All expenses when buying an apartment in a new building

Preparation of documents for a mortgage

To take out a mortgage, the borrower needs to prepare a standard package of documents:

• passport;
• completed borrower application form;
• employment documents - certified copies;
• documents confirming the availability of sufficient income - a 2-NDFL certificate or a certificate in the form of a bank;
• documents on marital status - marriage certificate, birth certificate of children (if any);
• information about your own real estate - in the case of a mortgage secured by an existing apartment;
• an account statement containing the money for the down payment.

At this stage, the borrower does not incur additional costs unless he hires an intermediary to submit an application to the bank. An exception is if a notarized copy of a document is required. Then you will have to pay the notary fee.

Valuation costs

After the client’s candidacy has passed the scoring and the bank has approved the mortgage, it is necessary to provide documents for the mortgaged property. The buyer pays for the real estate appraisal; the seller must prepare the remaining documents at his own expense. A real estate appraisal must be ordered from a bank-accredited appraiser. Valuation costs start from 3,000 rubles and are calculated individually - usually 1% of the estimated real estate valuation amount. The following factors influence the cost of assessment:

• primary or secondary market;
• presence of redevelopments;
• legal status of the object;
• type of real estate - apartment, share in an apartment, room, residential building, land plot;
• prices for this type of real estate in the region.

The amount that the bank will approve for a mortgage depends on the result of the assessment. Calculations are made taking into account the cadastral value and often differ from the market price of the property. If the price of an apartment is average in the market, you can count on successful approval of the required amount. Valuation of a private house with a plot will cost more than valuation of an apartment in a new building.

Costs for drawing up a purchase and sale agreement

When drawing up a mortgage agreement with a bank, the borrower must be prepared to pay the following expenses:

• state fee for registering encumbrances on mortgage real estate;
• state fee for registering a loan agreement;
• notary services - if necessary;
• renting a safe deposit box (if settlement with the seller is made from cash) or opening an account and servicing it (subject to non-cash payments);
• the first insurance premium is on average about 1-2% of the loan amount.

If an intermediary was also involved in the transaction, his services are also included in the mortgage costs. This could be a realtor or mortgage broker. The services of professionals are not a luxury, but a means to ensure your own safety and reduce costs: a specialist will help you fill out documents correctly, obtain loan approval, check the legal purity of the chosen property and avoid pitfalls when signing a loan agreement. The costs of a mortgage broker depend on the range of services provided and the cost of housing. On average, these costs amount to 1-5% of the cost of the apartment.

All costs when applying for a mortgage

When deciding to take out a mortgage, potential borrowers are faced with the need to incur considerable additional expenses in addition to directly paying interest. In fact, it turns out that not everyone is aware of this in advance and is not ready for such expenses. That is why this issue should be studied in advance so that it does not take you by surprise at the moment when what you want is already so close.

Additional costs for a mortgage, depending on the bank’s policy, include:

• An initial fee

As a rule, the more favorable the loan terms, the higher the down payment . In some financial institutions, the minimum down payment is no less than 50% of the cost of housing, although it can be as high as 90% if the borrower’s capabilities allow.

But not many have the potential to pay such a significant sum. to such clients , but with a minimum down payment of 10% .

There are even mortgage programs that allow you to purchase an apartment without a down payment at all.

• Appraiser's fee

A mortgage implies that the purchased property becomes collateral. That's why

you will definitely need to assess the value of the property.

This can be done by the bank itself, if it has the appropriate certificate, by a company accredited by it, or by any appraisal office, if this is allowed by the bank’s policy.

In any of the options, this service will be paid for by the borrower.

• Insurance

Banks require borrowers to obtain mortgage insurance for the entire loan term; without this, the transaction will not take place. By law, it is mandatory to insure the collateral against damage or destruction.

However, depending on the financial institution and mortgage program, the list of coverages may vary . The more risks the insurance covers, the more favorable the loan terms, as a rule.

