mortgage is a blessing, especially since interest rates are currently at record lows and real estate itself has fallen in price.
The advantages of a mortgage also include:
- Obtaining property when the amount of savings to rent an apartment is not enough.
- Purchasing your first home with a mortgage is an excellent alternative to rented housing.
- Tax law allows you to return part of the funds paid to repay the mortgage principal and interest, subject to the availability of income tax deductions, i.e., the borrower can take up to 13% of the funds that the buyer transferred to the seller.
- Seeking help from government financial support programs, including maternity capital, will also allow you to receive compensation for part of the funds paid or use them for a down payment.
Many consider the following characteristics to be the disadvantages of a mortgage loan:
- Within 30 years, the amount of overpayment for the purchased housing will be many times greater than the loan amount. The money could be spent by the client for other purposes.
- Over a long period of life, the entire family budget will be subordinated to the need to make regular loan payments and pay for insurance.
- Restriction of the owner’s rights during the period of validity of the agreement with the lender, which will not allow either exchange, sale, or donation of the received housing.
- Quite high requirements for the borrower, his status, solvency, and age significantly limit the availability of the service.
For each person, the value of advantages and disadvantages has different significance. Therefore, only a personal analysis of the situation, taking into account specific circumstances, will allow you to make the right choice as to whether it is worth taking out a mortgage now.
Parameters influencing decision making
Assessing parameters in two different categories will help you understand the issue: the current market situation and your personal financial situation.
Market indicators influencing the justification of a mortgage
The benefit of the transaction primarily depends on the percentage overpayment: the higher the percentage, the greater the overpayment, and vice versa. If the percentage is less than 11%, the mortgage is considered profitable.
However, the market situation should be assessed more comprehensively. There may be many reasons for an increase in the rate:
- reduction in the inflow of foreign funds due to international sanctions;
- lowering tariffs on oil exports and depreciation of the ruble;
- the lack of opportunities to attract additional investments leads to an increase in lending rates.
The exchange rate, the dollar-ruble ratio, and trends in the foreign exchange market affect the refinancing rate, which can lead to changes in interest rates on loans, including targeted housing loans.
Many people remember when in 2014 there was a sharp rise in the dollar exchange rate, mortgage rates increased to 18%. Such an overpayment on ruble loans was unprofitable.
If the mortgage rate is low and the exchange rate is calm, you can plan expenses and payments with a greater degree of confidence, which means that the question of whether it is profitable to take out a mortgage in 2018 can be answered positively from the point of view of taking into account objective factors.
Personal factors influencing the validity of a loan
Equally important, and in some cases of priority importance, will be taking into account the financial situation and solvency of the borrower.
The following criteria must be assessed:
- monthly income;
- loan amount;
- optimal contract duration.
These indicators are among the main ones used in calculating monthly payments, as well as the ability to bear this financial burden.
In addition to labor income, it is necessary to take into account additional sources of financing (interest on deposits, investments, income from securities). In addition to income, current monthly expenses and existing financial obligations are assessed.
Before sending a request to banks, you need to be absolutely sure that the payment calculated by the mortgage calculator can be paid regardless of any risks (loss of job, loss of health). You can sign an agreement with the lender only in full confidence that the funds will be returned to the bank in any case.
Analysis of the current situation
After an assessment of payment ability has been made and work has been carried out to collect information on the lending and real estate markets, it’s time to choose the optimal program that takes into account the needs and capabilities of the payer:
- Analysis of information on interest rates.
- Analysis of requirements for borrowers.
- Collect information about other conditions of the loan - mandatory insurance, penalties, registration requirements.
Currently, there is a general decline in mortgage interest rates, but income levels have not increased in recent years. Therefore, the choice of mortgage should be influenced by the final overpayment, taking into account all factors and requirements of banks.
At the same time, the real estate market is also experiencing a significant drop in prices, due to which the amount required from the bank is reduced. Currently, the most favorable external conditions have been created for obtaining a mortgage.
