The population density of megacities is growing every year. Meanwhile, native residents of large cities are increasingly willing to buy a house somewhere away from the city’s tired bustle. At the same time, many mistakenly believe that suburban real estate, due to its remoteness, is much cheaper, and it can be purchased, if not for their savings, then certainly on credit.
However, when you look closely at the problem, it turns out that the cost of suburban housing is slightly cheaper than urban (and sometimes even more expensive), and it is quite problematic to get a loan for such a purchase.
Why are banks reluctant to credit the purchase of country houses?
Loans for housing by banks have been issued for a long time, but suburban real estate has always been and remains not in favor with creditors. Statistics say that about 80% of applicants for a loan for suburban real estate are expected to be refused a mortgage. The banks ‘ distrust is due to the fact that housing that acts as collateral is not liquid enough, and it is not easy to sell it on the secondary market. But it is the possibility of selling housing that the bank is primarily interested in since this is the only way for it to return its money if the debtor cannot repay the loan. In order for the applicant to have a chance to approve the application, the area where the property will be purchased must have all the necessary communications; convenient access roads, gas, and electricity supply.
It is more likely that the applicant will be able to take out a mortgage on real estate located in residential suburban settlements. The maximum allowed distance of such a village from the metropolis is 50 km. At the same time, it is important that the land on which the house stands belongs to the owner of the building, and not to the housing Association. In addition, a significant role is played by the state of the house itself, and the material from which it is built.
What does a borrower need to take out a mortgage?
The process of obtaining a mortgage for a country house is more difficult for the borrower than when buying an apartment on credit in the city. In addition to the fact that the applicant needs to worry about the liquidity of the proposed structure in advance, he faces some other difficulties. Even if the bank wants to issue a loan for such a purchase, it will certainly require payment of the first payment.
Moreover, if it is enough to pay for an apartment up to 10% of its cost, then when buying a country house, the borrower will have to pay at least 30% of the price of the future purchase. In addition to the cost of the initial payment, do not forget about paying for insurance. In addition, due to the high degree of risk, the bank will probably force the borrower to buy additional policies in addition to the mandatory one, which involves paying compensation only in case of destruction or serious damage to the housing.
However, even basic insurance can cost the borrower a “penny”, especially if the house is not new. Next, the applicant will need to convince the bank of the legality of ownership of the land from its current owner. If this site has ever had any problems with the documents, the bank will not take the risk and refuse the loan. Of course, such general points as the term of permanent employment of the borrower and the level of his current salary remain relevant.