Why should one consider a loan secured by Russian real estate?

Why take out a loan secured by real estate in Russia?

The question of why mortgage loans secured by real estate are needed in Russia is becoming relevant for many. At first glance, obtaining a mortgage in the country where the desired property is located seems like a simpler solution. However, the reality is much more complicated.

Local financial institutions have strict requirements for borrowers. For example:

• In Austria, you may be refused a loan if you do not have a permanent income or your own home in the EU.
• In Italy, Russians can only expect to get a mortgage if they have an official income verified in the EU.
• Greece has currently suspended its mortgage program for foreigners.

For more detailed information, you can refer to our study.

The capabilities of Russian banks

Russian financial institutions typically do not offer specialized mortgage products for purchasing real estate abroad. Regular consumer loans usually involve the issuance of relatively small amounts. In such a situation, it is worth considering loans secured by existing property.

Some banks call such loans non-purpose loans, which means that there is no need to report on the money spent. You can use the funds for your own needs or for the purchase of foreignreal estate. It is important to keep in mind that your property will be pledged until the debt is fully repaid, and the amount of such loans can vary from tens to millions of rubles.

General goals of secured loans

Alexei Kreitor, deputy chairman of Vostochny Bank, emphasizes several main reasons why people take such loans:

• Acquisition of new real estate;
• Debt refinancing;
• Carrying out repair work;
• Construction;
• Car purchase.

Collateral conditions in different banks

The terms for collateral real estate can vary significantly between different financial institutions. For example:

• In Tinkoff Bank it is possible to mortgage only an apartment in an apartment building.
• Absolut Bank considers the location - the pledged apartment should be located not further than 100 kilometers from the bank's branch.

Sberbank allows using not only residential real estate as collateral but also garages or land plots without buildings. However, using a country house as collateral may be unavailable. Additionally, it will be most challenging to secure a loan against a property that has an existing mortgage or other encumbrances, which will negatively affect the chances of receiving an affirmative decision on the loan.

Conclusions

Ultimately, it should be emphasized that in order to achieve your goals in real estate, it is important to study the terms of all banks and choose the most advantageous option for your situation.Secured loancan be one of the most effective decisions on the way to realizing your dream. Be careful and ready to thoroughly analyze all available offers on the market.

Key aspects of lending

At the moment, key aspects are becoming issues of investment, immigration, and purchasing real estate abroad. Most often, individuals looking to take out a loan are interested in information about what conditions need to be met to obtain it, as well as the relationship between the size of the loans and the value of the collateral provided. It is important to understand that different banking institutions use various methods for property valuation: in some cases, they are based onmarket value, in others — oncadastral valuation. Therefore, when you apply to the bank for a loan, be sure to specify the criteria by which your property will be evaluated.

Example of a loan

For example, if you have an apartment in Russia valued at 3 million rubles, you can get a loan of 1.8 million rubles from Sberbank, which corresponds to 60% of that value. It is important to note that your monthly payment will be around 31,800 rubles, and your documented salary must be at least 45,400 rubles. Most banks have calculators on their websites that can help potential borrowers preliminarily assess their financial capabilities.

Methods of real estate valuation

Some banks, such as Tinkoff, base their calculations solely on the market value of real estate obtained from open sources. If the institution relies on the cadastral valuation, you will most likely need to provide the necessary supporting documents.

Loan terms and conditions

What are the loan terms? They can vary significantly depending on your financial capabilities and preferences. Usually, you can choose the terms in which you plan to repay the loan - from three months to several years. However, you should remember that each bank sets an upper limit on loan terms for its clients. Interest rates are determined individually by each lender and depend on many factors, but they cannot be lower than the established minimum level.

Co-borrowers

Many banks offer borrowers the opportunity to bring in co-borrowers. In this case, your acquaintances, friends or relatives who agree to become guarantors of your loan will also have to sign the relevant documents. This can significantly increase your chances of getting the necessary amount, because the presence of co-borrowers increases the credibility of the lender.

Preparing for lending

Thus, to successfully obtain a loan, the following is required:

• Prepare thoroughly;
• Explore all conditions and available options;
• Seek professional help if necessary.

Don't forget that an important step is to gather all the necessary documents and prepare to talk to lending institutions. This will create confidence and increase the likelihood that your loan will be approved.

Lending conditions in Russian banks

Various lending conditions have been established in Russian financial institutions based on information obtained during a telephone survey conducted on November 7, 2018. We will consider banks such as Tinkoff, Sberbank, St.

Conclusion

In concluding this discussion, I want to emphasize the key aspects to consider when looking into the option of obtaining a loan secured by Russian real estate. At first glance, securing a mortgage in the country where your dream of having your own place is located may seem like a simple and convenient path. However, as practice shows, not everyone has the opportunity to take advantage of such offers. The strict requirements of local banks can pose a significant obstacle for Russian citizens wishing to realize their dream.

As I mentioned earlier, many countries, including Austria and Italy, are setting clear and strict conditions for foreign borrowers. Moreover, Greece has completely canceled lending programs for Russians, which makes the issue of purchasing real estate abroad even more complicated. In this context, a loan secured by real estate in Russia becomes an attractive option.

Advantages of a secured loan

It is important to note that such loans allow for:

• Obtain significant funds without the need to explain their purpose;
• Use your existing assets as collateral;
• Not to limit oneself to a narrow range of offers from other banks;
• To solve various financial tasks, such as purchasing real estate, carrying out renovations, or buying a car.

From my experience communicating with professionals in the banking sector, I have learned that such a loan is especially useful for those who plan not only to purchase real estate but also to carry out renovations, buy a car, or even start their own business.

Conditions and requirements

However, it is important to remember that the collateral property must meet certain requirements, which may vary among different lending institutions. Some banks only accept apartments, while others may accept various types of real estate, including land plots. It is crucial to accurately assess your collateral property and its value to understand what amount you can expect as a result.

Loan term and interest rates

Finally, the loan term and interest rates are determined based on your personal financial capabilities and the bank's conditions. The option to involve co-borrowers also opens up additional avenues for those looking to reduce their financial burden and make the process more flexible. In this context, such a loan product can become a truly valuable tool for achieving your desires and financial goals.

Results

In conclusion, taking out a mortgage loan in Russia is a serious step that can be both a profitable solution and fraught with risks. However, with a proper assessment of all aspects and conditions of obtaining the loan, this option opens up new horizons for investment and personal growth. I hope my article has helped you see the opportunities and risks, as well as broadened your understanding of this financial instrument. Be careful and approach your decisions thoughtfully — your financial future depends on it.