It so happens that the borrower bought the desired apartment in the mortgage, but as time passed, circumstances arose that prompted to change their place of residence. However, how to exchange an apartment in a mortgage? There are many types of encumbrances, but mortgage encumbrance in today’s Russia remains the most common. Is it possible in principle to exchange the apartment, located in the mortgage? Mortgage does not mean that the client has no right to do anything with the apartment until the moment of its redemption. Just such a living space for the period of crediting is listed as temporary banking property. Therefore, if the bank gives good, then the mortgage apartment will be possible and sell and exchange. Almost always it is necessary to observe two conditions:
- 2 years must pass from the moment of taking the mortgage (sometimes this period is extended to half of the entire crediting period);
- the client should not have payment delays, and in general it is desirable to have a “clean” credit history, or a credit institution may not allow the transaction.
In this case, the borrower, even before the start of all operations, needs to collect a small set of documents, which is attached to the application:
- RF passport;
- an identification number;
- if the borrower is a married couple, then the written consent of the second party (wife / husband) is necessary;
- if the spouses are officially married, then a marriage certificate will be required;
- credit report statement confirming that the client has not overdue payments and ends (this document can be taken directly from the bank).
Exchange / sale options and the main stages of the transaction
What situations may arise during mortgage ownership transactions? The following should be highlighted:
- exchange / sale of mortgage housing in order to move to more expensive residential real estate;
- exchange / sale of mortgage housing in order to move to residential real estate, equal to the market price;
- exchange / sale of mortgage housing in order to move to residential real estate in the cheaper segment.
Not only does each of the points have its own characteristics – the exchange and sale procedures will take place differently. For a start it is worth considering the differences of exchange and sale. The exchange is characterized by the fact that most of the cost of an apartment does not turn into a cash equivalent. In the exchange of a mortgage apartment for another residential area, an automatic change of the collateral bank is implied when the mortgage burden is transferred from one real estate property to another without delay. The exchange transaction with real estate is characterized by the conclusion of only one contract – an exchange contract. It involves two sides, changing living space. But the exchange of an apartment in the mortgage also implies the participation of a third party as a controller. This is a bank. How to change an apartment / house in a mortgage for another living space? The basic procedure for this process is:
- The borrower informs the bank about his desire to conduct a transaction with mortgage real estate. Of course, it is understood that the bank gives a positive solution. Otherwise, the client will not be able to do anything with the apartment or house.
- The borrower collects all the main technical and legal documentation concerning the housing selected for the exchange, and the bank’s specialists carry out independent monitoring of the housing object. Since the bank has not been real estate. For example, the lender, most likely, will not allow the exchange of a new apartment for Khrushchev. Or another apartment may also be under a mortgage, which will seriously complicate the deal, and it is even possible that the bank will cancel everything.
- The borrower and the owner of the other living space constitute the exchange agreement. Of course, both parties must be informed of all the encumbrances that may be taking place on the property that they offer to each other.
- The bank draws on his mortgage property new housing.
- Only after this, the mortgage encumbrance is removed from the property of the borrower, and the new owner becomes the full owner of this housing.
The sale is distinguished by the fact that two contracts are being drawn up here, since there are no longer three but four parties: the owner of the real estate mortgage, the buyer of this property, the owner of another property and the bank. Therefore, you first need to sell one, and then on the money received to buy another. And that means – two sales contracts, when a bank customer acts first as a seller, and then as a buyer. It should be said that even the exchange of a mortgage apartment is quite a lengthy and costly procedure. First, as already mentioned, the borrower will have to collect all the documentation regarding the property for which the exchange is made. This includes:
- cadastral and technical passports (issued by BTI);
- the opinion of an appraisal firm specializes in all types of housing value, primarily market value;
- confirming the ownership of the seller (sales contract, deed of gift);
- an extract from the state register that housing is purely from encumbrances.
Secondly, all the financial costs of processing the transaction also fail on the borrower. When there is no exchange, and the sale of mortgage housing with the subsequent purchase of a new one, it is still more difficult. There are only two contracts, but also two statements. One borrower submits to permission to sell real estate, the other for a new loan. The fact is that the re-drafting of the bank agreement actually takes place. The borrower sells the mortgage apartment / house, but the debt remains to the bank. With the money he gets, he acquires a new living space, which immediately goes into securing this debt. At the same time, the sequence of actions is always saved in favor of the bank:
- the buyer gives money to the mortgage owner;
- the mortgage owner acquires other real estate with this money;
- this property is issued as a new pledge under the new loan agreement with the bank;
- and only after that the financial organization removes the burden of the first apartment / house, and the first buyer becomes the full legal owner.
The importance of price difference
At the same time, the difference in the cost of 2 apartments plays a big role. Because of this, the client has to write an additional application for changing the size of the mortgage, respectively, the price difference. There may be three options:
- The most possible option – the equivalent exchange of living space, when the house is under a mortgage encumbrance, or an apartment, the client exchanges for real estate, equal to the market price. And it may be that the housing is smaller in area, but newer and higher quality. Or a large area, but in worse quality. In both cases, the price is equalized. For the bank, and for the borrower, this option is attractive because of its relative simplicity and speed. One of the key factors is the location of the property chosen by the borrower. If the apartment is located in a house that is located close to the branch of the lender bank, then the probability of getting a go-ahead for the transaction becomes even higher.
- A situation when another apartment / house is more expensive. Here the beneficiary has an even greater interest, since the new pledge will have a higher market value, which means greater protection against costs. Well, when the difference in price exceeds 20%. Then the bank will certainly give permission for the exchange with a surcharge. For the borrower, the main problem will be the question of where to get the money for the surcharge. Some of the sake of this take a consumer loan, becoming a customer already two banks.
- On the contrary, when another apartment / house is cheaper. The most difficult option, because here the bank is never interested to receive collateral. The lender will give consent only when at least 2/3 of the entire mortgage is repaid. Therefore, the borrower will either have to wait or seek additional funds for a large early lump sum payment. For example, all the same consumer credit. By the way, since the borrower is already receiving a cash surcharge, he can use it to repay the consumer loan taken.
A few words about the military mortgage
It is easy to see that any option can be solved by exchange. Without any extra sale. But it only happens that the seller of other real estate apartment, which took the mortgage client, may not be needed. If the seller requires only cash, then you can not do without the sale. In addition, the more expensive or cheaper apartment means to different size of the mortgage, because the value of the collateral must correspond to the amount that the bank lent. As it changes, both the interest rate and the down payment may change. That is why, most often, all operations with mortgage real estate take place within the equivalent of money exchange. Another outstanding case is a military mortgage. Perhaps, for a client, such property will be hardest to exchange / sell. After all, there is a double burden – banking and Rosvoenipotek.
- transfer to another place. This is usually a different city. This is provided in advance in the contract of military mortgage in the “moving”. The scheme is similar to the one that takes place with an equivalent exchange, only housing should be near the military service;
- The second option is obvious – just level the mortgage and pay for the Rosvoenipotek program.
Finally, it is worth warning that it is often when the conditions for the exchange or sale of collateral are specified in advance in the mortgage agreement. Therefore, when signing an agreement, you must be careful. This is one of the highlights of the sale of real estate in mortgage encumbrance, which was discussed in this informative article.