The cost of insurance is calculated based on the value of the collateral. As the loan is repaid, insurance will become cheaper every year.

The cost of risk insurance is determined at designated rates, based on the individual conditions of the borrower.

Your loan has been approved!

• Commission of the bank

Banks often charge a commission from the borrower for carrying out certain transactions.

Commissions can be one-time or can be charged each time a transaction is carried out , for example, a commission for a wire transfer or cashing out, or a one-time commission for opening a bank account.

• Realtor payment

Everyone has the right to decide for themselves whether to use the services of a realtor. If time does not allow you to search for real estate on your own, you often have to resort to the services of realtors.

By going the whole way yourself, you can save a decent amount.

• Registrar payment

Real estate transactions are subject to mandatory state regulations. registration.

The amount of the duty determined by law is about thirty thousand rubles.

• Paying for a safe deposit box or account

An escrow is a common way to securely transfer money during a mortgage transaction.

However, this bank service is paid. Some financial institutions also charge account maintenance fees, although this right is not established by law.

• Payment for legal services

The mortgage agreement must be notarized. Although this is not established by law.

With rare exceptions, you can find banks that do not require notarization of the agreement.

• Other expenses

also have to incur costs when obtaining medical certificates , which will be required when completing the transaction.

Some people, lacking free time, are forced to resort to the paid services of a mortgage broker. Such an agent will help you find good mortgage programs, complete the transaction, and also give competent advice to achieve the best result.

If real estate is purchased from a company not accredited by the bank, it may request an inspection of this property (applies to housing under construction). This service can have a fixed cost, or be calculated as a percentage of the loan amount.

Insurance: mandatory, comprehensive and imposed

According to the mortgage law, it is mandatory to insure the mortgaged property in case of fire, flood, household gas explosion and other insurmountable circumstances that may lead to damage to the collateral. Other types of insurance when taking out a mortgage are voluntary. Banks often offer to pay for comprehensive insurance, which includes title insurance (for secondary homes) and life insurance for the client. If you refuse comprehensive insurance, the loan rate may be increased by 1%. There is another side effect: if you refuse the “three-in-one” insurance, the bank may refuse to issue the client an already approved mortgage without giving any reason.

Mortgage Insurance Facts:

• If you plan to repay early, do not buy insurance for the entire loan term. Recalculation of the insurance amount is more convenient for the client when renewing the contract with the insurer annually;
• you yourself can choose the insurance risks that are real for you, so as not to overpay;
• carefully study the insurance contract and clarify the procedure for recognizing the event as insured. The cheaper the insurance, the more ways to avoid insurance payments the insurance contract contains;
• the amount of insurance payment on average is 0.7-2% of the amount of the remaining debt;
• insurance for a house will cost more than insurance for an apartment;
• life and health insurance policies for borrowers over 45 years of age are more expensive than for younger ones;
• If an elderly person takes out a mortgage, when taking out life insurance, it is worth including in the contract a condition for the insurer to repay the remaining debt in the event of death before the end of the loan repayment. This service is beneficial for the heirs - they will not need to pay the balance of the mortgage;
• A title insurance policy for secondary real estate is required for 3 years from the date of the transaction. After the expiration of the specified period, title insurance is not relevant, since the statute of limitations for claims in real estate transactions is 3 years.

Mandatory expenses

1. Notary fees

A real estate transaction requires consent from the spouse, and this, in turn, requires notarization. You will also need the services of a notary if minors are involved in the purchase of a home and you need to issue a power of attorney on their behalf. You need to budget 2-3 thousand rubles for this.

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2. State duty for registering the right of a child-care facility in Rosreestr

According to the rules, an individual pays 350 rubles for registration. This is if you prepare the documents yourself. If through an agency, then this can either be included in the cost of services, or, conversely, cost more.

