Citizens of the Russian Federation in most cases apply for a mortgage to purchase an apartment in a new building, a house or secondary housing. However, every year there is an increasing number of people who want to leave noisy cities and settle outside the city, which requires having their own plot of land. To bring these desires to life, you can also use a mortgage. According to the Mortgage Law, it is possible to pledge a land plot in a mortgage agreement if it is not excluded from land circulation and is not limited in circulation (Article 62). You can find out in detail about those land plots whose circulation is limited and lands withdrawn from circulation by consulting Article 27 of the Land Code of the Russian Federation. You can take out a mortgage on a land plot subject to additional conditions, the first of which is compliance with land law. You can draw up a land mortgage agreement at almost any bank in the Russian Federation.
Choose a profitable mortgage
How to obtain a mortgage on a plot of land
A mortgage on a house with a plot of land or simply on a plot of land can be issued with the involvement of a significant number of necessary documents. The process of collecting them is very labor-intensive.
First of all, you need to know that the Land Code of the Russian Federation regulates situations in which land plots can be sold using a mortgage. It is prohibited to pledge state or municipal land in a mortgage agreement. The minimum size of land is also taken into account, which is established in accordance with the regulations of the constituent entities of the Russian Federation and local governments. Dimensions may vary depending on the purpose of the land and are regulated in accordance with Article 33 of the Land Code of the Russian Federation.
Mortgage on land
In Russia, in addition to obtaining a mortgage for private houses, new buildings and secondary real estate, it is possible to obtain a land mortgage. It is divided into two types depending on the intended use:
- Purchase of land for individual housing construction.
- Acquisition of land for the purpose of building a summer house.
The difference in mortgage programs will depend on the intended use of the land. Banks issue mortgages only for liquid areas, which are subject to strict requirements.
Mortgages are not allowed on plots that are in state or municipal ownership, with the exception of those intended for housing construction or complex development for it. Also, mortgages are not allowed on plots that are smaller in area compared to the dimensions established by regulations.
REFERENCE! Land plots under state protection cannot be the subject of mortgage lending.
Requirements when applying for a mortgage on a plot of land
There is a certain list of conditions that all banks follow. The applicant must meet the following:
- Be over 18 and under retirement age;
- Be a citizen of the Russian Federation;
- Be registered where the pledgor's branch is located;
- Have a good credit history;
- Have a permanent job. Work experience in the last position must be at least 1 year;
- Have a stable income that will allow you to make monthly loan payments.
If a person meets all the points described above, in order to obtain a mortgage for the purchase of a land plot, he needs to collect and present the following list of documents:
- An act confirming the seller’s ownership of the land plot;
- A certificate with state registration of ownership of the claimed plot;
- Cadastral plan of the land, indicating all the necessary items, including number, location, category of the plot, its area and price;
- Title document;
- A certificate from the technical inventory bureau confirming the absence of buildings on the declared site;
- An expert report compiled by an independent appraiser;
- If the land plot is owned by both spouses, the consent of the second spouse to sell must be certified by a notary;
- In the case of co-ownership of a plot by a person who has not yet reached 18 years of age, permission from the guardianship and trusteeship authorities is required.
What are the conditions for obtaining a mortgage on a plot of land?
Among the banks that agree to issue such loans are Rosselkhozbank, Sberbank, Rosevrobank, VTB24 and others. Such organizations are more likely to provide loans for the purchase of real estate from companies with which they have established partnerships.
Sberbank offers the most favorable conditions. Interest rates here are minimal, the loan is given for a period of 10 years, the down payment starts from 50% of the cost of the property. Offer options may vary. They change the loan term, interest rate, and the amount of the down payment.
Whether a particular borrower will be able to receive a loan will be decided by the bank, depending on the information specified in the documents. Based on them, convenient conditions are selected for issuing a loan for the purchase of a plot. To approve your loan application, you should be more careful in completing the required documents.
Requirements for the collateral
A very important point when applying for a loan is the possibility of securing collateral. When taking a mortgage to purchase a plot of land, it will serve as collateral. You will also need to take into account its liquidity. What the appraised value of the land is will be determined depending on several factors.
Land plots have lower liquidity than apartments. Therefore, banks need to obtain confirmation that the property will be able to attract buyers in case of problems with loan repayments.
The following indicators are assessed:
- How far is the land from populated areas;
- Ease of travel for transport;
- Are the soils on the site fertile?
- How far are the garbage and waste collection points located?
- The site must be registered in the city cadastre;
- Infrastructure development;
- The allotment should not be under arrest or leased;
- Reliability of documents and information contained in them;
- Many banks make it a mandatory requirement that the plot of land purchased with a mortgage be located near one of their branches.
Look at the same topic: How to get a tax deduction when buying an apartment with a military mortgage? Step-by-step instruction
If the plot has already been purchased and a loan is taken for construction
For some borrowers, the situation is this: they have money for land, but not enough for construction. The construction of buildings on the site is considered a rather costly undertaking. Prices for building materials are steadily rising, so it can be difficult to meet the available amount.
In this case, when applying for a loan, the acquired land can become collateral. When calculating the loan amount, bank employees will proceed from the market value of the plot.
