Mortgage for the purchase of a house with land - the best offers from banks 2020

A mortgage to purchase land is a profitable investment.

Whether you are planning to build a house or a country cottage, or develop your own production, you need a place for such activities.

The reality is that not everyone can save the necessary amount to purchase a plot of land.

What to do?

The solution is simple - go to the bank to get a mortgage.

Today we will analyze the main nuances of the procedure for obtaining a mortgage, making it more understandable and accessible.

Conditions of banks providing mortgages on land

Each banking institution has its own requirements, but they are generally similar and have almost the same procedure.

The identity of the borrower is verified, and the collateral must meet certain criteria.

Requirements for the collateral

Until you pay off the entire mortgage amount, the bank will hold the land as collateral and security for its repayment.

Although you are actually the owner and user of the site, but only with the fulfillment of the condition of regular payments.

When issuing a loan, the bank considers the land plot according to certain criteria:

The seller's ownership is verified and supported by the necessary evidence. This is not only in the interests of the bank, but also in your own, in order to protect the buyer from scammers.
The site must be located in favorable location conditions - transport links, water supply and electricity. This makes it usable.
The site should not belong to protected lands, water or forest environmental funds.
Close location to the selected bank and its branches.
Mortgages are not issued for plots with a small area ( up to 5 acres).

As you can see, all these requirements protect not only banks, but also mortgage participants.

Documents for applying for a mortgage on a plot

If you need a loan to buy an empty plot of land, without a house or foundation, you will need to collect a lot of documents. Among them are:

Certificate of ownership or extract from the Unified State Register of Individual Entrepreneurs. Documents must be certified by a notary.
Extract from the cadastral chamber. It is provided in the original. If there are buildings on the site, they must be displayed on the cadastral plan.

See this same topic: How to pay off the down payment on a mortgage with maternity capital?

To approve a mortgage application, the standard document is a 2-NDFL certificate. The loan amount is determined depending on the market price of the land plot. Before collecting documents, it is recommended to check their list with the institution where you are going to take out a mortgage.

The verification of the provided documents may take about a week. A pledge agreement is concluded simultaneously with the mortgage agreement.

Land pledge agreement

As one of the essential conditions, the contract stipulates the obligation to develop the land. Banks do not have the right to demand actions from the owner for development, but they are obliged to provide for it.

An equally important condition of the pledge agreement is the identification of the land. Some settlements provide rules that contain the obligation to assign addresses if plots are allocated for construction.

Which banks provide mortgages on land?

A considerable number of banking organizations work with mortgages. You can obtain borrowed funds to purchase land from the following banks:

Rosselkhozbank;
VTB 24;
Sberbank;
DeltaCredit.

Other banks also issue mortgage loans to the population. Their requirements for applicants are not much different. Mortgage loans are issued at 11-17%, the amount can be from two hundred thousand to several million. As an option. You can consider a consumer loan or non-targeted mortgage loans.

Mortgage on land

Banks try to enter into the client’s position and provide the most favorable and attractive mortgage conditions possible.

There is an opportunity to waive the down payment or lower the interest rate, as well as earn increased trust from the bank in order to definitely get a mortgage.

Useful video:

Mortgage without down payment

What should people do who have no savings at all?

Some banks offer to waive the down payment and pay the mortgage amount, seemingly on such favorable terms.

This is a very tempting offer, but banks are also playing it safe and require additional conditions to be met in exchange for the down payment on the mortgage.

This may be a deposit secured by real estate already owned by the client (which is fully capable of covering the cost of the mortgage and interest on it).

Rosselkhozbank practices the option of increasing the interest rate several times, in exchange for the down payment, or reducing the period for which the mortgage is issued.

It is possible that the first mortgage payment is paid by the state or another entity or is guaranteed by a valuable document or certificate.

Read about how and where to get a mortgage without a down payment in this article.
It will also be useful to familiarize yourself with mortgages without a down payment at VTB 24.

Mortgage secured

This type of mortgage has been proven over the years, as it has been used for a long time.

The bottom line is that existing real estate (most often an apartment or a house) acts as collateral when issuing a mortgage on a land plot.

You can learn more about mortgages secured by existing real estate here.

Banks offer the option of reducing the interest rate on the collateral or canceling the down payment.

