Mortgage lending for the purchase of real estate is becoming an increasingly popular banking service. Considering the large amounts of funds raised and the duration of the contract, the legality and transparency of such a transaction plays an important role. The regulation of such relationships is devoted to the mortgage law, the key points of which will be discussed in this article.

Mortgage Law - Basic Provisions

A mortgage is not just a loan, but a pledge of property to obtain funds. The purchased property has encumbrances until the debt is repaid in full. In this way, the bank insures its risks of non-repayment of issued funds, the pledge guarantees that the parties fulfill their obligations.

The legal basis for the emergence of such relations between the client and the client is the mortgage law, the current version of 2020, which officially came into force in October 2015.

According to accepted standards, mortgage is recognized as a special type of relationship between citizens. Its terms establish that the collateral holder (which is the bank) has the primary right to recover its expenses.

In accordance with the law, the use of collateral can be of a different nature, namely:

• loan processing;
• contractual obligations;
• guarantee of compensation for harm.
• rights and obligations of the borrower

As stated in Federal Law 102 on real estate mortgages, the person providing the collateral can be either the borrower himself or a third party. This type of contractual relationship does not mean a change of owner; the right of ownership also remains with the person who provided the security. Thus, when purchasing a house or apartment using mortgage lending, subject to fulfillment of obligations under the agreement, the bank does not have the right to claim ownership or use of real estate.

The standard requirements are as follows:

• repayment of the principal amount within the established time frame;
• payment of accrued interest for the use of bank funds in accordance with the terms of the agreement on the provision of paid money;
• repayment of a fine or penalty in case of non-compliance with assumed obligations in the agreed manner;
• payment of all additional costs that may arise if it is necessary to interact with government agencies or courts;
• covering costs associated with the procedure for selling collateral.

The obligations of the parties, as well as their rights, are specified in the concluded agreement, which is recommended to be read carefully before signing.

Requirements for property that serves as collateral for a mortgage

The Federal Law on Real Estate Mortgage Separately addresses the issue of what kind of property is available for use as collateral when obtaining a loan. The following are indicated as suitable property objects:

• land plots of a certain size, taking into account one or another intended use (if we are talking about ownership at the municipal or federal level, then it is necessary to obtain permission from the authorized body);
• real estate of any form, including those intended for solving production problems of commercial activities;
• residential buildings and apartments;
• isolated parts of housing (one room or several);
• summer cottages, garages, garden buildings and others;
• vehicles for transportation by air or water of large dimensions;
• unfinished construction projects (subject to compliance with additional conditions in relation to the development site);
• lease rights, if the lessor expresses his consent;
• rights of equity participation in construction.

The property that is planned to be transferred as collateral must be either owned or under economic management rights. Note that the federal mortgage law also contains a list of objects that cannot be used as collateral. These include lands withdrawn from circulation; objects that should not be privately owned; collections and so on.

If we are talking about joint property, then in order to use it as collateral, the written consent of all legal rights holders is required. If there is shared ownership, then each of the shareholders can dispose of their part as they see fit, without the need to obtain consent from other owners. However, when alienating collateral, the latter have priority of acquisition.

Features of the mortgage loan agreement

Such civil relationships as a mortgage, by force of law, must be formalized in the prescribed manner by concluding an appropriate agreement by the parties. It should contain:

• complete information about the collateral;
• conditions for return of collateral – loan size, monthly payment amount, repayment period;
• rights and obligations of the parties.

The mortgage agreement is created in a single copy. After both parties to the transaction have signed it, it must be registered with Rosreestr. Compliance with all the conditions specified in the law is mandatory, since if they are violated, registration will not be completed, as a result of which the transaction will be declared invalid.

Bank loan offers for the purchase of real estate are regulated by Federal Law 102 on real estate mortgages. It is on its basis that the relationship between the lender and the borrower is built and determined. It defines the very concept of a mortgage, the documents necessary for registration, and options for collateral for real estate. Thanks to clear regulation by law, the consumer has become more protected in front of banking organizations, and the housing lending market itself has experienced unprecedented growth. Let us examine in more detail what exactly 102 Federal Law establishes.

