Is it worth taking out a mortgage now? Or is it better to wait until it becomes even more profitable? “Pros” and “cons” of mortgage lending, how to get a mortgage on the most favorable terms. Does it make sense to take a mortgage?

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 2018, 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.

Features of a mortgage, its pros and cons

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.

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.)

The attractiveness of a mortgage loan depends on several parameters that are not always obvious to borrowers:

prospect of rates growth– the higher the rate, the less profitable it is to take out a loan. At the end of 2018, the news was stirred up by the rise in interest rates of the largest banks (Sberbank, VTB, etc.). The reason was the increase in the refinancing rate of the Central Bank of the Russian Federation. Since this parameter remains unchanged for now (with the possibility of additional growth), there remains a high risk that in 2019 rates will increase for all banks.
prospect of rising real estate prices– real estate prices are constantly rising. But it is after 2019 that a significant jump can be expected. A new bill limiting the ability of investors to receive dividends from the purchase/resale of apartments will most likely lead to an attempt to maintain profits at the same level by raising prices.
banks' willingness to lend– depending on the financial situation in the country and the category of the borrower, banks may or may not be ready to issue mortgage loans.

What is the situation with mortgages in 2019?

gradual reduction in rates
high chance of rising property prices
high willingness of banks to lend ( the mortgage industry has the highest approval rate– over 82%)

An unambiguous conclusion - Should you take out a mortgage in 2019?. Moreover, the mortgage agreement concluded now may turn out to be more profitable than the offer next year.

Check if it's worth taking a mortgage

The above points are only an analysis from the position of profitable/unprofitable on a global scale.

It is important to consider Should you take out a mortgage?.

Answer a few short questions ():

Do you need to improve your living conditions?
Taking into account your monthly income, will it be difficult for you to save up for an apartment faster than in 3-5 years?
Do you have a high level of consciousness and responsibility?
Do you know how to plan your expenses?
Do you most often fulfill your commitments?
Does your income allow you to allocate a certain amount without a critical decrease in your standard of living?
Is your health state of concern in the near future?
Do you read contracts carefully before signing?
Is the decision to take out a mortgage a deliberate one?
Have you thought through possible options in case of loss of income/other problems?

Score more than 8 points– the answer to the question of whether to take out a mortgage is definitely positive. You can skip to or read to the end of the article to find out whether you should take out a mortgage now.

Scored 4 – 7 points– It’s worth reconsidering all the options. Perhaps your financial/housing situation does not require urgent action at the moment. But it is possible that you should take mortgage and insurance issues more seriously. For example, have you ever wondered what it would take?

Scored less than 4 points- the answer to the question of whether it is worth taking out a mortgage is rather negative. Financer advises you to weigh everything again and plan. Perhaps look for other options for purchasing real estate. Not associated with a multi-year debt obligation.

You may also be interested in:

Is it worth taking out a mortgage now - 14 questions to find out

In addition to the benefits for the borrower, it is important to consider the chance of approval from the bank. Perhaps you are a reliable borrower, and taking out a mortgage loan is really beneficial for you.

Find out if the bank is ready to approve your mortgage (For each “yes” count 1 point):

Are you over 25 years old?
Have you worked at your current job for more than 6 months?
Do you have higher education?
Are you married?
Are you an employee of an LLC?
Do you receive a stable salary?
Are you ready to provide a 2-NDFL certificate/income confirmation in the bank form?
Do you have no open loans?
Do you have a good credit history?
Do you have any debts on housing and communal services/taxes/fines?
Do you own a car/real estate?
Do you have a passport with travel stamps abroad?
Have you already chosen the desired property?
Are you ready to make more than 20% of the cost as a down payment?

MORE THAN 11 POINTS– now is definitely a good moment. You should take out a mortgage. Most banks will be willing to approve your application.

________________

8 – 10 POINTS– obtaining a mortgage is possible. However, it is worth thinking about the points that you can “tweak”.

________________

5 – 8 POINTS– it’s worth thinking about seriously improving your reputation. Pay off debts, improve your credit history, increase your length of service. However, if the low score is related to freelancing or individual entrepreneurship, not all is lost.