Moreover, such clients have a greater chance of getting a mortgage, since they are considered more creditworthy by the bank.

The collateral must meet the established requirements (an apartment built no earlier than 1950, with all amenities, a house in good condition, and so on).

In total, you will have both the apartment and the purchased land as collateral, which cannot but be called risky.

Therefore, evaluate your chances, but the banks’ offer is favorable.

What are the conditions for obtaining a mortgage on a plot of land?

Among the banks that agree to issue such loans are Rosselkhozbank, Sberbank, Rosevrobank, VTB24 and others. Such organizations are more likely to provide loans for the purchase of real estate from companies with which they have established partnerships.

Sberbank offers the most favorable conditions. Interest rates here are minimal, the loan is given for a period of 10 years, the down payment starts from 50% of the cost of the property. Offer options may vary. They change the loan term, interest rate, and the amount of the down payment.

Whether a particular borrower will be able to receive a loan will be decided by the bank, depending on the information specified in the documents. Based on them, convenient conditions are selected for issuing a loan for the purchase of a plot. To approve your loan application, you should be more careful in completing the required documents.

Property valuation

The mortgage agreement with collateral must specify the amount for which the borrower’s property is valued (most often this is an apartment or house).

Moreover, the responsibility for such an assessment lies with the client himself, and the bank only provides a list of recommended appraisers.

They must have a certificate and insurance policy, and also enjoy the trust of the bank.

An on-site specialist evaluates a lot of details and characteristics relating to the apartment - layout, area and even location.

The future profitability and cost of housing and the condition of the apartment are also taken into account.

An appraiser will be held criminally liable for an incorrect amount intentionally stated in a report to prevent the issuance of mortgages for larger amounts than the client could pay.

Insurance when taking out a mortgage on a land plot

Typically, banks ask to purchase a policy that protects life and health, as well as the title of the borrower. The site itself is also subject to insurance. It is protected from loss or damage. Typically, a mortgage insurance policy includes the following risks:

fire;
negative impact of natural disasters;
influence of repair and construction pollution;
crash of aircraft or damage to the site as a result of collision with vehicles.

Attention
In accordance with the provisions of Article 31 of Federal Law No. 102 of July 16, 1998, the property must be protected from loss or damage. All other types of mortgage insurance are not mandatory. However, their use increases the likelihood of a positive decision on the part of the financial institution.

Bank offers

Each bank has its own conditions, but they are basically similar. Let's look at what the most trusted banks offer us.

Sberbank

Sberbank offers simplified schemes for obtaining mortgages for privileged categories of the population, as well as a completely minimal package of documents.

If you want to repay the mortgage amount early, you will not need to pay additional interest, as in some banks.

Also, insurance of the object is optional.

The table shows the main conditions of Sberbank:

Amount of credit	Interest rate	Credit term	An initial fee
from 300,000 rubles	from 12% in rubles	up to 30 years old	from 25%

VTB 24

VTB 24 sets a higher down payment of 20% on a mortgage, and a prerequisite is the development of the property being purchased at the time of loan repayment.

However, interest rates are offered from 10% and mortgage terms of up to 50 years.

Video on the topic:

Rosselkhozbank

Rosselkhozbank takes into account the individual characteristics of each situation.

Down payment 15%, loan for up to 30 years and interest rate from 13.5%.

Alfa Bank

Alfa Bank issues consumer loans primarily for home construction.

The interest rate varies from 14%, and the loan term is up to 30 years.

The procedure for obtaining a mortgage on a land plot

To speed up the process of obtaining a mortgage on a land plot, it is better to proceed according to the following scheme:

Study in detail the offers of financial organizations and choose the most suitable one. It is better to analyze the data in aggregate. This way, the borrower will be able to choose a company that lends money on the most favorable terms.
Submit an application to the election campaign. The bank will analyze the borrower's request and communicate a decision. The process of studying the application takes from 2 to 5 days.
If the answer is yes, collect a package of documentation and submit it to the bank. The financial institution will check the papers for errors and discrepancies between the information and the data specified in the application. If no inaccuracies are identified, the borrower will be given from 30 to 90 days to select real estate and complete the transaction.
Select a plot of land and offer the property owner to sell the property with a mortgage. If the owner agrees, an assessment must be initiated. When the procedure is completed, you have to collect documents for the land and submit them to the bank.
Financial institution specialists will analyze the papers. If no inaccuracies are identified, a bank representative will personally visit the site and inspect it. If the property truly meets all the established requirements, a loan agreement will be concluded with the client.
Re-register the premises, take out insurance and a mortgage. The last document must be submitted to the bank. Here the paper will be stored until full settlement with the financial institution.
Wait until the money is transferred to the seller.