Mortgage concept

The law defines a mortgage as a loan agreement, the collateral of which is real estate. This allows you to significantly reduce the risk for a financial institution in case of non-payment of debt. The borrower has the right to reside and dispose of his property, but with certain restrictions. For example, if you want to sell real estate, you must first obtain permission from the bank.

It is possible to obtain permission from the bank only if the apartment is forced to sell due to the impossibility of repaying the debt. It is worth noting that in this case, the bank will most likely take on the sale itself and return the difference to you, but you should not count on a large amount, since when selling, the bank is simply interested in returning its own funds.
The risk for the bank is also reduced by the fact that the borrower must make a down payment, the minimum amount of which in different banks and for different loan programs is 15-20%. Thus, if the bank has to sell the home due to non-payment of debt, it may even agree to a lower price.
After the mortgage is issued, the mortgage on the apartment remains with the bank, and after the debt is repaid and the encumbrance is removed, it is returned to the borrower. But until then, the bank has the right to dispose of this mortgage at its own discretion, for example, it can pledge it itself or sell it to another financial organization. This will not affect the borrower in any way and the terms of the loan will remain the same.

Two types of mortgage lending

Considering No. 102 of the Federal Law on mortgages as collateral for real estate, two methods of mortgage lending can be distinguished, which relate rather to the form of collateral:

• In the first case, the property you purchase will act as collateral. This option is suitable for borrowers. Who have a sufficient amount for a down payment.
• The second option is more risky, since existing real estate serves as collateral. In this case, a down payment is not required at all, but the cost of the purchased housing should be no more than 70-80% of the estimated value of the mortgaged property. This option is well suited for those who do not have money for a down payment, but have expensive housing, but in this case the risk is significantly higher, since the loss in case of repossession will be higher.

For what purpose is a mortgage issued?

As stated above, a mortgage is issued for the purchase of housing secured by existing or purchased real estate. But what exactly can you buy? The borrower can choose between ready-made apartments on the secondary or primary market, housing under construction, a plot of land with a ready-made object, or for further construction of a dacha or house, you can take out a mortgage to purchase a townhouse.

However, it is worth remembering that different programs provide for different real estate objects. This is especially worth paying attention to if you want to take out a mortgage under a preferential program, for example, a mortgage with government support only provides for the purchase of housing in new buildings that were built with government funding.

Mandatory insurance when obtaining a mortgage

Typically banks require compulsory insurance, such as:

• Borrower's life insurance.
• Insurance on property serving as collateral.
• They may also require you to insure your title to the property.

In the terms of lending, various banks clearly indicate that if you refuse to renew, the interest rate will be increased, it is worth remembering, since usually the increase is 2.5% per annum, which can amount to an impressive amount.

The nuances of signing a mortgage loan agreement

After receiving a positive decision and choosing an apartment, you must sign a loan agreement, which should include the following points:

• At the beginning, information about the object of the contract is indicated. We are talking about purchased real estate.
• Further, according to the appraiser's report, the value of the object is indicated.
• Naturally, the contract must contain information about the loan amount, repayment terms, as well as the calculation of monthly payments until full repayment.
• And finally, the point about ownership.

Pledge of real estate when applying for a mortgage

The law regulates the mortgage and determines the guarantor. 102 of the Federal Law on mortgages as collateral for real estate clearly establishes that the acquired or existing real estate serves as collateral. Moreover, the objects can be varied, including even sea vessels, which are not real estate, as well as industrial buildings.

In any case, the bank does not risk anything, since the down payment, as well as the fact that the mortgaged property must be more expensive than the purchased one, guarantees the bank a return of its money and even a profit. Of course, you can avoid foreclosure and contact the bank for the sale of the mortgaged property. In this case, it will be possible to return part of the funds paid.