________________

BELOW 5 POINTS– It is not recommended to take out a mortgage. Even if you get approved (and the chances are very low), the bank will offer quite harsh conditions with a high interest rate. It’s better to spend a few months, but strengthen your position - pay off debts, build a credit history. Maybe even go abroad for a while. Traveling abroad really has a good effect on your credit rating.

Every person wants to have their own home, but not everyone can buy an apartment without a mortgage. Applying for a home loan is a very responsible step, and it is also associated with certain risks. In this regard, questions arise whether it is worth taking out a mortgage in 2019 and which bank is better to take out a mortgage from. The article provides answers to these questions, as well as reviews from clients who have taken out housing loans from various banks.

Advantages and disadvantages of a mortgage

Before you decide whether to take out a mortgage in 2019, it's worth considering the advantages and disadvantages of mortgages in general. The advantages of a mortgage loan are as follows:

Opportunity to purchase your own home. For young families and those who, for various reasons, cannot buy an apartment at full price, a mortgage is the only opportunity to obtain ownership of a property. A mortgage allows you to move into your home immediately after completing the transaction;
Opportunity to invest funds. Every year real estate becomes more expensive. By purchasing an apartment with a mortgage now, you can increase your capital due to inflation in the future;
The opportunity to apply for a tax deduction and return part of the funds paid towards the principal and interest on the mortgage. This money can be used to pay off the mortgage or used at your discretion;
Confidence in the purity of the transaction. When issuing a mortgage loan, the bank carefully checks the collateral. Therefore, the buyer receives a 100% guarantee of purity and transparency of the transaction.

Mortgages also have their disadvantages:

Huge overpayment. Sometimes the interest on a mortgage is several times higher than the amount of the principal debt. Over the decades for which the loan is issued, the amount of overpayment reaches impressive amounts;
Risk of non-payment. The mortgage is taken out for a long period of time and it is simply impossible to predict all the force majeure circumstances that may happen during this time. Even a person who has a stable financial situation now may face financial difficulties in the future;
Risk of losing your apartment. Until the mortgage obligations are fully repaid, the property is pledged to the bank. If for some reason the borrower stops making monthly payments, the bank can take away the housing, evicting the client to the street;
Additional expenses when concluding a transaction. Before purchasing a home with a mortgage, the buyer is obliged to pay for the services of a notary and appraiser, insure his life, health and the purchased property;
Red tape with documents when completing a transaction. Before the bank reviews and approves an application for a mortgage loan, the borrower must collect and provide a complete package of documents. This takes a lot of time and effort;
Moral pressure. Many people experience psychological discomfort knowing that for several years they will have to constantly shell out part of their budget to pay off debt. Added to this is the fear of financial difficulties and job loss.

Before you take out a mortgage for an apartment, you should carefully weigh all the pros and cons of this decision. If this is the only available option to acquire your own home, and your earnings minus monthly mortgage payments will be enough to live on, it’s worth taking out a mortgage.

Which bank is better to get a mortgage from?

If the decision to buy an apartment with a mortgage has been made, the next question arises: which bank is better to take out a mortgage from? When comparing the conditions of banks, the first thing you should pay attention to is the mortgage interest rate. The size of the overpayment and the profitability of the transaction as a whole depend on it. The rate at the same bank differs depending on whether a mortgage is taken out on a primary or secondary home. It is also affected by the size of the down payment, the total loan amount, the presence or absence of co-borrowers and guarantors, and the client’s reputation.

A comparison of mortgage conditions in various banks is presented in the table:

When deciding which bank is better to take out a mortgage from, you should focus not only on the interest rate, but also on other conditions. There may be pitfalls in a mortgage agreement. For example, compulsory home insurance leads to an increase in the amount of monthly mortgage payments. Therefore, lending conditions at a bank, where the interest rate is initially higher, may in the aggregate turn out to be more profitable.

For people with a bad credit history or low official income who want to take out a mortgage, it is important to get their loan application approved. In this case, when deciding which bank is better to take out a mortgage from, you should pay attention to such a criterion as bank loyalty. Credit institutions that have long occupied their niche place higher demands on clients. Therefore, borrowers with a damaged credit history are better off turning to “young” banks.

An important condition is the need to attract co-borrowers and guarantors. If the client does not want to involve third parties in the mortgage transaction, it is worth choosing banks that do not require co-borrowers and guarantors. You can read more about mortgage co-borrowers.

