The housing issue remains vital for millions of Ukrainians at all times. New families are created, children and grandchildren are born, so the demand for a home loan in a bank is constantly growing. However, Ukrainians are in no hurry to massively take an apartment on a mortgage.
The fact is that mortgage lending in Ukraine is not a cheap pleasure. Even in the conditions of competition between banks in the credit market, a mortgage without a down payment and at a minimum rate is something beyond fantasy. And an apartment in a mortgage is at 9,9%, and even then not for everyone.
There are several reasons why mortgages in Ukraine are expensive:
- economic difficulties, high inflation;
- overestimated cost of the resource base for banks;
- high requirements for reserves for credit institutions for mortgage loans;
- lack of government programs to support mortgages;
- imperfection of the legal framework.
Therefore, most Ukrainians solve the housing problem according to the old scheme - they accumulate the necessary amount for buying an apartment. Unfortunately, the scheme is no longer working, because real estate prices are constantly rising. Starting from 2022, the cost per square meter in residential complexes of the "comfort" and "comfort+" classes will start at $2000/sq. m. That is, it turns out that it is almost impossible to accumulate. And now what do you want to do? Do Ukrainians have to continue to wander around in rented apartments? No matter how paradoxical it may sound, you should not give up the option of taking an apartment on a mortgage.
Nevertheless, in 2020, mortgages in Ukraine have significantly fallen in price. Leading banks in mortgage lending simultaneously reduced interest rates. And in the end - your own apartment, even if bought on credit, is definitely more profitable than rented square meters. In this article, we will figure out what a mortgage is, what are its pros and cons, how to take into account all the risks and who owns the property purchased with a mortgage. By the way, if you decide quickly buy an apartment in Kyiv, we recommend contacting the best luxury real estate agency THE Capital.
Home loan: what is it and how to get an apartment on a mortgage?
In Ukraine, buying an apartment on a mortgage often becomes the only way to obtain housing. At the same time, many do not know what it actually is. And due to the illiteracy among the population, the mortgage has become overgrown with speculation, misconceptions and myths that prevent a sober assessment of the situation. Let's look at this issue in order.
- Firstly, this is a long-term loan - the minimum loan term is 5 years.
- Secondly, this is a loan secured by an apartment, the very one that was bought for this loan.
A mortgage loan is probably the most complex loan product offered to individuals today. However, despite all the difficulties, an apartment on a mortgage has its advantages:
- the ability to purchase housing without the need to save money for 10 or more years;
- the possibility of reducing the terms and sizes of monthly payments;
- the possibility of buying a home even with a small amount of the down payment;
- the possibility of early repayment and savings on interest on the loan;
- a wide range of real estate options: primary and secondary housing stock, a country house.
The main disadvantage of mortgages is that property rights to real estate belong to the "mortgagee". The borrower receives the full right to fully dispose of the housing (sell, donate, mortgage) only after the debt is fully repaid.
Read more:: Power of attorney for the sale of the apartment.
An apartment on a mortgage - what are the risks?
On the Internet today you can find announcements that an apartment is for sale, which the bank has sued from mortgage debtors. Therefore, for many people, the decision to take an apartment in a mortgage is not easy. After all, it is impossible to foresee everything, but there is always a danger that you will fall ill or lose your job, the employer will reduce your salary, the dollar will fluctuate and, as a result, there will be nothing to pay on the loan.
Read more:: Taxes when buying an apartment.
In other words, if any problems with money begin, there is a high probability that the apartment will be taken away from you. In order not to lose the only housing that is in a mortgage, the following risks should be considered:
- loss / decrease in income;
- rising inflation;
- volatility in mortgage interest rates and market indicators;
- currency risk;
- decrease in value or damage to real estate that is pledged.
Protection against these risks is insurance. Therefore, most often insurance is a prerequisite for mortgage lending. Real problems happen when at the start a person does not evaluate his real income, and as a result, the monthly payment becomes unbearable for him. Therefore, before contacting the bank, you should carefully assess your financial situation in the long term. Taking out a mortgage is cheaper than paying rent. The main thing is to choose the right bank, lending program, object and evaluate your financial capabilities. Subscribe to our updates real estate blog and get the latest publications from the real estate agency THE Capital.