One should also take into account the possibility of allocating funds from the budget within the framework of a state program that are issued to improve the housing situation of Russian families (for example, mortgages without a down payment for large or young families in need of improvement). In addition to government programs, there are numerous promotional offers from the lenders themselves.
The government assistance program may consist not only of allocating tranches allocated for the purchase, but also repaying part of the interest.
In the banking sector, mortgage rates are gradually decreasing, reaching a record 8% per annum, which makes mortgages attractive to many borrowers. No rise in real estate prices or interest rates is expected in the near future, which allows us to hope for a stabilization of the situation on the market. Favorable offers from banks and low housing prices for the borrower mean the creation of favorable conditions for loans.
Tips on how to get a mortgage on the most favorable terms
If the borrower's decision is in favor of a mortgage, it's time to make sure that the bank's offer meets all requirements and possibilities.
By following a certain algorithm, you can get a mortgage with minimal risk and maximum benefit for yourself:
- Working with mortgage calculators will allow you to pre-calculate the acceptable financial burden in the form of a mortgage payment, as well as calculate the optimal amount that will be feasible to return to the bank. Also, using the calculator, the optimal loan term is selected.
- Having additional collateral as collateral will increase the chances of your request being approved by the lender. It is necessary to consider how much the interest rate on the loan will decrease if the client provides additional collateral. This will ensure a minimum percentage and a minimum total overpayment, which means it will increase the benefit of the future home owner.
- Studying information about banks that provide the best conditions for rates, the reliability of the organization, policies regarding borrowers, and any other information that will allow you to assess the risks for a potential client.
- Among the programs that are available in the portfolios of banks of interest, pay attention to various promotions and special offers (for salary clients, public sector employees, young families, etc.)
- When choosing between a foreign currency and ruble loan, in conditions of serious exchange rate fluctuations, it is recommended to take a program in domestic currency.
If, in the process of paying off a debt to a bank, a client encounters financial difficulties, it is recommended to promptly inform the credit institution about the difficulties that have arisen, because currently there are many tools that will help cope with temporary difficulties (restructuring, credit holidays, refinancing, etc.)
After the loan is issued and the apartment is purchased, it is best to think about ways to repay the loan early, which will lead to a reduction in overpayment. With the help of early repayment, you can speed up the time when the property will be at the full disposal of the client, who will be able to sell, donate, or bequeath the property in the future, without further coordinating his steps with the bank.
Is it worth taking out a mortgage in 2017, in conditions of severe economic stagnation and terrible unemployment?
Of course, we don’t know what to expect from the future and no one knows, but there are general mathematical indicators of the borrower, on the basis of which a mortgage can be taken out. And if you do not meet these parameters, then it is better not to think about this issue at all. Live as you are - don’t be offended in cramped conditions!
pros
Of course, in some cases, a mortgage has undeniable advantages, even before buying an apartment for cash, but for this you need to have sufficient financial literacy and a good knowledge of the banking market.
The benefits of a mortgage loan include:
- the client purchases home ownership without having the full cost of the purchased property; as a rule, banks only ask for an initial payment of 10-30% of the price of the selected property, but you can find
- the borrower has the right to live in the purchased apartment immediately after its acquisition, without waiting for the loan to be fully repaid
- Housing purchased with a mortgage is issued in a short time - 2-3 months
- you can return 13% of the purchase amount and interest paid to the bank
- an opportunity that can pay off part of the principal debt for you
- purchasing housing under construction at nominal value, upon completion of construction the client has the right to sell it at a higher price
- housing purchased with a mortgage is already property (but only pledged to the bank), and monthly loan payments are most often equal to the cost of a rented apartment, which significantly saves the family budget
- the bank gives a deferment of up to six months on payments if the borrower loses his job
- Life insurance when applying for credit funds allows you to cover the mortgage in case of an accident, but the interest rate will be more expensive
There are other advantages - but the main one, of course, is the monthly mortgage payment, which is practically equal to the rent for the apartment, but in 10-30 years the mortgaged housing will be at your complete disposal.
