Mortgage loans for new buildings
Posted on Oct 3, 2000 08:15:27 AM
Some time ago, mortgage lending has worked exclusively on the secondary housing market, almost covering the segment of new buildings. Borrowers and banks were afraid of the risks associated with registration of property rights, the freezing of construction of any failure to meet financial obligations of the developer. A construction and investment companies and mortgage is not needed, since new buildings were bought at the stage of excavation.
Russian mortgage, is known to work on the model of the American scheme. However, we have one feature is almost unparalleled in other countries. This lending of housing under construction. Western practice is to purchase only the finished houses and apartments as investments in the construction phase is simply unprofitable – “their” property prices are not growing as fast. In our country, as the newspaper “square meter”, the housing shortage, combined with an unmet need for developers to cash generated this synthetic banking product.
Lending to buy housing in new buildings has its own advantages – in particular, a variety of choices for buyers. On the other hand, lending of this kind has its limitations, because of which the borrower will likely have to choose: either he agrees to the unfavorable conditions, to get an apartment, or takes a loan on reasonable terms, but in a choice of options will be limited.
However, despite all the difficulties, buying a home in a new home on credit or using installment very real. Right now, most developers are thinking about applying schemes mortgage before the sale of housing being built. As a rule, they enter into agreements with banks, mortgage loans. Under this agreement, the bank lends to home buyers in homes that are built this developer. In addition to lending banks are engaged in specialized mortgage companies. Sometimes the housing loans will start issuing bank, which participates in the project as a lender of the developer.
In principle in such cases can not be afraid to get into the hands of unscrupulous developers. Credit institutions will not work with first got the construction company and the first check whether all the developer in accordance with the documentation. In the case of some “dark spots” banks tend to recommend a client to choose another construction company.
Perhaps the only thing that is difficult to anticipate when working with builders, – the possibility of charging different co-payments for apartments. But this will not help borrowers, with the developer will have to negotiate on their own.
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