3. Commission for non-cash payment

You also need to pay several thousand rubles to the bank through which you transfer funds for the apartment.

belchonock/Depositphotos

4. Property tax for individuals

A new apartment means paying property taxes. In Moscow, the rate for objects worth less than 10 million rubles is 0.1%, for objects worth from 10 to 20 million rubles - 0.15%, for objects worth from 20 to 50 million rubles - 0.2%, and, finally, for objects worth from 50 to 300 million rubles – 0.3%. For the most expensive apartments (more than 300 million rubles), the maximum rate is 2%. These percentages are calculated from a base that now consists of 60% of the cadastral value, 40% of the value according to the BTI (as of 2021). In this case, the cadastral value of 20 square meters is deducted from the taxable base. m of housing (regardless of the number of owners).

Every year the cadastral share will increase by 10%. This procedure applies in 26 regions, including Moscow and the Moscow region.

In the case of apartments, a rate of 0.5% applies. In this case, no tax deduction is made. For a modest two-room apartment in the north-east of Moscow worth approximately 7.5 million rubles, the annual payment amount will be about 4.3 thousand rubles. For a spacious three-room business class apartment in Ramenki, this is almost 30 thousand rubles per year. For premium real estate in Khamovniki you will have to pay approximately 100 thousand rubles per year.

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5. Advance utility payment

Strictly speaking, this cannot be considered additional costs. You must pay your normal utility fees, but do so early and two to four months in advance. Thus, an amount will appear in the management company’s account to ensure an uninterrupted supply of resources. The size of the contribution may vary, but on average we are talking about 20 thousand rubles.

"Optional" additional payments

This word is probably familiar to us from school - this is the name of those lessons that you can attend at will. In the case of banks and the provision of credit, this word has approximately the same meaning, only whether you pay or not is decided not by you, but by the bank’s credit council. So, by turning the corner and going to another bank, you can completely avoid them. We've already talked about some of them above (for example, additional insurance options or costs associated with transferring money), so we won't repeat them.

Checking a mortgage loan facility

Usually banks ask you to pay it if you buy an apartment in a building under construction. The argument goes: we must be confident in the reliability of the construction company. But why the client should pay for this (and a considerable amount, from 4.5 to 15 thousand rubles) is completely unclear.

Loan processing fee

Indeed, not so long ago, even if you received a loan refusal, you had to pay for the consideration of your application, and again for a second one. Today, such payments are practically not used anywhere, but we simply have to warn you that this is possible.

What are the costs of a mortgage?

The first thing a potential borrower does is select a property suitable for purchase, since depending on the type of residential premises, not only the lending conditions will differ, but also the cost of the loan. For example, obtaining a mortgage for a secondary home will require larger investments than for a new building, if only because the finished apartment must be checked for legal purity.

The standard list of costs associated with a mortgage, regardless of the loan program chosen by the borrower, will include costs for:

• repayment of the down payment amount (one-time costs);
• payment of a commission for lowering the rate (one-time payment made at the request of the client);
• repayment of interest accrued for the use of funds (in the long term);
• payment of the premium under the contract concluded with the insurance company (annual expenses);
• payment for the services of an appraiser when ordering a report on the value of the pledged item (made once);
• transfer of fees for registration actions related to the purchase of housing and registration of a mortgage loan (only at the initial stage);
• payment for services for storing funds during settlements with the seller, for example, for renting a safe deposit box or opening a letter of credit (fees are charged depending on the method and period of storage of funds with the lender);
• payment of a fee for consideration of the application (not always charged);
• payment for notary services (when certification of documents is required);
• payment for the services of a realtor, mortgage broker, real estate agency or lawyer (if the borrower uses an intermediary).

From this list you can select the main costs, exclude optional ones, and also change the amount of certain types of expenses. For example, a borrower may pay the minimum down payment, but the overpayment amount will increase. You can also refuse to involve an intermediary and check the property for legal purity, thereby increasing the possible risks associated with purchasing housing on the secondary market. Thus, in each specific case, the amount of basic expenses, as well as additional ones, will differ.

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