It would seem that this plus is enough to rush to take out a housing loan, but there are also disadvantages to such a deal.
Minuses
Disadvantages include:
- the final payments on the mortgage loan will double or triple the cost of any property due to existing interest - thus, you will buy an apartment for both yourself and the bank
- in addition to monthly payments under the loan agreement, the bank requires annual insurance for the purchased property in case of various risks
- Also, a mandatory condition of some banks is the registration of life and health insurance for the client, for which an additional fee is charged once a year until the mortgage loan is fully repaid (although imposing such a service is illegal)
- When applying for a mortgage loan, you should take into account that you may also incur other expenses (not only the monthly payment), for example, a commission for withdrawing funds, for reviewing an application by specialists, as well as for assessing the purchased property, plus each bank charges a commission for different papers and additional actions on their part, sometimes the total amount of such payments is 10-15% of the down payment on the mortgage
- until the mortgage loan is fully repaid, the client does not have the right to take any actions with the purchased housing (sell, donate, bequeath or exchange without coordinating his actions with the bank)
- and the toughest thing is that you must have a really high-paying job that will allow you to cover all your expenses + monthly mortgage payment (they will almost check your data with a flashlight)
- if you find yourself without a job, you will either urgently have to find a similar one (with the same income), or you can start weaving a stranglehold (with restructuring, refinancing, you will get stuck even more in debt)
- if you are forced to give up your mortgage, then, firstly, you will calculate your losses, and, secondly, the result may be such that having given the bank an apartment, you will still owe it
- The conclusion from all this is that Russia is such an unstable country that it is not possible to predict your income even for 5 years, let alone 30
In this regard, advice - before taking out a mortgage, finally understand what country you live in, that in such game conditions you will in rare cases end up winning (if you can call it that), when applying for a mortgage, get ready for a “tough life” .
While you can leave a rented apartment at any time when your plans or financial situation change, this will not work with a mortgage - you will be subject to both personal responsibility and an encumbrance on the apartment.
Before taking out a mortgage, you need to consider all of the above disadvantages.
Rent or mortgage
On average, the monthly mortgage payment plus down payment often exceeds the monthly rental payment for a home of the same class.
In order for the monthly payment on a mortgage loan, say for an apartment for 5,000,000 rubles, to be 45,000-50,000 rubles, the down payment should be 40-50% of the total cost of the purchased housing.
Today, prices for rented housing are significantly reduced, especially for old Khrushchev-era buildings or one-room apartments with European-quality renovation. In order for an apartment to be more profitable with a mortgage compared to a rented apartment, the loan rate should be no more than 10% per annum.
Banks specializing in issuing mortgage loans are trying to reduce the annual rate, as renting housing becomes more profitable. In 2017, by this time, housing rentals had increased slightly.
It is difficult to say what is more profitable, renting an apartment or paying the monthly mortgage loan amount, since prices on the rental market are constantly changing, and you need to consider the specific situation of a particular person. Therefore, everyone decides for themselves whether to take out a mortgage or rent an apartment.
Advantages of a mortgage over renting
Buying an apartment with a mortgage is advantageous in that it becomes the property of the borrower, albeit after a long period of time. By paying the monthly loan amount, the client understands that he is investing in his own home. Also, a person gets rid of the additional waste of money spent on renovating a rented apartment and periodically moving from place to place.
Rented housing does not provide the opportunity to obtain any asset - it is simply a waste. And rental housing in this regard implies benefits for the owner.
The main disadvantage of rented housing is instability. As a rule, an apartment rental agreement is concluded for 1 year. If the apartment owner's plans have changed, he can ask the tenants to move.
Advantages of renting over a mortgage
Renting housing is perfect for people who often change jobs or cities of residence, go on business trips, and also if they are not sure how many children they will have in the future.
When renting an apartment, you can easily change your place of work or city of residence, since there is no attachment to a specific place of residence.