Mortgage in various banks: customer reviews

There is no consensus on which bank is best to take out a mortgage from. This is due to the fact that the conditions of credit institutions can vary significantly depending on various factors. Each person tries to find the most favorable mortgage lending conditions for himself.

All banks have both positive and negative reviews from clients who have taken out a mortgage. Here are examples of those:

Forming an opinion about a bank based on other people’s reviews is not entirely correct. To objectively assess the terms of a mortgage, you should personally contact several lending institutions and listen to their offers directly to you.

When thinking about the question of whether to take out a mortgage in 2019, it is important to evaluate all the pros and cons and familiarize yourself with the offers of various banks. Only after comparing lending conditions according to all important criteria should you make a final decision and choose a specific bank.

Author: Olga Vasilyeva.
Photo: Instagram.
If you are the author of one of the photos and do not agree with its publication, contact the administration and we will correct the error.

It's no secret that real estate prices on the domestic market - be it secondary housing or square meters in a new building - are very high. For most people, even those with a stable average income, purchasing an apartment is almost impossible. It will take a very long time to save for such a purchase, and no one can put off solving housing problems for ten years.

You can solve your housing problem by taking out a mortgage loan. This financial instrument was created specifically for financing purchases in the real estate sector and assumes: a large loan amount and a long repayment period.

Advantages and disadvantages of a mortgage

Like any other financial instrument, an apartment loan has a number of advantages and disadvantages that should be taken into account before applying to a financial institution for such a loan.

Advantages of a mortgage - why is it worth taking?

To answer the question of whether or not it’s worth taking out a home mortgage, you need to look at the advantages of this decision. Customer reviews highlight the following: positive sides:

This tool allows a person to become the owner of a home without having to pay its full cost. It is enough to save up a down payment (usually the amount of this contribution in different banks varies from 10% to 30% of the total cost of the selected housing).
Opportunity to move into your own apartment immediately after purchase. Even housing purchased with borrowed funds becomes the property of the borrower. At the bank, he registers it as collateral in case he cannot repay the loan funds.
Minimum waiting period. The waiting period for acquiring your own real estate in this case is equal to the period for obtaining a mortgage loan. This, of course, does not happen instantly - as a rule, such a process can take two to three months.
Tax deduction. After processing a loan, the amount of income tax is calculated not from the full amount of the borrower’s income, but from the balance (it is calculated by subtracting the amount of the monthly loan payment from the amount of monthly income).
Possibility of obtaining a social mortgage. The difference from the usual one is that the state participates in paying the cost of housing - this can be a partial refund of the down payment or subsidizing the interest paid.

Disadvantages of a mortgage loan

Before you take out a mortgage, you should understand what negative sides she has. Among them are:

High final cost of housing and long payment terms. Due to the fact that the mortgage is issued for many years (usually ten or more), the bank's remuneration (in other words, interest) ultimately amounts to a substantial amount, comparable (and sometimes exceeding) the cost of the apartment itself. Simply put, a person takes out a loan and buys one apartment, and he pays the bank two and sometimes three times more money.
Additional payments. In addition to regular loan payments, the terms of the agreement oblige the borrower to take out property insurance at least annually, and the property will have to be insured against all possible risks. Some banks also issue an insurance policy for the borrower himself. It's not free, and you have to renew the insurance annually until the loan is paid off.
Commissions upon registration. When applying for this type of loan, you need to be prepared for the fact that you will have to pay additionally for almost everything: for the registration itself, for reviewing the application, for withdrawing funds, for assessing the property. This list can be very long, and the total amount of such payments sometimes reaches 10-15% of the down payment.
Until the mortgage is paid, the borrower has no right to sell, exchange, bequeath or otherwise dispose of his property without the consent of the bank.
Strict requirements for the borrower. The credit institution has strict requirements regulating the need for a stable income, length of service, age of the borrower and much more. Such strict criteria make mortgages inaccessible to pensioners, students, and young families.

Therefore, the pros and cons of a mortgage should be carefully analyzed on a case-by-case basis.

What is more profitable: rent or mortgage?

What is more profitable: mortgage or rent? This question is asked by a huge number of Russian citizens today. It should be understood that each case is individual. However, you can make a small comparison of these options based on several criteria.