Mortgage tax

Notarization of transactions

Limitation of mortgage penalties

A mortgage is one of the types of long-term bank lending. Thanks to this loan, you can purchase residential and non-residential properties. The state carefully monitors the activities of lenders in the real estate sector, therefore mortgages are regulated by the Federal Law “On Mortgage (Pledge of Real Estate)” No. 102-FZ. Often this law is finalized and amendments are made to it. In addition, tax legislation and the rules of State Real Estate Registration are changing. Special programs are being created for certain categories of citizens and lending conditions are being expanded. Therefore, so that you know what to look for when getting a mortgage in 2016, we will tell you about the most important changes in the law on mortgages and related amendments in other areas.

Tax deduction for mortgage. One of the first innovations in 2016 was that from January 1, 2016, the rules for taxation of personal income received from the sale of real estate changed. Having previously purchased real estate, you did not pay tax on its subsequent sale if it was in your ownership for more than three years. Currently, the minimum period of ownership of real estate for which the seller is not subject to tax upon sale is 5 years. This change applies only to real estate purchased from January 1, 2016.

But there are also exceptions. Property that was received into ownership by inheritance, a gift agreement from close relatives, as well as as a result of the transfer of property to the payer under rent or under a lifelong maintenance agreement with a dependent - for these cases, the period of ownership of real estate, after which the tax will not be paid when selling the property, is , as before, only 3 years.

How does this change affect the mortgage market? First of all, this makes it difficult to choose an apartment, because many sellers do not want to pay the tax and will wait for the specified period to expire or ask you to pay an additional tax amount separately to the cost of the apartment. And if a new building is sold with a fresh certificate of ownership, then the total waiting period for the seller will become even longer. After all, at first he waited a year or two for the house to be built, and now another five years from the date of registration of the right.

Previously, it was possible to avoid tax by “understating” the value of real estate in the purchase and sale agreement. Now this is impossible.

Tax on the sale of real estate in 2016 is now calculated either from the contract price or from the cadastral value of the property (with a reduction factor), depending on which price is higher. A state cadastral valuation was carried out specifically for these purposes and it is practically equal to the market value of the property.

If the amount in the contract is greater than the cadastral value, then the tax will be 13% minus 1,000,000 rubles (tax deduction) or minus expenses for the previous transaction, at the choice of the seller. For example:

The cost in the DCT is 5,000,000 rubles and it is higher than the cadastral value.
Tax is calculated:
1. From 5,000,000 minus 1,000,000 (tax deduction) = 4,000,0000.
The tax will be 13% of 4,000,000, that is, 520,000 rubles.
2. If the apartment was purchased for say 3,500,000 rubles before, then:
From 5,000,000 minus 3,500,000 (previous consumption) = 1,500,000
The tax will be 13% of 1,500,000, that is, 195,000 rubles.

If in the contract you indicate an amount less than the value of the property according to the cadastral extract, then the tax will be calculated from the cadastral value multiplied by a reduction factor of 0.7. The tax will be 13% minus 1,000,000 rubles (tax deduction) or minus expenses for the previous transaction, at the choice of the seller. For example:

The cost in the monetary contract is 1,000,000 rubles and it is lower than the cadastral value (understatement).
The cadastral value is 6,000,000 rubles.
1. The tax is calculated from 6,000,000 multiplied by 0.7 = 4,200,000
Minus tax deduction 1,000,000 = 3,200,000
The tax will be 13% of 3,200,000, that is, 416,000 rubles.
2. If the apartment was previously purchased, say, for 3,500,000 rubles, then:
The tax is calculated from 6,000,000 multiplied by 0.7 = 4,200,000
4,200,000 minus 3,500,000 (previous consumption) = 700,000
The tax will be 13% of 700,000 rubles, that is, 91,000 rubles.

Essentially, the tax office calculates the amount from 70% of the cadastral value of housing, and also allows you to use 1,000,000 rubles as a tax deduction or deduct previous expenses. Therefore, at the moment it makes no sense to indicate the value in the purchase and sale agreement as less than 70% of the cadastral value.

