Buying an apartment with a mortgage on the secondary market: pros and cons

Risk factors

Real estate transactions in general represent a complex category of civil law relations: this concerns checking the “cleanliness” of apartments, the stages and timing of transactions and settlements, and legal registration.
In addition, the serious money that accompanies the purchase of an apartment is a bait for various kinds of scammers and swindlers. Conventionally, all the numerous problems that may arise when purchasing a secondary product can be divided into the following categories:

Legal problems related to the so-called cleanliness of the apartment. This is an extremely serious risk, as it risks losing your home ownership. This risk is due to the significant complexity of the purchase and sale transaction, as well as the low legal knowledge of buyers.
Problems related to the characteristics of the apartment and technical documentation for it. They do not affect ownership, but can create very uncomfortable living conditions. Of course, these problems are not as terrible as legal ones, but they can entail significant financial expenses. A typical example of such a risk is unauthorized redevelopment.
Problems related to transaction security.

We also recommend reading the article on the ConsultantPlus website “Buying an apartment on the secondary market without risks: myth or reality?” If you don't have access to the system yet, you can sign up for a free trial online! You can also get the current K+ price list.

Let's look at each group of factors in more detail.

Suitable mortgage apartments on the secondary market

Lenders have the most complaints about housing from the secondary market. The fact that it was already in operation can lead to various problems associated with illegal redevelopment, inconsistencies in documentation and many other nuances. Each banking organization puts forward individual requirements for mortgage lending. But the bulk of them remain unchanged.

The following describes in detail which apartments are suitable for a mortgage on the secondary market. As an example, the requirements of Sberbank will be analyzed.

Building location

What kind of housing is suitable for a mortgage, taking into account its location? The requirements are:

the building where the apartment is located is not planned to be demolished;
the residential building is located within the Russian Federation;
the apartment is not on the first or top floor;
Property in developed areas, where schools, hospitals, kindergartens and other important infrastructure facilities are located, is welcome.

It is advisable that the apartment be owned by the seller for three years or longer. Otherwise, the possibility cannot be ruled out that relatives will begin to claim the inheritance in the future and may challenge the legality of the mortgage.

Design features and wear

If we consider such indicators as degree of deterioration and design features, the requirements for mortgaged apartments are as follows:

wear and tear of the building where the apartment is located is no more than 70% of the service life specified in the technical passport (data will become available upon contacting the BTI or Rosreestr);
main communications are connected to the multi-storey building;
the building is not constructed from flammable or rotting materials, is potentially safe, and has a stable reinforced concrete or stone base;
the redevelopment that was carried out in the apartment was agreed upon with higher organizations, is legal, and is noted in the technical passport;
There is no visible damage to the building.

When choosing an apartment for a mortgage, you should weed out from the available options real estate built before 1970, as well as those located in “Khrushchev” and “Stalin” buildings.

You can order a cadastral extract online from Rosreestr for any building located within the Russian Federation. The document is sent to virtual mail.

Interior arrangement

When approving a mortgage, banks take into account the interior design of the home:

availability of a bathroom, heating system, ventilated kitchen;
equipping a battery in every room;
location of windows and doors according to technical documentation.

Windows and doors in an apartment being selected for a mortgage must function properly.

In general, it is important that while the borrower is repaying the debt, the condition of the mortgaged apartment does not noticeably deteriorate, and its market value does not decrease sharply.

