Real estate mortgage can be described as the following action: the lender provides a sum of money in exchange for the borrower’s obligation to repay the funds with a warranty in the form of real estate. Such lending is very popular because the process of obtaining credit is very simple and does not require the collection of a large number of documents. Another advantage of this form of credit is that you can immediately receive a large amount of money for a long term at a small interest. Accordingly, it is much easier to repay such credit than it is to repay it to consumers. If a consumer loan can be borrowed for 5 years, a mortgage is granted for more than 10 years, and the amount can reach 5 million. UAH.
Which property qualifies for loan?
Mortgage credit is a good opportunity to manage your real estate and have extra money. The Bank Organization seizes from the borrower the ownership of the dwelling only in case of default of the loan, until then the real estate is owned by the client and he can manage it. The only thing the contract cannot do is sell the property, which is a pledge, destroy it as well as spoil it, since the estimated value will be overestimated.
Real estate can be:
- Flat. Very often the subject of the loan contract is the apartment in which the borrower lives, because no other property is owned. This is a dangerous type of credit, as there are great risks of homelessness if repayment obligations are not met. Since the amount of the loan is estimated at 50-75% of the amount of the housing, the borrower loses a lot of money in the long run.
- Private house. If the client owns only the house, the property is subject to the same risks as the apartment. Private houses are very often sold through the bank. If a client inherits a house and does not want to sell it, he simply takes a loan from it, gets his money and hands over the property. The bank already sells and converts.
- Pi. In Ukraine, it is not easy to take credit for a land plot, especially if it is inherited by a lender and is agricultural land, as this type of collateral is not accepted by banks. But if the bank evaluates your claim, pi is a good way to get the money. If you do not live on a plot of land and do not engage in agricultural activities, you can get a favourable contract with the bank. If the borrower defaults on the loan and interest, the bank sells the land to third parties on its own.
However, it is not always possible to take a mortgage on real estate. Ukraine has enacted a law prohibiting the following types of property as collateral:
- real estate that is not privatized. If the client has not taken ownership, he cannot dispose of the property, much less charge it as collateral;
- unserved apartments with further confirmation of contract for other persons’ share;
- rooms of any square or private apartment;
- real estate that is already collateral under another loan agreement and is not paid;
- apartments and houses under rent contract.
A type of mortgage is a mortgage, but only a mortgage requires a down payment.
Basic loan conditions?
Take out a mortgage on real estate, if you need a large sum of money urgently. Plus, under this form of credit, the bank can offer the borrower more favourable terms. Any property that serves as collateral is the property of the borrower, and the bank will only temporarily encumber it with any manipulation that cannot be made of the collateral. For example, under the contract, the client does not have the right to donate or sell the collateral, nor can it be converted or destroyed. Collateralization substantially reduces the repayment rate and extends the repayment period.
If the borrower has bad credit history and consumer credit, he may be refused. Then the deposit in this case can significantly increase the chances of receiving the sum of money.
The terms of credit in each banking organization will be different, it is important to look for a bank with a good reputation and a comfortable credit program. Basic elements of any collateral:
- sum of credit;
- interest rate.
The customer may only take out a loan on bail if he has reached the age of majority. A small number of banks raised the age to 21. There are also age limits, the average ceiling is 70 years. Only residents of Ukraine or persons with temporary propiska can take credit. If the borrower is not the sole owner, then at the time of the conclusion of the contract all persons who also have ownership of the property are included. If the borrower is using another person’s property as collateral, the owner must confirm this decision with his consent and signature, otherwise the borrower will be refused. It should be borne in mind that if the owner signs a loan, he is equally liable for the property.
What is required to make a mortgage on real estate?
Since the terms of credit are relatively similar for all banking organizations, the real estate cash loan itself is issued on the basis of a standard set of documents. The only nuance will be the ability to insure your pledge, but this is not a mandatory procedure and the borrower will decide at his discretion.
In contrast to consumer credit, where a whole set of loans is needed to make mortgage only a few documents:
- marriage certificate (if borrower is married/married);
- identification code;
- title deeds.
If the client provides shares as collateral, then all land deeds must be provided. Such lending often does not even require a statement of income of individuals, if the borrower is a natural person, and financial reporting if the borrower is a legal person. The bank does not need these documents, as it fully insures itself with the amount of real estate that will become its property in case of default. In any case, the bank remains in the big boon.
Is it possible to refinance credit?
Refinancing is the assignment of new property as repayment of old debt. Many banks offer this function, but it has a number of features. The process of refinancing is as follows: the customer takes again a loan, the cost of which covers the initial loan. In order not to lose the property, many people open a new credit history in the same bank. Once the borrower has fully covered the old loan, it has a new financial obligation that is already in effect on new terms.
Refinancing can be implemented if the customer has a mortgage on the property. Ukraine introduced such a system to:
- significantly reduce the initial credit burden;
- avoid fines, penalties or forfeiture of property;
- control credits after combining them into one.
Refinancing not only avoids waste in case of credit line delinquency, but also avoids loss of property. New programmes are being invented with new, significantly simplified repayment possibilities. Such a process can only take place after a certain period of time, when at least two repayments with interest have been made on the old loan. Banks usually give a period of two months from the date of entry into force of the credit contract. The period for which the client makes a new loan depends on the type of property that the borrower is prepared to make as the object of the pledge. If the second mortgage contract is valid, the repayment period may be up to 30 years, and all other forms of credit provide a significantly shorter period. Rates and payment are also selected according to the collateral asset.