Home loans with no down payment started being issued in 2016, says Denis Konovalenko, managing partner at Prime Life Development.
The amount of the bet and the maximum amount of the loan depend on the chosen program. However, such transactions occupy an insignificant part of the total number of mortgage transactions: most clients prefer a standard mortgage, saving money in advance for the down payment or, for example, using maternity capital funds for this.
The lack of demand for such a program is also due to the introduction of increased coefficients for loans with low installments.
Banks’ conditions for a down payment of at least 20% remain advisory and in most cases the developer, having agreed with the bank, is willing to subsidize the rate and reduce the down payment of the mortgage to practically zero. says Yevgeny Platonov, CFO of Time Development.
For example, there is an interest-free installment plan for the first installment for up to six months. In the total volume of transactions involving mortgages, the share of transactions without a down payment, according to him, is 8-10%. And the demand for it is growing.
A mortgage with no down payment is not a new product, but the interest rates and the bank’s requirements for the borrower are quite high, says Aleksey Novikov, director of the mortgage lending department at Est-a-Tet. According to him, now such a mortgage can be obtained in two ways. One of the banks issues it at 13% per annum, while the bank has very strict requirements for borrowers, so the program is mainly used by the bank’s payroll clients. The second option is to obtain a loan secured by existing real estate. But here you need to understand that the cost of collateral real estate must be at least 20% more expensive than the purchased one, Novikov emphasizes. Due to a number of features, these programs are not very popular on the market, he points out. For the year, such transactions are less than 1%.
For borrowers who want to get a mortgage without a down payment, insurance can be more expensive, the bank can reduce the mortgage term or introduce additional conditions, such as collateral for another property and attract co-borrowers, says Irina Orlyankina, Sales Manager at Corporation Megalit. At the same time, these programs are convenient for citizens who are selling their existing home and don’t want to underestimate its value for the sake of a quick sale. However, it is often more cost-effective for borrowers to take out a consumer loan for a down payment rather than a zero-payment mortgage. However, this increases the debt burden on the borrower and is also not welcomed by the Central Bank.
Mortgages with no down payment are still being issued, but after the Central Bank raised the requirements for committed reserves for such loans, banks inevitably raised rates to offset costs, and deals became less profitable, says Yaroslav Bajurak, chief executive officer. from Vyberu.ru. . However, such programs can still be seen in most major Russian banks. The conditions often stipulate the use of maternity capital or a loan is issued against the security of existing property. At the same time, the demand for such loans is moderately declining – in the first six months of this year it turned out to be almost 20% lower than in the same period last year. However, under current conditions, it is still far from a total rejection of mortgages with no money down. However, the proportion of people who cannot make a down payment and are willing to accept unfavorable terms will always remain, so developers and banks are likely to come up with alternative solutions, such as a partial mortgage that seems replace mortgages at near zero rates.
