In theory, it is possible to purchase a secured real estate object with partial preservation of the terms of a mortgage loan at any bank (for example, at a rate of 12% per annum instead of the market 20%). But in practice it is difficult to do this
On real estate websites, you can find ads in which the seller offers to assign an apartment to a mortgage at his own rate. For example, it can be a housing loan at 12-14%, and sometimes 10% per annum. In terms of average market mortgage rates, which reach 20% in July, such an offer seems very profitable.
Together with experts, we understand what the essence of this mechanism is and whether it is realistic to issue such a loan.
Mortgage at the seller’s rate
A mortgage with a fixed rate for the buyer began to be actively used as a tool to maintain demand after the introduction of protective rates for standard mortgage programs in the spring of 2022. Sberbank has such a program now, it appeared about two years ago, says Ruslan Syrtsov, Managing Director of Metrium.
The bottom line is that for the buyer of real estate, all the conditions of the seller’s housing loan, including the interest rate, were preserved. The seller determined the value of the property independently. For example, he sold an apartment for 10 million rubles, and he had a mortgage debt of 6 million rubles, in which case the buyer had to pay the difference of 4 million rubles to the seller. “The bank reissued the existing mortgage loan from the seller to the buyer while maintaining the terms of the agreement, including the rate, and the buyer continued to pay the remaining amount of debt to the bank,” explained Tatyana Reshetnikova, deputy head of the mortgage department of the federal company Etagi.
However, now the program is limited — only relatives of the borrower can use it in Sberbank, Tatyana Reshetnikova explained. “But in this case, banks more carefully check the transaction itself, especially when various kinds of subsidies and certificates are used in the purchase,” the expert noted. “Although the option potentially applies to a significant number of customers, Sberbank rarely issues such loans due to the difficult conditions for obtaining a loan,” Ruslan Syrtsov added.
However, in theory, it is possible to purchase a secured real estate object with partial preservation of mortgage loan conditions in any bank, there are no legal restrictions, continued the deputy head of the department of the federal company “Floors”. “In the current conditions of high market rates, this is, on the one hand, an excellent alternative to an expensive mortgage for the buyer, and, on the other hand, a good mechanism for the sale of real estate secured by the bank for the seller,” the expert noted.
But now it is unprofitable for banks to issue such a mortgage, since the new borrower will have to issue a mortgage at the old lower rate, explained Alexander Chernokulsky, CEO of Zhilfond. “At current mortgage rates and with the threat of a new increase in the key rate, such a service has probably become financially uninteresting for the bank. Therefore, such transactions are now literally a piece of goods,” the expert noted. In addition, not many of those who bought an apartment with a mortgage at 10% per annum decide to part with it now, he added.
Nuances of the program
Photo: Freepik
A mortgage at the seller’s rate has its own characteristics. Firstly, in this case, the bank took a one-time commission in the amount of 1% of the mortgage balance, but in the range of 12 thousand to 30 thousand rubles. Secondly, a mortgage loan from the seller should be issued according to a standard program, and not a preferential and corporate one, Tatyana Reshetnikova explained. “In this case, an assessment of the object is not required, since it is already pledged to the bank. But the insurance of the facility and the new borrower will have to be done again,” the expert added.
A new borrower usually has to make a larger down payment. This is due to the fact that the owners sell apartments for more than the amount they bought for, Ruslan Syrtsov explained. “The amount of the approved loan during this program coincides with the balance of the owner’s loan. Accordingly, in order to get such a mortgage, it is often necessary to make a large initial payment,” the expert said.
Such applications were considered individually. “The main and very strict condition imposed on buyers is the need to match their credit profile with sellers, in particular, a comparable income level, age, and loan term are required,” added the managing director of Metrium.
According to experts, the procedure for obtaining a mortgage with a change of borrower generally does not differ from the standard scheme. The main thing is that the buyer and seller agree on the amount of the transaction, and the bank approves the candidate. “When signing a loan agreement, ownership is transferred simultaneously with the removal of one pledge and the establishment of a new one — to the same object and to a new owner,” explained Alexander Chernokulsky. “The funds allocated under this new loan agreement are used to repay the old loan. I think it’s technically quite easy to do this inside one bank,” the expert noted.
Pros and cons of the program
Sochi (Photo: Anastasia Dieva / TASS)
The main advantage of this scheme for the buyer is the opportunity to renew the mortgage at a lower rate. “This is a significant saving for the buyer due to the difference in rates between the market and the one that the seller has. For a seller, this is a good competitive advantage when selling their property,” said Tatyana Reshetnikova. A mortgage with a change of borrower allows you to choose more favorable conditions, Ruslan Syrtsov added. “If you compare the rate of 20% and 13% with a down payment of 20% and a loan term of 30 years, the monthly payment in the second case will decrease by an average of a third,” he gave an example.
Tatyana Reshetnikova, Deputy Head of the Mortgage Department of the federal company “Floors”:
— For example, the apartment was bought at a rate of 12% per annum. Now the seller is selling this apartment for 8.5 million rubles. with a loan balance of 6.9 million rubles. for the remaining 29 years. If you take this amount today, at a rate of 19.5%, the monthly payment for such a mortgage will be 113.7 thousand rubles, and the total overpayment for the entire term of the loan will be about 32.6 million rubles. If you purchase with the retention rate from the seller, the monthly payment will be 72 thousand rubles, and the overpayment for the entire period of use of the loan will be lower by 14.5 million rubles and will amount to about 18.08 million rubles.
At the same time, the benefits should be calculated individually, looking at the difference with current market rates and the amount of the down payment. This does not always make financial sense, says the CEO of the Zhilfond company. Sometimes, together with an increased down payment, commission and insurance, the amount of overpayment may eventually approach the cost of a more expensive loan, he explained.
According to the Managing director of Metrium, the disadvantages of this mechanism are the difficulty of meeting its criteria and approving such programs. The disadvantage of the program is also the need to pay an increased down payment, the expert added.
English 
Russian 
German 
Polish