вторник, 22 декабря 2015 г.
Decades, not years
When taking the decision to apply for a mortgage, the
first thing to assess is one’s own financial strength. A maximum of prudence
should be used, as mortgages are serviced over decades.
However, according to the Head of Mortgage and
Consumer Lending at SMP Bank, Natalia Konyakhina, the loan’s term can be
determined by the borrower himself. “Basically, people take out a mortgage for
10 to 15 years and repay within 5 to 7 years”, she says. “The longer the term,
the greater the interest premium paid to the bank, warns Dmitry Leus from
. “If income allows it, I advise early mortgage repayment”.
When making a decision about buying a property with a
mortgage, it is important not to be frightened. In fact, for most people
mortgages are the only way to turn into home owners, without having to save up
for years (and see these savings finally eroded by inflation). According to Dmitry
Leus, mortgages are a time-tested, relatively comfortable, streamlined, and
affordable tool to solve the housing question.
On the other hand, it would be misguided to take
mortgages lightly. Repayment is mandatory and must be made on a regular basis,
unless your home be repossessed. Accordingly, it is necessary to calculate what
portion of family income can comfortably be spent on repayment - without living
on bread and water.
What it takes
While deciding on a mortgage, it is not only the
borrower who assesses his financial capacities. So does the bank...
“The borrower must have a stable job”, argues Natalia
Konyakhina. It is a good sign if the borrower already owns an
apartment, a secondary residence, a car, or any other assets of value. Equally
important is a positive credit history”.
“An official proof of income is an icebreaker for most
banks”, says Dmitry Leus. “However, even the existence of historical
income figures as, for example, evidenced in an applicant’s official tax
declaration, cannot guarantee that such income will always be available over
the mortgage’s life”. Therefore banks are more and more often using internal
questionnaires to document the income history of their potential clients. As a
consequence, interest rates may be slightly higher.
The average borrower’s age is between 27 and 45, but
the range may be wider. “Our applicants tend to be between 21 and 60 years
old”, says Dmitry Leus.
Better not bet
Another important aspect worth consideration is the
loan currency. “It is better to take out a mortgage in the currency of the
borrower’s income, in order to avoid increased mortgage costs due to exchange
rate fluctuations”, says Natalya Konyakhina.
“For borrowers with income in Russian roubles, the
mortgage should, of course, only be taken in roubles”, agrees Sergey
Arzyantsev. “It is nonsense to take a mortgage loan denominated in
dollars/euros, thereby entering into a bet on whether the dollar/euro currency
pair will weaken against the rouble”. “If the borrower's main income is in
roubles, the mortgage should definitely be in roubles too”, confirms DmitryLeus from . “This will at least help avoid taking an unnecessary currency
risk”. According to Dmitry Leus, it is important not to be naive about
floating rate mortgage proposals, which are normally linked to such instruments
as the MosPrime (Moscow Prime Offered Rate), or the Libor (London Interbank
Offered Rate), or to the Central Bank’s own refinancing rate“. I am very
cautious with regard to this option”, says Dmitry Leus. “Interest rates
can only go up right now and, in general, when it comes to mortgages, exchange
rate uncertainty is an undesirable additional burden for the borrower”.
On the other hand, by making a simple calculation, one
can see that floating rate offers can look quite attractive. For example, one
bank offers 9.75% for the first five years, and 4.5% above MosPrime (today at
6.64%) during the remaining years.