With a mortgage, ownership of the property is transferred to the borrower immediately after execution of the contract. When renting, the apartment, regardless of the length of stay, does not belong to the residents.

But there are also advantages to renting - you can live in good housing without having absolutely any savings. In order to obtain a mortgage, you will need to raise funds for a down payment.

In addition, monthly payments for rent are usually significantly lower. But when you take out real estate on credit, payments will sooner or later stop. When renting, repairs and maintenance of the apartment most often fall entirely on the shoulders of the landlord.

Some people cite a high degree of mobility as an advantage of renting. That is, it is possible, if necessary, to change your place of residence much more easily.

As can be seen from the comparison, an apartment with a mortgage can be a more profitable option for those who already have a certain amount of savings, a stable income, and do not plan to move to another locality in the near future. In all other cases, the rental option is more suitable.

Mortgage 2019 – to take or not to take?

Should you take out a mortgage in 2019? For those thinking about it, you should know that most experts agree that next year will be a good year for the mortgage market. It is not yet clear whether interest rates will decline, but existing and new government support programs will make this financial product more accessible.

Should I take out a mortgage this year or wait?

There is another question that worries many people: is it worth taking out a mortgage this year now or is it better to wait. The answer to this question should only be given on an individual basis, since it depends primarily on the stability of the potential borrower’s income and the prospects for their preservation and growth.

Real estate experts predict a 5 percent increase in property values over the next few years. In addition, in 2019 one can observe a decrease in mortgage rates in almost all banks. The rate is about 10% under the standard program, and 6% per annum under the mortgage program for young families - today this is a tempting offer to acquire your own home!

Should I take it or is it better to save it?

Thus, those who decide Is it worth taking out a mortgage or is it better to save up?, we can advise you to weigh the pros and cons. It can be very difficult to collect such an amount. Often, with a stable income, it is much easier to get a loan. In this case, you can make monthly payments in excess of the regular payment. Most credit institutions allow partial early repayment. With it, you can reduce not only the term, but also the amount of payment. As a result, with an accelerated interest calculation scheme, the bank is paid less, and the apartment belongs to the borrower.

For the vast majority of citizens who do not have their own square meters, a mortgage is the only way to purchase housing. The cost of apartments today, especially in large cities, is quite high. Thus, it is almost impossible for a novice specialist or a young family to become the owner of their own real estate without support. However, even in such a situation, some may be tormented by the question of whether it is worth taking out a mortgage if renting a home at first glance seems much easier. We have to figure out this difficult matter.

How does a mortgage differ from a regular consumer loan?

Most banks offer mortgages today. It is a loan issued to a person secured by purchased or other real estate owned by the borrower. To understand how profitable a mortgage loan can be, it is worth first differentiating it from ordinary targeted loans. So, there are several significant differences:

In addition, there are some other nuances in which these two banking products may differ from each other. For example, you can use “maternity capital” funds only when applying for a mortgage as a down payment or closing part of an existing debt. This certificate cannot be used to redeem other financial products.

Rent or purchase with borrowed funds: what to choose

The differences between this type of loan and other banking products are now quite clear. But is a mortgage profitable compared to renting a home? Of course, it is impossible to answer this question unambiguously; everything is purely individual. However, some analysis can still help you make the right decision.

Firstly, you need to understand that rented housing, even if you live in it for several years in a row, will never become yours. It’s a completely different matter when we buy an apartment, even using bank funds. From the moment the contract is signed, the borrower becomes the full owner and owner of the property; he can register there himself and register his loved ones. While in a rented apartment registration is not expected, and the terms of the lease or the life situation of the property owner can change at any time, after which you will have to look for other housing.

Renting can also have a number of benefits for some. For example, in order to live in a well-furnished and renovated apartment, there is no need to have any significant financial savings, as is the case with an initial payment to the bank and subsequent possible repairs. In addition, particularly freedom-loving citizens who crave a constant change of environment value rental housing for its mobility and the ability to quickly change place of residence and not be tied to one area, city or even country.

Thus, each of the options can have both advantages and obvious disadvantages. Everything will depend on the final goal. If you consider real estate from a long-term perspective seriously and for a long time, while having a constant stable income and some savings, of course, taking out a mortgage is the best option. In other cases, perhaps renting is more suitable for now.