And when applying for a mortgage, there is no confidence that tomorrow the borrower will not lose his job and that he will also be able to repay the loan debt consistently. When renting a home, borrowing the shortfall to pay rent is easier than borrowing a mortgage.
Today, banks provide very high interest rates on loans; the client pays several times more than the cost of the purchased home. Until the last mortgage payment is made, families often have to deny themselves many things.
The worst thing about a mortgage is the monthly payment
A mortgage loan is taken out for 15-30 years, during which you will need to repay the bank every month. The main part of this debt is interest on the mortgage, therefore, due to the annuity system of calculating interest, the amount of the principal debt practically does not decrease at first.
When getting advice on a mortgage loan, you should first of all be interested in the amount of the monthly payment, and not the interest rate - since it is this that will eat up all your income for many years, and if you have problems in your finances, no one will care.
If a loan program is selected on the bank’s official website, then you can calculate the approximate amount of the monthly payment using an online calculator. Thus, you can think in advance whether the family will be able to pay off the loan debt every month without much damage to themselves. The online calculator also calculates the approximate amount of overpayment on your mortgage.
Please note that the calculator shows an approximate, not an exact amount. He will not be able to show all the commission fees, does not count the amount taken for the assessment of the future home, additional insurance payments and the fee at the registration chamber. It is also impossible to find out the exact loan rate on the website.
The purpose of the online calculator is to help you determine your approximate monthly payment amount. Thanks to this information, the client can decide whether to take out a mortgage in 2017.
The payment amount should not be more than 35% of the total income of the entire family. If your monthly loan debt is more than 40%, then everything immediately becomes difficult - you may not even have enough to buy food!
There are unexpected expenses, such as a car or plumbing breakdown, or medical treatment for a family member.
You should also consider whether the family will be able to continue to regularly pay off the loan debt if one of the family members loses their job.
There is always a possibility of losing your job, so when signing up for a mortgage loan, you need to set aside a certain amount of money just in case, this could be 3-4 loan payments. In this case, the borrower fired from work will have enough time to find another job and not ruin his credit history. In order not to spend the saved money ahead of time, you can open a deposit and invest funds there.
You may also want to consider whether you own real estate that, if necessary, can be sold and repaid the loan debt. This could be an apartment, a house or a car.
When not to take
The fairly low interest rate today suggests that it makes sense to take out an apartment on credit right now. On the other hand, housing prices have continued to fall recently. Due to the fact that demand in the real estate market is greatly reduced, prices for budget housing are expected to be even lower next year.
To confirm this, mega budget offers are appearing on the market - one-room apartments in Moscow from 1.1 million rubles and so on.
According to Oleg Repchenko, you should not take out a mortgage, the minimum payment and monthly payments for which amount to more than 30% of the total family income - instability in the labor market in 2014-2017 may lead to a difficult financial situation for the borrower, as a result of which he will not be able to regularly repay the loan, which will negatively affect his credit history.
In some cases, it is even better to postpone buying an apartment on credit until better times.
Such cases include:
- planning to get married or have a child
- planning a change of job for a family member who pays the bulk of the loan debt (at the new place of work, the salary may be lower than expected, and relations with management may not be as good as at the previous job, in addition, some enterprises provide for a probationary period, which is not fully paid)
- presence of dependents, elderly people
- when you are in the status of an entrepreneur (the business may decline)
- and a host of other life situations
When to take it
You can safely take out a mortgage if the borrower is not afraid of losing his job, has a stable income, savings or assets. An apartment purchased with a mortgage loan will allow you to avoid inflation by investing money as a down payment.
If you have a special personal status (military, holder), then you can purchase an apartment on preferential terms, for example, with the same maternity capital, or with a social mortgage, or with benefits available to military personnel, and so on. It is worth taking advantage of them, as there may not be another opportunity.
However, it should be taken into account that no matter what benefits are provided to you, the mortgage is taken out for more than one year; the debt will have to be repaid every year in equal shares for several years, when you may already lose your status.