Limitation of mortgage penalties. Another important change in the mortgage law was the adoption in June 2016 by the State Duma of a law limiting the maximum amount of penalties under mortgage agreements if the terms of the agreement are violated. Now the amount of the penalty under a mortgage loan agreement will not exceed the key rate established by the Central Bank of Russia on the day the loan agreement is concluded. If interest is not accrued under the loan agreement, the amount of the penalty should not exceed 0.6% of the amount of overdue debt for each day of violation of the terms of the loan agreement. Previously, banks themselves set the amount of the penalty and it happened that people who found themselves in a difficult situation ended up owing the bank amounts that far exceeded the original loan and interest on it.

Notarization of real estate transactions. In 2016, a law also came into force stating that all transactions for the alienation of real estate in common ownership are subject to notarization. Federal Law 172 regulates the notarization of all transactions with shares of real estate, even if all property owners are parties to the transaction. This service from a notary is not cheap; its cost consists of a set percentage of the sale price of real estate, plus a set tariff and related expenses.
That is, if you have not one seller, but several (husband and wife, relatives, etc.), then you can no longer conclude a purchase and sale agreement in simple written form at the bank. Be sure to go to a notary and conduct the transaction with him according to his form. Of course, this negatively affects the mortgage market. Firstly, it extends the time it takes to enter into a deal. Not every notary has the authority to certify such a transaction; this can only be done by a notary located territorially at the address of the property. First you need to find him and make an appointment. Next, the bank and the notary need to agree on an acceptable form of the agreement so that the wishes of the bank, notary, seller and buyer are taken into account. And this most often also takes several days. Secondly, these are additional costs (about 25,000 rubles), which will most likely fall on the buyer’s shoulders, because Sellers operate on the principle of “you buy, you pay.”

A military mortgage will not appear on your credit history. In the summer of 2016, the Ministry of Defense prepared a legislative initiative stating that data on military personnel who took out a “Military Mortgage” should be removed from their credit history. This legislative initiative was caused by the fact that military personnel do not participate in loan repayments, since Rosvoenipoteka does this for them. If this bill is passed, then data on “Military Mortgage” will no longer be transmitted to the credit bureaus. If this information has already been previously entered into the credit history, then any military personnel will be able to write an application demanding that the military mortgage be excluded from it.
These changes in mortgage legislation and related areas affect the mortgage market both positively and negatively. Some of them may still undergo modifications and become better. One way or another, all of them should be taken into account when applying for a mortgage. We hope that our article about changes in the law on mortgages in 2016 will help you

The new mortgage law was eagerly awaited by those who plan to take out a mortgage loan in 2017. What updates have been adopted in the law for the current year, and what forecast for mortgage rates can we expect?

Federal Mortgage Law No. 102 was adopted in 1998. It includes fourteen chapters and seventy-nine articles regulating the acquisition of real estate on the territory of the Russian Federation. Brief content of the Federal Law “On Mortgage (Pledge of Real Estate)”, N 102-FZ dated July 16, 1998:

• In Chapter 1, the law establishes the general provisions of the law, defines the requirements and obligations, the type of mortgaged object;
• From chapters 2 to 4, establishes regulations on mortgage agreements and mortgages, as well as state registration;
• In chapters 5-6, the law regulates the safety of mortgaged property, the right to transfer rights to the mortgage to third parties;
• Chapter 7 and 8 basis for subsequent pledge and assignment of obligations under the mortgage contract
• Chapters 9 to 10 establish provisions for penalties on mortgaged property and its sale;
• From Chapters 11 to 13, the procedure for mortgaging land plots, non-residential real estate, companies, mortgages of apartments and private living space is regulated;
• The last chapter includes the final provisions of Federal Law-102.

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The Federal Law on Mortgages establishes a system of lending as collateral for real estate and agricultural plots on the territory of the Russian Federation. Federal Law - 102 consists of 14 chapters and 79 articles. Starting in July 2017, significant innovations were introduced aimed at changing the subjects of the pledge agreement, simplifying state registration, etc.

You can download the Federal Law on Mortgage and Pledge of Real Estate at

Last changes

Since this year, amendments to Federal Law 102 on mortgages and pledge of real estate have been in force. Now parking spaces are also the subject of a mortgage agreement. (Article 5, paragraph 1, paragraph 6). Starting in January, the requirement to register a mortgage agreement has been amended. Now it is registered if required by Federal Law. Points on deadlines, registration regulations, mortgage confirmation, refusal of registration and its suspension were crossed out. New regulations and deadlines were approved in 2015.