Mortgage: its pros and cons

The demand for this type of loan is growing, which greatly influences the constant reduction in interest rates. However, many still consider a mortgage to be a kind of “bondage”. To figure out whether opponents of this loan are right, it is necessary to consider in detail the pros and cons of a mortgage.

Main advantages

Based on numerous customer reviews, the advantages include:

The opportunity to purchase a home with only 10% of its total cost in hand (the amount of the down payment in some banks ranges from 10% to 30%);
The purchased property becomes the property of the buyer immediately after signing the purchase and sale agreement, even despite the encumbrance imposed.
In case of loss of a permanent source of income (dismissal, layoff, temporary disability, etc.), you can use.
The opportunity to take advantage of one of the government support programs (assistance to young families, social or military mortgages, use of a maternity certificate);
The waiting period for receiving square meters in ownership is minimal. Obtaining real estate in this way is possible immediately after the registration procedure is completely completed (a couple of months) and cannot be compared with the time frame in the case of the gradual accumulation of funds, which can last for years. If the client already has a suitable property in mind, all he has to do is submit all the necessary documents, wait for a positive decision from the bank and begin the registration procedure.
You can count on a tax deduction and return part of the funds paid to the state. So, if a citizen took advantage of a mortgage offer, he has the right to pay taxes not on the full amount of income received, but only on that part of it that remains after deducting the amount of the monthly payment.

By using this loan, you can continue to accumulate by setting aside part of the funds for early repayment. These one-time payments help reduce your monthly payments or shorten your mortgage term. In addition, mortgage interest rates have been decreasing annually over the past few years, reaching record levels, thanks to which borrowers have the opportunity to regularly renew their loan.

List of possible disadvantages

However, despite the obvious strengths of this type of lending, the weaknesses should not be ignored. When thinking about whether to take out this loan, you need to weigh your options. The main disadvantages include:

Increase in the final cost of purchased housing (due to bank interest paid over several years).
Availability of additional costs. Among them are: annual insurance (both the real estate itself and the life of the borrower); payment for the services of an agency that evaluates housing before purchase; commissions for registration, for consideration of the application, for withdrawal of funds, etc. Of course, some commissions can be challenged; for example, it is by no means necessary to take out life insurance; nevertheless, real estate insurance, as a rule, is a mandatory item when concluding a contract, which cannot be refused.
Obtaining the mandatory consent of the bank for any manipulations related to the purchased real estate (redevelopment, sale, donation, exchange, etc.);
Strict requirements for the borrower (stable income; a certain age; work experience; presence of children or dependent persons; etc.).

Dispelling myths

Such disadvantages give rise to many myths, due to which those who have access to a mortgage are afraid to get involved with this type of loan. However, that is why myths exist, to dispel them. Here are just a few of the most common ones.

Is the amount of overpayment so scary?

Many people are afraid of the final amount that will need to be paid to the bank. But after analyzing real estate market data, you can understand that the cost of square meters is steadily growing, which means that the price of an apartment purchased with a mortgage loan will probably become even higher by the time of final repayment (due to inflation and many other factors).

Thus, even taking into account the final overpayment, such real estate can turn out to be a very profitable acquisition and cost much more than its original price at the time of purchase. In the future, if there is a desire to sell this object, a significant part of the paid funds can be returned.

How many times can you take out a mortgage for a home?

Often those who have taken out a mortgage believe that this loan can only be applied for once. However, it is not. The number of mortgage loans issued to one person is not limited and depends solely on his solvency, and not on the wishes of the banks.

Credit institutions will not refuse a new loan to a reliable borrower, even if the existing mortgage loan has not yet been repaid. If the income level of such a client allows him to take advantage of one more or even several such opportunities, the bank will be only happy. Although, of course, not every citizen is able to afford such a “luxury”, the level of monthly cash receipts should be very high.

In addition, you can sell real estate that was previously taken out as a mortgage, and after some time, take out a new mortgage loan. This method is often used by families who want to “expand” their living space and get more rooms.

Is it possible to sell mortgaged living space?