Due to the fact that the price of the ruble is falling and inflation is rising, it is more profitable to take out a mortgage loan in rubles. A finished apartment in a new building still costs 35-40% higher than housing under construction.
If a client has the opportunity to purchase a home without the help of banking services, but there is no money left to repair the purchased apartment, it is better to take out a mortgage and leave the available money for repairs, since consumer loans have higher rates than a mortgage loan.
Some people think that in such situations it is more profitable to take out a mortgage for 1 year. Actually this is not true. It will be cheaper to take out the required amount for 5-10 years, the interest rate will remain the same, but the monthly loan debt will decrease due to an increase in the mortgage term, and you can also repay the mortgage ahead of schedule when the money becomes available - then you will generally only be in the black.
Experts give some advice on whether to take out a mortgage in 2017:
- you should think carefully about everything and understand whether you can allocate approximately 30% of the total family budget for several years (to check this, you can try saving an amount equal to the loan payment for several months
- Having taken out a mortgage, in addition to the monthly payment, it is best to set aside an additional amount of money for an emergency - loss of a job or serious illness (an amount of 3-4 monthly loan payments is considered optimal)
- taking out a mortgage in foreign currency is only relevant if the borrower receives a salary in euros or dollars
- In addition, it is best to take out insurance for property, life and health
- In order not to lose all your property, you should register the apartment as collateral
And personally from us...
Look what's happening in the country! Since 2014, 20 million people have become poor, and by normal European standards, all 70 million. Inflation for the average person has remained at the level of 15% per annum for 3 years, all housing and communal services are becoming more expensive, and the mortgage market is at a standstill. What kind of mortgage?
Terrible unemployment, interruptions in the monthly diet of every 5th Russian. Everyone who wanted to get into mortgage lending has already gotten into trouble (that’s why there are interruptions).
Do you have confidence in the future when we are all at the bottom!
Last update: 05-02-2020
Regarding crises, then in the picture below you can see the change in the dollar exchange rate from 1998 to the beginning of 2019.
I think there is no need to write about 1998 and 2014 (August 2008 – military conflict with Georgia). True, in 1998 the population had practically no money, but in the face of new shocks they accumulated some fat and endured everything much easier.
This is about it that crises happen with enviable regularity. Once every 5-10-15 years, but difficult times come. Putting your life on hold because of this is simply stupid.
Instead, it is better to take all possible measures to protect yourself.
Mortgage fear and how to deal with it
What scares you the most about a mortgage?
First of all, these are long loan terms: 5, 10, 15, 20 years.
Is this really scary? Will you really have to pay all these years and won’t be able to pay it off sooner?
No no and one more time no!
Keep in mind that no matter what type of payment you choose, if you start paying off early, you can reduce the overpayment and the mortgage term ().
Example. Calculate how much your salary has increased over the past 5 years. Now imagine if you took out a mortgage 5 years ago, you could now start paying it off ahead of schedule, because... payments remained the same.
Calculation of the period for which it is more profitable to take out a mortgage
Don't be intimidated by a 20-year mortgage if you have a fixed interest rate. In just 4-5 years you will begin to pay off your debt ahead of schedule and payments will not be so burdensome for you.
Disadvantages of a mortgage loan to remember
Since the cost of real estate is quite high, and one’s own savings are often not enough, therefore a large amount is taken out on credit for a long period of time ( 10-15-20 years).
This leads to several disadvantages of buying an apartment/house with a mortgage:
- Paying for so long can be mentally difficult.
- There is a risk of losing a source of income and incurring debt to the bank (read also how possible).
- To formalize the purchase of an apartment in and spend more time waiting for the application to be approved by the bank.
- You will have to pay for insurance annually (be sure to read).
- You must have money for a down payment.
- Large overpayment on the loan if not repaid early. Accordingly, the longer the term and amount of the loan, the more money you will have to pay.
- An encumbrance is placed on the apartment and in case of non-payment it can be lost.
- Selling such an apartment will be more difficult.