Provisions in the law, paragraph 1, art. 22, which included information about the mortgage registration record, are no longer valid. From Article 25 of the law, paragraph 3, the section with reference to Federal Law-310 has been deleted, since it has lost its relevance. Starting from 01/01/2017, Articles 27 and 28, which establish the rules for challenging the activities of state registration of mortgages, and the responsibility of the registration authority for the pledge of property, do not apply.

In the updated amendment to the law, the name of the body for state registration of rights has changed; it is now called the “authority for registration of rights. Another change concerns the replacement of the words from “Unified State Register of Rights to Real Estate and Transactions with It” to “Unified State Register of Real Estate”.

In Art. 19, 20,25 and 55 include footnotes to Federal Law No. 218, in force since January of this year on state accounting of real estate. At the same time, the location of the state registration authority for the pledge is not indicated.

Interest rates for government-backed mortgages have been changed to only 9-11.4 per annum. According to the new law, collection from debtors for late mortgage payments will be within the limits of the Central Bank interest rate.

On July 1, 2017, a new version of the law came into force, adding Art. 20. paragraph 2. The new paragraph approves the legal procedure for municipal registration of a mortgage on real estate for residents of the capital region of the Russian Federation (Moscow), simultaneously with the registration of the right to residential premises without a petition on the basis of a contract for the transfer of the right to mortgaged housing or on the basis of a court decision on forced concluding a mortgage contract. The order of priority for mortgagees is regulated on the basis of information from the Unified State Register of Real Estate on state registration of real estate in apartment buildings participating in the Moscow housing stock renewal program.

The Law on Mortgage Lending was supplemented by Art. 41.1 out of 8 points regarding the renovation of the housing stock of the capital of the Russian Federation.

Point one - Signing an act on the transfer of ownership rights to living space in an apartment building, with a requirement to provide equivalent living space, issuing a court decision on state registration of the transfer of ownership rights to living space - the basis for providing other housing on a mortgage without the approval of the mortgagee and mortgagor. In relation to residential real estate provided in exchange, the terms of the old mortgage agreement remain unchanged.

Paragraph two - when replacing the object of collateral, it does not provide for a change in the obligations of the parties regarding the subject of the agreement involved in the renovation of the housing stock of the capital of the Russian Federation

Paragraph three - The valuation of housing issued with a mortgage is regulated by agreement between the mortgagor and the mortgagee, according to the assessment of the premises or on the basis of a monetary value approved by an assessment act or on the basis of a cadastral price.

Point four - When receiving a mortgage secured by another home, the insured home becomes the object of collateral.

Point five - The insurer must be notified by the pledge holder in writing that the collateral has been changed. The insurer gives the mortgagee an insurance certificate for the property that was pledged under the mortgage contract, with conditions similar to the old insurance contract, and provides the policy with his signature. at the address of the insured premises. The policyholder does not have to sign the policy or insurance certificate.

Paragraph six - Determines the amount of insurance payments in the event of incidents of property damage, according to the limits of the amount of insurance, without taking into account the ratio of the amount of insurance and the insured value.

Paragraph seven - If the pledgee confirms his rights under the mortgage, if the object of the pledge is replaced, then the information about the subject of the agreement is changed in the act. The monetary estimated price of living space indicated by insurers can be replaced by the cadastral price of living space. The updated mark in the Unified State Register of Real Estate is made by the body for recording the rights of ownership of living space. The mark is entered at the request of the mortgage holder. The owner is required to present the application and mortgage in the original. An agreement between the mortgage debtor, the mortgagor and the mortgage holder to adjust the marks in the document is not necessary.

Paragraph eight - Adjustment of the mortgage according to the law occurs through the attachment to it of a separate act with the adjustments made, indicating the body that records the rights in the document, stating that the attached attachment is an inseparable part of the document. An entry on the document about the entered adjustments is made by an employee of the registration authority, signed by him and supported by the stamp of the organization. The procedure is free of charge.

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