Some clients may also be put off by the very lengthy encumbrance that a mortgage represents. Is it worth taking out such a loan if the property cannot be sold until final repayment? In fact, in practice everything looks much simpler. Having received consent from the bank, you can sell the apartment in one of two options:

sell your home for cash (and pay off the remaining “body” of the loan with this money);
find a buyer who plans to get a mortgage from the same bank.

After signing the purchase and sale agreement and removing the encumbrance, the borrower receives from his credit institution a certificate of full repayment of the debt.

How to profitably buy an apartment with a mortgage

If a decision regarding a mortgage has already been made, it is advisable to take care of the issue of the maximum possible benefit from the transaction. Here are some useful tips:

Procedure for issuing a mortgage loan

If a potential borrower is interested in how to profitably take out a mortgage for an apartment in a new building, and not on the secondary market, it is worth first obtaining a list of accredited properties from the selected bank. Thus, accreditation of real estate guarantees the reliability of the developer, the necessary documents and construction permits of which have already been verified by the credit institution. Often the result of such partnerships is special mortgage programs for buyers. The main stages of obtaining a loan are presented below.

Before taking out a mortgage for an apartment, you need to study the conditions and main stages of obtaining this loan. First you need to find out which bank you can find the most advantageous offer. As a rule, participation in the salary project of a credit institution automatically means a lower interest rate.

Preliminary consultation

Before your first meeting with a loan specialist, you need to clarify the following points:

Is it profitable to take out a mortgage from this bank;
what is the interest rate;
are there any additional payments and how do they affect the amount of monthly payments;
what are the requirements for the borrower, etc.

In addition, it would be useful to study the reviews and advice of experienced clients who already have experience working with this financial institution. These can be found, for example, on specialized websites and forums.

During the first meeting with the bank where you take out a mortgage, the manager will prepare a preliminary calculation of the full cost of the loan. This document will help the borrower see a detailed breakdown of all expected costs, including the actual rate, as well as all possible commissions and insurance.

You should also read the loan agreement. Everyone who took out a mortgage insists on mandatory study of all its points. Thanks to this document, the borrower has the opportunity to discover existing “pitfalls” (if any) that were not mentioned during consultations or on the bank’s website.

Formation of a package of documents

The bank may need not only the originals of the collected package of documents, but also its copies, which should be taken care of in advance. The main documents required to apply for a mortgage loan are:

passport;
information about education (diploma of an educational institution or certificate of secondary vocational education);
certificate in form 2-NDFL (if the borrower has a salary project at the selected bank, such a certificate is not necessary);
application for a loan indicating the required amount and planned repayment period;
borrower application form (a sample of this document can be found on the bank’s website and filled out in advance);
in the presence of movable property or real estate - documents confirming the fact of ownership.

Obtaining a bank decision

If the application is approved, the borrower can begin searching for suitable housing. This stage usually takes from 3 to 4 months.

If the potential client was unable to select the optimal option within the allotted time, the approval procedure will have to be completed again. In case of refusal, you can apply to other credit institutions, perhaps you will have better luck there.

Tips for those planning to take out a mortgage in 2018

2017 broke all records for an unprecedented decline in mortgage rates, and financial analysts predict a similar situation in 2018. We present to your attention a few more obvious facts to help you decide whether it is worth taking out a mortgage now:

In 2017, the interest rate decreased to 7-9% per annum.
The program for obtaining “maternity capital” has been extended, which is a good incentive to apply for this type of loan. The down payment, of course, can be saved up, but it is much more pleasant to use appropriate assistance from the state for this.
Along with changes in interest rates, there is also a persistent tendency towards a decrease in the cost of housing on the secondary market, where it is better to purchase apartments for those citizens whose income does not allow them to buy housing in a new building.
Many developers offer potential buyers special programs that make the deal even more profitable. Thus, some provide an additional discount to families using a maternity certificate, others offer to sell old housing as part of the new one. There are many similar incentive promotions; you can choose the most attractive one in each specific case.

So, what is more profitable: a mortgage or saving? It is quite difficult to answer this question unequivocally. However, current trends in the real estate market and the stability of mortgage lending offers indicate that it is still worth taking. Programs for restructuring and early repayment of loans in the future will help to significantly reduce the terms and amount of payments. Well, the joy of the long-awaited purchase of your own home cannot be assessed in monetary terms.