Legal pitfalls

Sale of an apartment using forged documents or by a person who is not the owner, by proxy. Why should this be a concern? There are often cases when a power of attorney turns out to be fake or expired. If the power of attorney is genuine, it can be revoked by the person who issued it. Fraudsters issue powers of attorney for lonely elderly people, orphans, disabled people, and alcohol and drug addicts. As for the real owner, he may either not know that his apartment is for sale, or he may already be dead by this time.
Privatization of an apartment completed with violations. For example, in the 90s, violations of the rights of minors, who were not included in the composition of the owners during privatization, were quite common. The danger is also posed by the tenants who participated in the privatization, who promise the buyer to check out of the apartment after the transaction is completed.
The history of the apartment being sold contains transactions of a dubious nature, especially with the participation of state-owned enterprises, government agencies, and other legal entities.
Sale of an apartment received under a gift or rent agreement, by inheritance, as well as under other agreements that affect the interests of third parties. In these cases, after the purchase of an apartment has been completed, previously unknown persons may appear, for example, heirs, who may lay claim to this apartment. Also, do not forget about persons who have a legal right to an obligatory share in the inheritance.
Violation of the procedure for registering ownership of an apartment, fully or partially acquired at the expense of maternity capital. According to the law, such housing must be registered as the common property of not only the parents, but also the children, and the size of the shares is indicated. However, this rule is not always observed. Why? Firstly, it is not possible to identify the exact proportion in all situations. Secondly, some owners deliberately try not to burden their apartments with the rights of minors. Unfortunately, such violations are quite real, since at the moment in Russia there is no effective system for monitoring the fulfillment of this obligation by owners.
Sale of an apartment, one of the owners of which is a minor, mentally ill person, alcoholic or drug addict, i.e. a person who is incompetent at the time of the transaction. Such citizens are not prohibited by law from making transactions, but they may be challenged in the future.
Sale of an apartment that is under arrest, pledged or is the subject of litigation, as well as other hidden encumbrances.
The presence among the owners of the apartment for sale of persons who went to prison, military personnel or disappeared in an unknown direction. Such people retain the rights to reside and use the apartment, but they may not “show up” and move into the housing you bought through the court right away. At the same time, before concluding a transaction, sellers often try to convince potential buyers that the absent tenant will not lay claim to the apartment, supporting their arguments with written consent to sell it.
Violation of the rights of spouses.
Violations of pre-emptive rights to sell rooms (or shares). According to the Civil Code of the Russian Federation, in these cases the seller is obliged to make an offer to neighbors (or shared owners) to buy out the rooms (shares). Quite often this process is labor-intensive, so sellers try various ways to get around this requirement.
Selling using a fake or invalid passport (the document could have been stolen from another person, or the fraudster receives a new passport and conducts the transaction using an old one, allegedly lost).
A transaction with an apartment on the secondary market may also be declared invalid if the house is included in the resettlement plan. Moreover, the seller may simply not know about this or may not take it into account, but the buyer will suffer in such a situation.

What requirements must borrowers meet?

It is not difficult to figure out how to properly take out a mortgage for secondary residential properties, but it is important to take into account that the bank imposes numerous and strict requirements on potential borrowers. These in most cases include:

presence of Russian citizenship;
permanent place of registration in the region in which the bank branch is located;
age should range from 23 to 60 years, but it is allowed to attract co-borrowers whose age will be up to 70 years;
permanent place of income;
the optimal amount of income sufficient to repay mortgage payments;
good credit history;
the total work experience must be more than a year;
no criminal record.

It is these factors that can contribute to obtaining a mortgage loan for any property selected on the secondary market and meeting the bank’s requirements.

Buying a secondary car is an accessible process that has both positive and negative parameters. The potential borrower must make sure that he has all the capabilities to repay this large loan, and also that he has chosen the optimal apartment that meets the bank’s conditions. It is taken into account that in any case, this property will be transferred to the credit institution as collateral, so if the borrower is unable to cope with payments, it will be confiscated and sold, regardless of how long before the bank client paid the funds without interruption.

What you need to know about selling an apartment with owners who are minors

Registration of a transaction for the sale of an apartment, among the owners of which there are minors, must be carried out only with the consent of the guardianship authorities. The main condition in this case is that the living conditions of citizens under 18 years of age should not worsen. Otherwise, the transaction may be declared invalid.

On behalf of minors under 14 years of age, the agreement is signed by their parents/legal representatives. And citizens aged 14 to 18 years old enter into a transaction themselves, but with the notarized consent of their parents/legal representatives who have received prior permission from the guardianship authority.

If minors are not the owners, but are only registered in the apartment being sold, there is no need to obtain a guardianship permit.

The best mortgage offers in 2021

1. Sberbank of Russia.

The country's leading bank offers loan products at only 12.5-13% per annum. In this case, the loan term will be up to 25 years, and the minimum borrower contribution must be at least 15%. The loan amount starts from 170,000 rubles.

2. Tinkoff Bank.

Tinkoff offers to finance the purchase of secondary housing at only 12.75% per annum, provided that the borrower's down payment is at least 15%. The loan amount cannot exceed 99 million rubles.