Advantages of a mortgage loan that should not be forgotten
Now let’s get acquainted with the advantages of a mortgage in order to ultimately decide whether to take out a mortgage.
- Buying an apartment with a mortgage is much safer than just through a real estate agency, because the bank at least somehow checks the documents and is interested in ensuring that no problems arise in the future (not a 100% guarantee, but something). This way you can even arrange everything without realtors and save on commissions. The only thing is that you need to compose it correctly, but it’s not that difficult, some banks even give you their own form.
- A mortgage loan typically has a lower interest rate than a consumer loan.
- Registration of documents for mortgage transactions takes place in just 7 days.
- A mortgage allows you to buy a home much earlier than if you save money for it. This is especially true for those who live in a rented apartment. It’s one thing to pay for your own house and another when you have to pay for someone else’s apartment (possibly purchased with a mortgage). About what is more profitable, mortgage or rent, .
- Another plus- this is that if you save money, then inflation will “eat it up”, while the purchased apartment, on the contrary, becomes more expensive. Again, due to inflation, payments will become less and less burdensome from year to year.
- You can get a deduction() from the interest paid on the mortgage and thereby get back 13% of the amount spent (), and then make it as an early payment on the mortgage (the overpayment and term will be reduced).
- If problems with money still arise, no one will kick you out of the apartment so easily. You can take a credit holiday.
Mortgage risks and dangers to consider
Let's consider the most likely risks associated with a long loan term and a large amount.
- You may lose your source of income(for example, fired from work), BUT in this case, you can ask the bank for a deferment in the payment of the principal debt (credit holiday). And it’s hard to believe that someone will sit idle, for the first time a job not in their specialty or one that pays less can always be found - some verified options on how to make money on the Internet (without cheating).
- To be more relaxed in this regard, it is better in the form of 3 monthly payments.
- Health problems may arise. In this case, a nest egg + health insurance will save you. Not a 100% guarantee, but still much calmer.
- Recognition of the transaction as invalid. To do this, you can get title insurance. What is it, read the link.
These are the main problems that may arise.
Example, If in one family a decrease in income by 50% will not particularly affect the ability to pay the loan, then in another it will lead to late payments on the mortgage loan. I don’t think there is any need to explain what will happen if one of the family members loses income.
Assess all risks correctly and leave a reserve amount for at least several months of payments.
How to pay off your mortgage early?
It's simple, we use property deduction, the maximum amount is 260 thousand rubles+ some other part is returned from the interest paid to the bank.
Of course, you won’t be able to pay off your entire mortgage ahead of schedule, but it’s quite possible to partially reduce the burden. This is also true in 2020.
Alexey Novikov, head of the Est-a-Tet mortgage center, discusses how profitable it is now to take out a mortgage loan and what awaits those potential borrowers who decide to wait.
Arguments for
The main argument for taking out a mortgage now is unprecedentedly low rates. Previously, banks periodically had special programs with a rate lower than the average market level, but usually such special conditions were available only to limited groups of citizens - for example, workers in industries financed from the state budget. Now each bank participating in the program with state support is trying to attract as many clients as possible, so banks are constantly playing with the rate, lowering it within the framework of state programs to 10.5% and making it possible to lend at such low interest rates for almost all categories of borrowers.
However, it is not clear whether banks will be able to maintain such a rate at a dollar exchange rate of 80 rubles. With such a rate, the scenario of the end of 2014 may well be repeated, when the Central Bank sharply raised the rate to 17%, and those who applied for approval were accredited at the new rates. People came for a deal, and they were told that they would have a rate three percentage points higher than expected, because after December 17, practically no bank had rates below 17%. There was a real excitement then. Many refused to make deals altogether; some took out a loan at 17%, because, for example, their existing housing had already been sold and there was nowhere to retreat. The only one who offered affordable loans was Sberbank of Russia with a rate of 14.5%. In the first two months of 2015, almost 95% of mortgage transactions were accounted for by this bank.
