The housing issue remains urgent for millions of Ukrainians at all times. New families are created, children and grandchildren are born, so the demand for housing loans at the bank is constantly growing. However, Ukrainians are in no hurry to take out mortgages en masse.
The fact is that mortgage lending in Ukraine is not a cheap pleasure. Even under conditions of competition between banks on the credit market, a mortgage without a down payment and at a minimum rate is something beyond fiction. And a mortgage apartment is at 9,9%, and even then it is not for everyone.
There are several reasons why mortgages are expensive in Ukraine:
- economic difficulties, high inflation;
- overestimated cost of the resource base for banks;
- high reserve requirements for credit institutions for mortgage loans;
- lack of state mortgage support programs;
- imperfection of the legislative framework.
Therefore, the majority of Ukrainians solve the housing issue according to the old scheme — they accumulate the necessary amount to buy an apartment. Unfortunately, the scheme is no longer working, because real estate prices are constantly rising. Starting in 2022, the cost of a square meter in the "comfort" and "comfort+" residential complex will start at USD 2000/sq.m. m. That is, it turns out that it is practically impossible to accumulate. And what will you order to do now? Will Ukrainians have to continue wandering around rented apartments? No matter how paradoxical it sounds, you should not give up the option of taking an apartment on a mortgage.
However, in 2020, mortgages in Ukraine became significantly cheaper. Banks-leaders in mortgage lending simultaneously reduced interest rates. And after all, own apartment, even if bought on credit, is definitely more profitable than rented square meters. In this article, we will understand what a mortgage is, what are its pros and cons, how to take into account all the risks and who owns the mortgaged real estate. By the way, if you decide to quickly buy an apartment in Kyiv, we recommend contacting the best elite real estate agency THE Capital.
Housing loan: what is it and how to take out a mortgage?
In Ukraine, buying an apartment with a mortgage often becomes the only way to get housing. At the same time, many do not know what it actually is. And due to illiteracy among the population, the mortgage is overgrown with conjectures, mistakes and myths that prevent a sober assessment of the situation. Let's deal with this issue in order.
- First, it is a long-term loan - the minimum credit term is 5 years.
- Secondly, this is a loan secured by an apartment, the same one that was bought with this loan.
A mortgage loan is probably the most complicated of the loan products offered to individuals today. However, despite all the difficulties, a mortgage apartment has its advantages:
- the opportunity to purchase housing without the need to save money for 10 or more years;
- the possibility of reducing the terms and amounts of monthly payments;
- the possibility of buying a home even for a small down payment;
- the possibility of early repayment and savings on loan interest;
- a wide selection of real estate options: primary and secondary housing stock, country house.
The main disadvantage of a mortgage is that the property rights belong to the "mortgagor". The borrower gets the full right to fully dispose of the home (sell, gift, mortgage) only after full repayment of the debt.
See also: Power of attorney for the sale of an apartment.
Mortgage apartment - what are the risks?
On the Internet today, you can find an ad that an apartment is for sale, which the bank foreclosed on mortgage debtors. That's why many people find it difficult to take a mortgage. After all, it is impossible to predict everything, but there is always a danger that you will get sick or lose your job, your employer will reduce your salary, the dollar exchange rate will fluctuate and, as a result, you will not be able to pay for the loan.
See also: 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 from you. In order not to lose the only housing that is in the mortgage, the following risks should be taken into account:
- loss/reduction of income;
- rising inflation;
- variability of mortgage interest rates and market indicators;
- currency risk;
- diminution in value or damage to the mortgaged property.
Protection against these risks is insurance. Therefore, insurance is often a mandatory condition for mortgage lending. Real problems occur when a person does not estimate his real income at the start, and as a result, the monthly payment becomes unaffordable for him. Therefore, before turning to the bank, you should carefully assess your financial situation in the long term. Taking a mortgage is more profitable than paying rent. The main thing is to choose the right bank, credit program, facility and assess your financial capabilities. Subscribe to our real estate blog updates and get the latest posts from THE Capital real estate agency.