3. Rosselkhozbank.

It offers mortgage lending for the purchase of apartments on the secondary market at 13.5% per year with a down payment of 15%. The maximum loan amount is 20 million rubles, and the financing period does not exceed 30 years.

What to pay attention to when completing a transaction with joint property of spouses

According to the Family Code of the Russian Federation, property acquired during marriage is recognized as the common property of the spouses, therefore, they must manage it together. For real estate transactions, this order takes the form of a notarized consent of one of the spouses for the sale. However, in practice this document is not always drawn up.

If there is no such consent, then the second spouse can challenge the transaction for the sale of the apartment. Before concluding a contract, we recommend that you make sure that the apartment was not purchased during marriage. If not, then the consent of the second spouse is not required (except in cases of shared ownership).

Technical points

Do you like the apartment and are you ready to sign a contract? Do not hurry. Please pay attention to the information below: any oversight on your part may subsequently result in various troubles - from administrative fines to endless repairs. So, when buying an apartment on the secondary market, close attention should be paid to:

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the condition of the house as a whole: do not limit yourself to the boundaries of the apartment you have chosen - you need to inspect the entrance, and it is also very advisable to look into the basement and attic;
cleanliness of the entrance, local area, garbage chute;
defects such as fungus, dampness, mold;
the condition of electrical wiring, plumbing, heating systems (the serviceability of these systems, unfortunately, is not always easy to immediately assess);
the location of the apartment relative to the cardinal directions, the view from the window;
the material of the walls of the house, the convenience of the layout: of course, in the future some adjustments can be made to the layout of the housing, but it is still better to choose an apartment with a layout close to your expectations;
legal registration of the ongoing redevelopment (often sellers hide its unauthorized nature) - illegal transformation of an apartment can significantly complicate the life of its owners: such redevelopment is an administrative offense that entails quite serious fines, while responsibility rests with the current owner, and it is necessary to prove that the previous owner did it apartment owner is incredibly difficult;
social status of neighbors: a close, homogeneous social environment is the key to peaceful relations between neighbors, and on the contrary, different social status often leads to mutual misunderstanding between residents of the house.

Choosing housing

Buying an apartment is an important and significant process for every person, since the chosen property will be used for a long time for permanent residence. Therefore, you need to choose a convenient and optimal option for future owners.

But since it is intended to purchase an apartment using bank funds, it is important not only to pay attention to your own preferences and desires, but also to ensure that the selected property meets the bank’s requirements. It is also important to take into account the financial capabilities of the future borrower, since it is better to take out a mortgage for a secondary home that has an acceptable cost, then monthly payments will be affordable for borrowers.

Since processing such a loan assumes that the bank will have an apartment as collateral, it is extremely important that it meets its requirements. These usually include:

year of construction, in which case the optimal time frame for this parameter is usually set, and houses built later than the current specified value are unsuitable for a banking organization (it is impossible for a house to be built before 1990);
technical condition of the whole house. This factor is one of the most important, since it is unacceptable to buy a “secondary” building that is dilapidated or in disrepair;
connecting various utilities to the house is mandatory. The apartment must not only be in optimal condition, but also be fully prepared to provide quality living conditions;
no problems with the apartment (illegal redevelopment by previous owners, since any changes made to the plan must only be official);
the location of the house may also be important for some banks, since if it is located in a disadvantaged area, then in case of problems with the borrower it will be difficult for the bank to sell such property;
the floor on which the apartment is located (financial organizations have the most negative attitude towards housing located on the first or last floors of the building).

When choosing an apartment on the secondary market, it is recommended to evaluate all of the above factors, since strictly following the bank’s requirements can significantly increase the chances of receiving approval in the mortgage process.

How to protect yourself from illegal redevelopment of the apartment you are buying

Very often, residents of secondary housing make redevelopments in the apartment, removing unnecessary partitions and combining rooms. However, such changes are not always documented. Often, due to legal illiteracy and reluctance to spend money and time, citizens refuse to contact the competent authorities in order to legalize redevelopment.

Buyers of a modified apartment without documents will subsequently face fines, which they will have to pay themselves, since the apartment will already be their property.

What should I do?

To begin with, we recommend that you inspect the apartment most carefully: some redevelopments are visible to the naked eye. For comparison, you can check out the similar living space of your neighbors.

