Buying an apartment usually involves substantial costs money. Even with the available real estate sales counter supplement is often very large. What to say about the situation when the apartment is purchased from scratch (without selling anything). It is not always required amount is available. Attractive enough in this case, it is a mortgage loan, with which you can solve the problem.
Mortgage loan is really a convenient tool. But deciding on the treatment for them in the bank, you need to clearly understand what disadvantages for the recipient it has and what additional costs you may encounter.
The advantages of a mortgage loan :
- Long-term lending (sometimes over 20 years)
- The possibility of transferring the bank to pledge apartments bought, and no other, is already available at the borrower's property.
- The possibility of early repayment of the loan by the borrower.
- The relatively low percentage (compared with consumer credit).
Along with the advantages of a mortgage loan, there are a number of shortcomings that need to be taken into account:
- You can not sell an apartment purchased until full repayment of the loan.
- It is difficult to agree with the bank on further installments in the event of the borrower's income fall as a result of job loss or reduction of wages.
- The apartment necessarily need to insure (see. "Additional costs" section).
- When applying for a loan you need to evaluate the apartment (see. "Additional costs" section)
- Many banks charge for consideration of a client application for a loan a sum of money, which in case of failure will not be returned.
- During the first half of the term loan repayment of the loan is carried out very slowly. Basically pay interest.
- Banks prefer customers with a high official salary, they can confirm by official letter from the employer. Entrepreneurial income and revenues "for help in any form," the banks are extremely reluctant to accept, and lead to an increase in the interest rate on the loan.
Consider some of these shortcomings in detail.
The main problem lies in the fact that the mortgage loans are almost always repaid in equal monthly installments. The graph shows:
- distribution of mortgage payments on the loan term,
- the proportion of the loan repayment in the monthly payment on the mortgage,
- dynamics of the outstanding balance of the mortgage loan principal.
Note that in the first four years the share of loan repayment maturity of the loan itself to the bank monthly payment is less than 20%. Those. More than 80% of the money you have each month to pay the bank, goes to the repayment of interest and your credit is almost does not decrease (especially in the beginning when the payment of interest on the leaves almost 90% of the monthly payment).
So you, as a borrower, find yourself in a very precarious situation. For example, five years after the loan you took any force majeure life changes (for example, high-paying job loss) and you can no longer pay the mortgage payments.
You are going to have the following fact (the calculation is made on the basis of our example):
- Of the 3.5 million of the loan for 5 years (one third of the loan term) repaid less than 500 thousand rubles (less than one seventh of the loan) !!!
- The outstanding loan balance amounts to 3,036,264 rubles.
- At the same time over the past five years, you have paid the bank 2,475,397 rubles per cent, almost everything he took. But it does not help you!
As a result, you will be forced to sell the collateral apartment and return the loan to the bank. You with virtually nothing left (given that the sale will be at a discount to the market price), ie get you five years to pay the bank money in vain.
This is one of the most serious risks associated with mortgage lending. The crisis of 2008-2009 is demonstrated. If you start thinking about the mortgage, take very seriously the analysis of the future (and in a fairly remote: 5-10 years) risk of loss of existing revenue.
Of course, as the repayment of a mortgage loan risks are reduced. But the balance of the loan repayment and interest only reaches 50-50 in the tenth year of repayment (see. Graphics) and in the last 5 years you have to speedily extinguish the loan.
If you do decide on a loan, please note the following conditions in the contract:
- Can the bank to change the interest rate on the loan without your consent. If yes, then you are very, very much risk. There was a crisis, the devaluation of any of the currencies, just problems in the banking sector, and you wake up in the morning and discover with interest, your monthly payment, for example, has doubled.
- Reported whether your loan account maintenance fees and other banking services related to the existence of the loan. If the bank can arbitrarily change them. See previous item.
- Heed to the hidden costs (insurance, re-evaluation, etc.).