A mortgage loan is a bank loan issued for the purchase of residential real estate. According to the terms of the bank, the purchased object becomes the property of the borrower, but remains in the bank's pledge until the debt is fully repaid.
Officially, there is little interest in what a mortgage is in Ukraine, since there are quite high interest rates on loans issued on purchase of apartments and houses. As a rule, a large loan used for the purchase of real estate is more correctly called a loan, which, unlike standard offers, has its own characteristics:
- a large amount is issued;
- the loan is paid over a long period of time.
A standard home loan in Ukraine is issued at a rate of 16% to 25% per annum. But you can save, because there are various government programs that allow you to purchase real estate at a discounted rate. We will mention all types of lending and existing loyalty programs in the article. By the way, if you decide buy a house in Kyiv, we recommend contacting the best elite real estate agency THE Capital.
Why a mortgage in Ukraine is expensive
For comparison, in developed European countries, the mortgage rate does not exceed 2%. Why is a mortgage for an apartment in Ukraine so expensive for our compatriots? In this regard, economists note several reasons:
- Difficult economic situation in the country.
- High level of inflation.
- A small amount of government support.
- High resource base for financial institutions.
- Increased requirements for banks regarding financial reserves related to large loans.
- Lack of clear legislation on the purchase of housing on credit.
Of course, in the case of applying to the bank on general grounds, it is sometimes possible to save by reducing the rate from 16% or a higher rate to 5-6%. But such offers are relevant if a new home is bought with a mortgage in Ukraine. In this situation, the financial institution is a partner of the developer and offers preferential lending only for a certain period, for example, 1 year.
How are loans for secondary housing issued in Ukraine
In Ukraine, a home loan has one significant plus — you don't need to save for decades to buy an apartment, you can take out a large loan and move in right away. In this case, a person is freed from the costs of renting an apartment, and pays for his own real estate. The disadvantage of such a measure is significant — a large overpayment, since the banks' rates are high and the payment term is long.
Conditions
Usually, a loan for secondary housing in Ukraine is issued for a term of up to 20 years. The period is calculated based on the borrower's financial capabilities and the size of the loan. In general, lending conditions may differ, it depends on the operating procedure of the financial institution, we note the common requirements:
- When taking out a loan for an apartment in Ukraine, the future borrower must be ready to pay at least 30% of the housing cost.
- The borrower must have a stable income sufficient to repay the debt and life, as well as be a resident of Ukraine.
How to issue
Mortgage conditions in Ukraine are quite strict. In order to get approval from the bank, one had to have a stable and large income. If you are previously satisfied with the conditions of the financial institution to which you have applied, be prepared to collect documents:
- Passport, TIN.
- Certificate from the place of work in form No. 3, which indicates not only the income of the future borrower, but also the position. Incomes are indicated for a period of 6 to 12 months, depending on the bank's requirements.
- The borrower's application and questionnaire are filled out at the bank.
These are not the final conditions for a mortgage in Ukraine, as the institution has the right to request additional documents. For example, a marriage certificate, copies of husband's/wife's passports, etc.
See also: Where is it better to buy an apartment: in a new building or on the secondary market?
Discount mortgage rates in Ukraine
In the first half of 2021, mortgages became more affordable in Ukraine, and this trend is expected to only develop. We are talking about the state program "Affordable 7% mortgage", to which maximum attention is directed among those who want to buy real estate.
Features of the program
Implementation of the "Affordable 7% mortgage" program is entrusted to the Entrepreneurship Development Fund, which is also responsible for interest compensation for business lending. It follows from this that the mortgage rate in Ukraine within the framework of the state program remains on the terms of the banks from which the loan is issued. The difference between the final rate and 7% is reimbursed by the state, but not more than 9%. For example, if an apartment is bought with a mortgage in Ukraine through a bank at 16% per annum, then the state returns 9% of it.
Conditions
It is not so easy to take out a loan for the purchase of housing in Ukraine under the "Affordable 7% mortgage". First of all, the conditions concern the age of the borrower - he must be no more than 70 years old (60 in some banks) at the time of repayment of the debt, while the maximum term is no more than 20 years. We also note other conditions:
- The entire income of the borrower and his family members, i.e. wife and spouse, including. At the same time, earnings should not be higher than ten times the average monthly salary in the region where you plan to buy an apartment with a mortgage in Ukraine.
- The borrower is prohibited from owning real estate. If he once owned an apartment, more than 5 years must have passed since its sale.
- The purchased housing must meet the standards. Currently, each family member owns less than 20 m2 of living space.
- In order for the mortgage rate in Ukraine under the preferential program to correspond to 7%, the amount of the loan should not exceed 2,5 million hryvnias with a mandatory down payment of 15%.
A preferential mortgage for secondary housing in Ukraine is not yet possible, the housing being purchased must have been built no more than three years ago.
How to issue
In Ukraine, a home loan can be issued only at banks that have signed a cooperation agreement with the Entrepreneurship Development Fund. These include "PrivatBank", "UkrgazBank", "OTPBank" and some others. The decision is taken by the financial institution, and if the borrower has provided all the necessary documents: identity card, certificate from the place of work, marriage registration certificate, birth certificate, etc. The list of requirements is individual and depends on the bank's operating procedures.
How to repay a mortgage in Ukraine, the full interest rate and the state compensation procedure, as well as other details are explained at the bank. You can also get the first consultation on this issue from the lawyers of our agency. Subscribe to our updates real estate portal and receive the latest publications from the real estate agency THE Capital.