If in doubt, we recommend asking the owner for an extract from the BTI or a technical plan of the apartment for comparison. The documents indicate the original (construction) state of the premises. If you find changes, convince the owner to register the redevelopment and postpone the deal until the paperwork is properly completed.

Transaction security

When concluding a purchase and sale agreement, in order to save on taxes, the seller may offer to indicate in the document a cost significantly lower than the actual value (for example, according to the BTI estimate). You shouldn't agree to this. The contract should reflect the actual cost of the transaction. Why? Firstly, you will be able to return part of the amount paid for the apartment in the form of income tax (property deduction). This procedure is regulated by Art. 220 of the Tax Code of the Russian Federation. If the contract indicates an underestimated value, then the deduction will be significantly lower. When indicating an unreliable sales amount in a contract, you must also remember that such a transaction can be challenged in court and declared invalid. In addition, if for any reason the contract is terminated, the buyer will be able to claim a refund only of the amount that was specified in the contract.
It is convenient and safe to make cash payments through a safe deposit box rented from a bank. To do this, the buyer, in the presence of the seller, puts the required amount in the cell. In this case, the money is counted and checked for authenticity in the presence of both parties. The conditions under which the safe deposit box can be opened are negotiated (for example, the seller will have access to the contents of the safe deposit box only after presenting a notarized purchase and sale agreement to the bank). The buyer, by mutual agreement, can also gain access to the money, but later, for example, a few weeks from the moment the money was invested. Using a safe deposit box for settlements, the parties have the right to choose almost any procedure and package of documents, describing these conditions in the agreement with the bank.
When buying an apartment with the participation of a real estate agency, pay special attention to the clauses of the contract that stipulate the responsibility of the realtor, including in force majeure and crisis circumstances.
If the parties decide to pay for the apartment by bank transfer, consider an instrument such as a letter of credit. What is its essence? The seller opens a special bank account in his name, to which the buyer transfers the amount of funds corresponding to the terms of the purchase and sale agreement. In this case, the seller can use this amount only after certain documents are submitted to the bank. This could be, for example, a purchase and sale agreement with a registration mark or any other document (package of documents) previously agreed upon when opening a letter of credit. Details and conditions of this procedure can be obtained from any banking specialist.
A very important issue is making a deposit or advance payment for an apartment. These concepts are often confused, but advance and deposit are not the same thing. An advance is actually a preliminary method of payment. If the transaction is canceled for any reason, the advance payment is returned to the buyer in full. Making a deposit if the transaction fails entails legal consequences for both the buyer and the seller. So, if the buyer is at fault, the deposit will remain with the seller. If the seller is the initiator of the transaction rejection, the deposit must be returned to the buyer in double amount.

Buying Tips

Before you decide to buy the apartment you like, be sure to check the following points:
sources of financing for previous transactions (do not forget about the possible “catch” when paying for an apartment with maternity capital);
whether there are minor children or incapacitated persons among the owners;
whether any of the owners are currently serving in the army or are in prison;
the number of registered residents in the apartment, as well as their willingness to leave it;
relevance of the technical passport, availability and legality of redevelopment;
if the seller received the apartment by inheritance, you need to find out on what basis.
Make copies of absolutely all documents and keep them for yourself. At the end of the procedure for checking the legal purity of the apartment, you should not be left with any ambiguities. In addition, these documents, in the event of litigation, will help you look like a bona fide purchaser and defend your rights.
If you are planning to purchase an apartment that is not clean enough, do not rely on the registration authority, bank or insurance company - these services will not fully check the legal cleanliness.
What options for purchasing secondary goods should you be wary of:
dubious, suspicious identity of the seller;
concealment of information about the owner;
selling an apartment by power of attorney (be sure to check its authenticity, powers, and validity period);
sale of an apartment at a price significantly lower (from 10%) than the cost of similar properties;
counter sale of apartment and resettlement.
Check whether the owners' passports are valid; there should be no erasures or corrections in them.
Read the documents about the timing of major home repairs.
Remember that it is best to explore the interior of the apartment and the features of the yard during daylight hours.
When inspecting a home, do not rush in any way: you need to clarify all the nuances for yourself.
View no more than two apartment options at a time.
Talk to people in your yard or neighbors: they will be able to tell you about many of the features of your chosen area and home.