Now there are no factors allowing the key rate to be lowered, but it may well rise, depending on fluctuations in exchange rates, because last year it was the rate increase that slowed down currency surges. Even if the rate does not rise to 17%, but, for example, to 13%, it is difficult to say whether the state will be able to continue subsidizing rates, given that this is a temporary measure. Banks will not lend at a loss, and the market will return to 14%, as it was at the beginning of 2014.
It makes sense to wait when there is something to wait for. And reducing rates given the already low current level is a very vague prospect. At the same time, apartment prices rise during the waiting period. Yes, this is not such intensive growth as in a growing market, but it is there. Developers are already carrying out a planned price increase of 3-5% once a quarter. Plus growth due to currency fluctuations, due to which the price of building materials in a number of projects increased - and this is another 5-7%. It is worth considering that as the stage of construction readiness increases, the most liquid proposals are washed out. Of course, developers are launching new pools of apartments, but the further they go, the less choice buyers have. From this point of view, by taking out a mortgage on an apartment now, the buyer not only chooses from a larger number of properties, but also secures the value of his property.
Arguments against
If the dollar does go down, then the rates will not decrease significantly, I emphasize, significantly, since the Russian market is already subject to low rates. On the eve of the New Year, picking up the “crowd effect”, banks can launch New Year programs with lower rates, but again this will be a decrease within the market, that is, for example, from 11.5% to 11%. But even now there are such stakes. Compared to the risks of increasing the key rate and returning the level of mortgage loans to the beginning of 2014, this is not such a big bonus.
However, despite all the “seductiveness” of lending conditions, not all potential borrowers are actually able to repay the loan. Moreover, in conditions of economic instability, people need to take a more balanced approach to applying for a loan. Of course, a lot depends on what category the borrower belongs to, what his income is, how stable his job situation is, and whether there are any additional sources in addition to his main income.
Is the game worth the candle?
In general, all borrowers are divided into three categories. Firstly, these are borrowers with a high level of income - over 200 thousand rubles. per month. Those who purchase expensive properties, as a rule, realistically assess their financial capabilities, understanding how they will repay the loan. Such clients calculate how much their overpayment on the loan will be if they repay it in a year, three or five years. They initially understand that they will be able to repay the loan ahead of schedule, and will use the loan for no more than five to seven years.
The second category is people with average incomes, whose income for a family of two, not counting children, ranges from 100 to 200 thousand rubles. Such clients, as a rule, have additional “gray” income, for example from rent. Among such borrowers there are “headless” borrowers who want to take out a mortgage while having other loans, and the total payments on all these loans may exceed the client’s income. It is interesting to note that the issue of overpayment is of least interest to such borrowers; many understand intuitively that if you pay off a mortgage for 20 years, you overpay twice. People mainly care about what interest they will have on their loan because it determines the size of their monthly payment. The planning horizon of most citizens is narrow, it does not extend beyond a couple of years; people take out loans and only think about how they will live in the next few years.
And there is a third category of borrowers whose income does not exceed 50-40 thousand rubles. Such people, as they say, count every penny, and it always seems to them that they will be shortchanged. Unfortunately, it is these borrowers who do not compare the cost of housing in Moscow with their income and overestimate their capabilities. Often they want to take out a loan, for example, 6-7 million rubles, despite the fact that their income is 40 thousand rubles. Typically, “wishlist” ends immediately after the monthly payment for such a loan is calculated, which is at least 60-70 thousand rubles. per month.
How to competently take out a mortgage during a crisis
“Measure twice, cut once” - this proverb perfectly reflects the correct approach to applying for a mortgage loan. First of all, those citizens who already have unpaid loans, as well as those who are responsible for maintaining their family, need to think several times before taking out a mortgage. If there is one breadwinner in the family, and the wife, for example, is on maternity leave with a small child, then first of all you need to think: what will happen if this breadwinner loses his job, how to support the family and pay off the loan.
