Low financial burden in this program is only until the house is handed over, and then you need to make a full payment
Mortgage is still practically the only way to buy a home for Russians. But it is also a serious burden, because it is becoming increasingly difficult to secure affordable monthly payments. According to the Bank of Russia, by the beginning of May, the average rate on loans issued in new buildings exceeded 6%, having increased immediately by 2.5% since the beginning of the year, including due to the withdrawal of developers (under the pressure of the Central Bank measures) from near-zero mortgages. Instead, they began to increasingly offer tranche mortgages, when money is given to the borrower in installments. However, payments on it remain reduced only until the house is put into operation. The experts of the Elitnoye.ru portal, using information from the Metrium company, decided to tell in detail about the advantages and disadvantages of such lending.
How it works
When an apartment is purchased with a “traditional” mortgage, the borrower pays a monthly installment for the full cost of the home, even if the house has not yet been built. A tranche mortgage, on the other hand, involves lower payments before the house is put into operation. The loan amount is divided into tranches and issued to the home buyer in several stages. There can be from two to five such trenches. For example, the first includes the amount of the down payment and 30% of the loan amount, the second – another 30%, and the third – the remaining 40%. The burden on the borrower's budget for the construction period is small, since interest is paid only on the allocated amount, and this happens before the delivery of the house. Until the loan is repaid, the living space remains pledged to the bank, as with a standard mortgage.
How profitable
There are other benefits besides the comfort of monthly payments at the stage of building a house. Families have the opportunity for financial planning. You can set aside money for repairs or furniture, as well as for partial early repayment of the mortgage after receiving the second tranche. In a few years, a sufficient amount will be accumulated, which, with a conventional mortgage, would go to the bank. Another plus is that initially interest is charged not on the entire loan, but on part of it, so the overpayment will be less. Also, developers do not increase the cost of the apartment itself, as was the case with near-zero programs.
Who will suit
A tranche mortgage is best considered for those who are still limited in their abilities and do not fall under the scope of state programs. It is also beneficial for those who have to rent an apartment before receiving the keys. Or buyers-investors. After the commissioning of a new building, prices usually rise. Then you can sell housing for more than you bought, while not spending much on paying interest on the mortgage while construction is underway. This method is also suitable for those investors who plan to rent an apartment. It starts to generate income almost immediately, without delaying the “working out” of invested funds.
What are the disadvantages of
Last fall, Central Bank Chairman Elvira Nabiullina said tranche mortgages were a risky product. It will lead to an increase in investment demand for housing and an increase in the price of finished apartments. Buyers will have to purchase more expensive properties, making it harder to service mortgages. Another risk Nabiullina called “unfair sale.” Some borrowers will not be able to decide on the final cost of the mortgage, mistakenly believing that the low cost of servicing the first tranche will not change until the end of the payment of the entire loan amount. The real conditions of the program may not suit such people.
However, mortgage tranches can only be issued at Sberbank. Therefore, for now, there is no talk of mass distribution, which will cause a rise in prices. Also, the financial literacy of our compatriots has grown significantly in recent years. Buyers carefully read the terms of the contract and calculate all the nuances in advance. For example, there are people who are ready to pay only symbolic amounts for the first few years, but want to fix the cost of housing. Someone is going to sell an old apartment after renting out the house, hoping to repay a significant amount of the loan, or expecting to receive an inheritance in two or three years, when the bank issues the second part of the loan.
It's not that simple
There are other features of “tranches” that you need to be aware of. First, there are still few options available under the program. Such a mortgage does not work on all new buildings – the choice is very limited by the developers themselves. In addition, developers often refuse discounts to buyers who choose tranche payments. Companies want to get the full cost of housing as quickly as possible, and in this case they have to wait several years. That is, it is better to carefully study the terms of the contract and compare the various programs that are lacking today. It may well turn out that in some cases the installment plan will turn out to be much more profitable.
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