Mortgage and mortgage loan
A mortgage is a form of loan secured by the property being purchased. Registration takes place in the form of a double agreement: on a loan and on the transfer of real estate as collateral.The documents provide for all the nuances of further legal relations between the buyer and the credit institution.
Types of mortgage loans
The two most common forms are:
Ordinary mortgage
Does not provide benefits from the state or bank. A person simply needs to regularly deposit certain amounts to pay off interest and principal. It is considered the most severe form for the person receiving credit.
Mortgage with social support
Usually, various benefits are provided to ease the situation of the one who takes out the debt, including tax deduction for treatment , purchasing a house, studying. The most common type of maternity capital is issued for the second and subsequent children. These funds, amounting to approximately 400, 000 rubles in 2019, can be used to pay off the mortgage.
Also, benefits in the form of a reduction in the interest rate to six percent are offered to people living in small residential areas and using the bank’s services to improve their living conditions. In this case, a subsidy of 20-40% is provided. Employees of a number of organizations can count on some benefits. A similar area includes military mortgages.
Advantages and Disadvantages
Purchasing housing is considered one of the most profitable investments in Russia. However, statistics from the last five years show that, from a financial perspective, it makes more sense to rent a living space than to purchase it as a property. If you buy with a mortgage, the benefit is reduced even more. Problems in the suspension of real estate prices.
However, many people own property on which they pay mortgages. The advantage is that the rates for this form of loan are much lower than others. In addition, when applying for a loan, you can have a base amount of 10-20% of the cost of the purchased apartment. For many, this path seems to be the only opportunity to buy a home.
The disadvantages are the status of the house, which has been pledged to the bank for many years. Conventional loans carry high interest rates. Given the lack of growth in real estate prices, it is often more profitable to buy a house outright, saving money, or simply renting a house. In addition, huge overpayments make the cost of real estate twice as high. In addition, organizations put forward conditions for annual insurance of the purchased property, which must be undertaken by the person taking out the mortgage, despite the fact that the property does not legally belong to him.
Conclusion
The main difference between this form is the pledge of the purchased house. This significantly limits the owner’s rights to dispose of the property. When deciding to apply for a loan, you should always objectively assess your capabilities.
