Mortgage – a serious step for both the borrower and the lender. By issuing a large amount, the bank takes a number of steps to ensure financial security. Collateral – an integral part of the transaction for the acquisition of mortgage housing. For registration of collateral financial institution is mortgage on the property. This is done in order to guarantee the return of debt through the sale of housing, if the borrower can not return the money to the bank. You should understand in advance what a mortgage is on an apartment with a mortgage and what consequences it is for the borrower.
With the help of the mortgage, the credit institution confirms the rights to the collateral in case of non-repayment of the mortgage debt. The document is to be signed simultaneously with the mortgage agreement, guaranteeing the bank a refund – even if the borrower refuses to service his loan obligations.
What is the essence of the mortgage?
For the borrower, it is important to find out what mortgage on a mortgage is, since this document significantly limits the rights to dispose of the property during the entire maturity of the debt.
A mortgage is a legally significant document that establishes the conditions for a mortgage on the property being acquired. The further relationship between the mortgagee and the borrower, as well as the realization of the rights of both parties depends on how well the document is properly drawn up.
Mortgage is one of the documents required for mortgage registration, without which it will not be possible to receive borrowed funds from a bank.
Thus, the value for which the mortgage is needed will differ for the client and the bank:
- For a financial institution, the paper serves as proof of profit and a successful loan return.
- For the client, registration is a mandatory step in the process of concluding a mortgage.
The degree of liquidity of the collateral will depend on how quickly and successfully the bank will be able to realize the property in the event of the borrower’s failure to meet its obligations. For this reason, the following requirements apply:
- land allotment with and without buildings, the estimated value of which exceeds the debt to the bank;
- premises from non-residential stock (warehouse, garage, office, summer house);
- Residential comfortable apartment (belongs to the most preferable option of mortgage security due to its high liquidity, however the object should be located in a non-emergency house built after 1970);
- private household, including the area under it, if the location within the village or suburb.
When considering the collateral object, the bank will proceed from the main requirement – a quick sale in case of an emergency debt closing. In some cases, the lender can meet the client by changing the standard conditions of the mortgage – instead of the acquired housing, they pledge to issue other property. This will avoid encumbrance in the right to dispose of the purchased housing with the possibility of selling it before the loan is repaid.
A number of requirements set forth in the law “On Mortgage” at the federal level are presented to a mortgage loan.
Collateral is not only a guarantee of repayment of funds to the creditor – in the event of the threat of bankruptcy and other financial difficulties, an organization can exercise its right to an object if certain conditions are met. The preliminary study of the provisions of the pledge document will allow avoiding the pitfalls and settling issues before the main transaction is executed.
Bank use options
Mortgage, signed in a single copy when you make a mortgage, remains with the bank until the complete closure of the debt. Despite the fact that this paper is not issued to the borrower, it is recommended to make a copy of the document, which is useful in case of disputes over the apartment when it is necessary to establish the legitimacy of certain actions of the parties. It is important to check the compliance of the conditions specified in the document with the content of the underlying mortgage agreement.
A signed mortgage on a mortgage gives the financial institution the right to use the property of the borrower without additional coordination of actions until the document on the collateral is in the bank, and the credit debt has not been paid in full. However, the possibility of disposing of the property may be limited by a basic mortgage agreement, if there are circumstances in which housing can not be resold or reissued.
Various financial institutions, including the largest mortgage banks of the federal level, such as Sberbank, Raiffeisenbank, VTB24, may apply the following options to the collateral object:
- partial sale;
- transfer of assignment rights;
- exchange of mortgages between banks;
- issue of securities.
Each of these methods needs to be studied in detail, and the choice is left to the discretion of the mortgagee, taking into account the mortgage parameters and features of the object (a new building or secondary housing has been acquired).
Assignment of rights
One of the options for debt repayment is to transfer the rights to the pledge to another bank. This practice is conducted by credit institutions without the consent of the client. When a mortgage is sold on a mortgage, the acquirer pays out the funds, which are then credited to the borrower’s credit account. For the client, the terms of repayment of the debt do not change, but the details of the transfer may change. After the assignment, the debtor’s rights are notified of the changes through the postal service or bank branch.
In the process of interaction with the new pledgee, difficulties are not excluded. For example, a new bank restricts the right to conduct certain operations due to the fact that it was not the primary creditor. For this reason, before applying for mortgages, they are interested in the position of a financial institution, choosing the most stable and reliable ones – Sberbank, Russian Agricultural Bank and other structures with many years of experience in housing lending.
Partial sale of collateral
When the bank needs to attract additional resources for a short period, the sale of part of the collateral is allowed. As a result, the bank acquires a certain amount for current operational needs.
The partial transfer scheme is based on the fact that a certain percentage of the monthly payment is transferred to the third party party who has acted as the buyer of the bank’s mortgage. Such obligations last until the full payment of the mortgage debt. The borrower may not even be aware that a partial assignment transaction has occurred between his bank and another financial structure, since the details of the payments do not change.
Issuance of issuing papers
In order to attract additional funds, the lender initiates the issuance of equity securities linked to a mortgage in a mortgage. This operation shares the liabilities with the subsequent sale of them to other organizations and individuals. On the borrower’s side, payments will be made to the bank details of the pledge holder, where the mortgage continues to be kept.
In contrast to the full sale of paper, in a mortgage exchange transaction, the difference is compensated. The procedure is applied by the lender when a minor amount is required. The exchange scheme looks like this:
- The bank must issue a mortgage on the mortgage.
- In the process of repaying the debt by the borrower, the credit institution exchanges the mortgage on the expensive object for the same paper on the cheap object with the payment of the difference.
Thus, the bank receives the required additional funds for current activities.
How to register a mortgage
Mortgage refers to the important documents regulating legal issues in relation to the object of the pledge, which requires special attention to the design. Since each bank establishes its own rules for how the mortgage is issued for an apartment, the specifics of the procedure are clarified with the employee of the department conducting the mortgage transaction.
The mortgage can be handwritten or printed, but the borrower’s handwritten signature is required. After signing the document you need to register and enter the number in the database. One should not blindly trust the text drawn up on the initiative of the credit institution, since after signing certain rights and obligations arise from both the bank and the borrower. Particular attention is paid to the correctness of writing personal information about the borrower and information about the lender.