The most important thing when applying for a mortgage is to understand that there are escape routes in case the borrower has lost their main source of income. Therefore, before taking out a loan, you need to secure these rear areas. Firstly, have a financial cushion of at least three salaries, so that while you are looking for a job or restoring your financial situation, you will have sources of funds for life and loan payments. Secondly, insure yourself or a co-borrower against the risk of job loss. The amount of such insurance is on average 1% of the loan amount. If the borrower loses his main job, his monthly payment will be frozen, and the interest on the loan will be paid by the insurance company. Thirdly, assess whether the family has additional sources of income, for example a car that can be sold in an emergency, or a summer house that can be rented out. The more such assets, the more confident the borrower can feel when applying for a loan. Fourth, take out a mortgage with the lowest possible monthly payments. If financial difficulties arise, it is easier to take out such a loan, and if things go well, you can safely repay the loan ahead of schedule.
Despite the fact that people have begun to take a more thoughtful approach to the issue of applying for a mortgage, understanding what a serious and long-term obligation these are, the culture of credit relations with banks among our citizens still suffers, especially among people with average and lower average incomes. People do not always provide for such considerations when applying for a loan, but only if they are available can we talk about a balanced approach to a mortgage.
Alexey Novikov specially for RBC Real Estate
Mortgage loans, with all their shortcomings and huge interest rates on loans in comparison with the same European countries, are still for many Russians virtually the only way to purchase their own housing, and not pay for rented property for the rest of their lives. Is it worth taking out a mortgage in 2017: expert opinion on this matter, general advice when taking out a mortgage loan.
Should you take out a mortgage in 2017?
Obviously, the required minimum that you need to have if you want to buy an apartment with a mortgage is some stable income that will allow you to make monthly mortgage payments relatively painlessly, as well as a certain amount of funds on hand for a down payment (usually about 20% of the cost of the apartment or at home).
As for the current moment and whether it is worth taking out a mortgage in 2017, it is important to understand the current economic situation. Despite the fact that at the end of 2016, inflation officially amounted to less than 6%, and the ruble even began to strengthen slightly, the future situation looks unpredictable, and the current state may turn out to be precarious. The situation with regard to mortgage loans is not the most favorable - banks increased the rate on mortgage loans to at least 11-13 percent against the previous eight.
The problem is that government mortgage support programs are ending in the spring, and there are no plans to extend them or introduce new programs.
Finally, a situation is developing in the real estate market that threatens to reduce the cost of housing in the near future, so you should not take hasty steps to purchase an apartment at the moment.
Expert opinion
What advice do experts give on whether to take out a mortgage now?
- If you have the right to take advantage of government programs like “Young Family” and you are sure that you will be able to repay the loan, you should hurry - by March this program will cease to operate.
- If there is no reason to rush, it is better to wait. There are a number of reasons for this tactic. Firstly, it is very likely that housing prices will decline in the second half of 2017 or at the beginning of 2018. Secondly, a possible improvement in the economic situation in the near future may prompt banks to reduce loan rates, as well as the amount of the down payment.
Thus, 2017 is not the best time to take out a mortgage loan. It makes sense to wait a while and continue saving money for a down payment. The higher the contribution, the smaller the loan amount will be. Of course, it is more profitable to buy an apartment at a lower price and at a lower interest rate on the loan.
- you need to think very carefully and, with the numbers in hand, have an idea that you can really cope with paying off the loan - it is best to try to live for a while, postponing the approximate amount of the loan payment every month, thereby you will test your ability to live with that budget, which will remain, and save up extra money for a down payment;
- When you take out a loan, leave a certain amount of emergency money that you can use in a difficult situation, such as losing your job. It is considered optimal to have such a reserve in the amount of three monthly mortgage payments;
- do not take out loans in foreign currency unless your salary is tied to some amount in dollars or euros;
- cost to take out insurance for your life, health and property;
- do not pledge another apartment as security for the loan, so as not to lose everything in an extreme situation.
If you still intend to take out a mortgage loan in 2017, you can familiarize yourself with