It is worth noting that banks are very skeptical about unfinished projects. If the borrower stops making payments on the loan, it is difficult to reliably determine whether the construction is completed. But according to the law, unfinished construction and construction materials can be considered as collateral.
A mortgage for the purchase of land is a good option for purchasing a plot of land. To select the program that best suits the conditions of a particular borrower, it is recommended to contact loan specialists.
Mortgage for the purchase of land in Sberbank
Land mortgages at Sberbank are provided under the “Country Real Estate” loan program. The loan is provided for the following purposes:
- Purchase or construction of a summer house (country house and other related buildings)
- Buying land
- Construction of housing outside the city.
The minimum loan amount is RUB 300,000. The loan is provided at 13 percent or higher. The loan term is up to 30 years. The minimum down payment is 30%.
Additional advantages of a mortgage from Sberbank:
- Low loan rates
- No additional commission payments
- Possibility of issuing a credit card
- Additional benefits for people whose salary is transferred to a Sberbank card.
The borrower must be at least 21 years of age, and his age at the time of payment of the last installment must not exceed 75 years. The borrower must have at least 1 year of primary work experience over the last five years (this requirement does not apply to people receiving wages on a Sberbank card).
No more than three people can act as co-borrowers, and spouses are required to be co-borrowers.
Documents for obtaining a loan are submitted according to the list posted on the bank’s web portal. The borrower's employment and income are confirmed by a 2-NDFL certificate and a copy of the work book (or an extract from it).
You can approximately calculate the cost of the loan using the online calculator on the Sberbank website.
Mortgage on land: which banks give loans?
Today, not all financial organizations provide mortgage loans for the purchase of land, but the list of banks working in the field of mortgage lending is very long. Mortgages are provided by: Sberbank of Russia, Rosselkhozbank, Soyuz Bank, RosEvroBank and many others. Most banks provide mortgage loans only for the purchase of land from their partners. Almost all banks have approximately the same requirements for land plots and coincide with those described in our article. Today banks issue loans at 12.5 - 17% per annum, in the amount of 200,000 - 40,000,000 rubles. The cost of the loan is from one fifth of the cost of the plot. A number of banks allow the use of maternity capital.
Another solution to the problem of finding funds to purchase land could be a consumer loan for a large amount or a non-targeted mortgage loan. But the settlement period for such loans is usually much shorter.
Is it possible to buy a plot of land with a mortgage?
It will be possible to purchase a plot of land with a mortgage only if the bank is convinced of its liquidity - sufficiently attractive for future buyers in the event of your refusal to pay the loan. The liquidity of a land plot is lower than that of an apartment, so for the bank this is a riskier (and therefore undesirable) operation. Bank employees will evaluate the following indicators:
- Remoteness of the site from cities and other settlements
- Availability and proximity of transport communications
- Soil fertility on the site, its suitability for agricultural work
- Distance from waste disposal points of factory enterprises and urban solid waste
- Distance from the nearest bank representative office (no further than 50 – 70 km from the nearest city where the lending bank’s office is located)
- Presence of clearly defined boundary lines
- Registration of the site in the city cadastre.
- Level of infrastructure development (presence of driveways, power lines, gas supply pipes, water pipes, sewer pipes - on or near the site)
- Absence of additional circumstances (the land plot is under arrest, lease, etc.)
- Availability of natural reservoirs and forests
- Reliability and completeness of registration of land ownership for the seller.
Banks give priority to plots located in cottage villages. These plots are more landscaped and are located in easily accessible places; such a plot has clearly high liquidity. This means that a mortgage on such a plot of land will be provided on favorable terms.
Documents for applying for a mortgage on a plot
If you need a loan to buy an empty plot of land, without a house or foundation, you will need to collect a lot of documents. Among them are:
- Certificate of ownership or extract from the Unified State Register of Individual Entrepreneurs. Documents must be certified by a notary.
- Extract from the cadastral chamber. It is provided in the original. If there are buildings on the site, they must be displayed on the cadastral plan.
Look at the same topic: How is real estate insured with a mortgage? Cost of property insurance in [y] year
To approve a mortgage application, the standard document is a 2-NDFL certificate. The loan amount is determined depending on the market price of the land plot. Before collecting documents, it is recommended to check their list with the institution where you are going to take out a mortgage.
The verification of the provided documents may take about a week. A pledge agreement is concluded simultaneously with the mortgage agreement.
Land pledge agreement
As one of the essential conditions, the contract stipulates the obligation to develop the land. Banks do not have the right to demand actions from the owner for development, but they are obliged to provide for it.
An equally important condition of the pledge agreement is the identification of the land. Some settlements provide rules that contain the obligation to assign addresses if plots are allocated for construction.
Which banks provide mortgages on land?
A considerable number of banking organizations work with mortgages. You can obtain borrowed funds to purchase land from the following banks:
- Rosselkhozbank;
- VTB 24;
- Sberbank;
- DeltaCredit.
Other banks also issue mortgage loans to the population. Their requirements for applicants are not much different. Mortgage loans are issued at 11-17%, the amount can be from two hundred thousand to several million. As an option. You can consider a consumer loan or non-targeted mortgage loans.