Which bank to choose?

Based on the above, it is worth paying attention to VTB 24, which offers more favorable interest rates and repayment terms, as well as a special approach to servicing clients with benefits.

Which bank to choose is up to you, but you should base it on the mortgage amount you require and whether the bank issues loans of that size; term of the mortgage.

It is also worth considering replacing the down payment with a deposit.

The fact that bank branches are located from your home is also important, because it is quite inconvenient to travel far every time your personal presence at the bank is required.

Conditions for granting a mortgage on a land plot

Whether it is possible to take out a mortgage on a plot of land is decided by the bank. It is he who sets the conditions for issuing a loan for the acquisition of land. To increase your chances of success, you should pay increased attention to certain aspects of the issue.

Requirements for the collateral

Loan security is an important point. In this case, the purchased plot of land serves as collateral. At the same time, its liquidity should be taken into account. The estimated value of an allotment is determined by a number of factors.

Land is a very specific type of collateral. For this reason, financial institutions set fairly stringent requirements for it.

A mortgage for the purchase of a land plot can be issued provided that the property meets the following requirements:

The allotment must be included in the list of lands of the settlement that can be used for private housing construction. Banking organizations do not like to work with other types of land plots due to the difficulty of monitoring the legality of their seizure. A mortgage on a plot of land for individual housing construction is the best option.
The location of the land is also of great importance. Financial institutions clearly record the maximum permissible distance of an allotment from the city - within 100 kilometers. Some banks have an even lower bar - about 30 kilometers.
The site should not be located in a reserve, environmental protection zone, otherwise you risk not getting a loan.
A serious advantage will be the availability of utilities on the territory: sewerage, electricity, gas and water.
It is desirable that the plot area be at least 6 acres and there is a road along which you can get to the plot throughout the year. You should not rely on borrowed funds if you plan to purchase a plot of more than 50 acres. Good transport links will be an additional advantage when applying for a loan.

Step-by-step mortgage application

The procedure for concluding a mortgage agreement for the purchase of a land plot is somewhat different from the registration of ordinary consumer loans.

There are several stages in this procedure.

We collect the necessary documents

The seller is required to:

A copy of the certificate of ownership;
Cadastral passport;
Consent of one of the spouses to the sale.

It is the buyer's responsibility to conduct an appraisal.

Both parties provide identification documents and a power of attorney, if required, as standard.

Each bank may require additional documents, which should be inquired about in advance.

It is also necessary to fill out an application in the established form for obtaining a mortgage loan.

We draw up a mortgage agreement

After all documents have been prepared and verified by the bank, a mortgage agreement is concluded.

It contains all the data about the land plot (size, cost), loan amount and loan repayment schedule, down payment.

Read about what the down payment on a mortgage is like here.

Additionally, there may be inflation rates or other fine print conditions that should be considered very carefully.

Ownership rights arise after state registration and issuance of a certificate.

Some nuances and shortcomings

The legislative framework on this issue is imperfect, so there are certain loopholes that scammers take advantage of, and they confuse ordinary people.

Remember that all buildings, and the land itself, are in the conditional possession of the bank, that is, under collateral until you pay off the entire mortgage amount.

It is not necessary to inform the lender about the type of construction; his interest and rights in this begin from the moment when payments stop for any reason and the bank is forced to apply sanctions.

You can use the purchased plot for building a house, gardening or farming.

It’s up to you to decide whether to use the right to mortgage or not, but this advantageous offer from banks is definitely worth thinking about.

Requirements for the collateral

A very important point when applying for a loan is the possibility of securing collateral. When taking a mortgage to purchase a plot of land, it will serve as collateral. You will also need to take into account its liquidity. What the appraised value of the land is will be determined depending on several factors.

Land plots have lower liquidity than apartments. Therefore, banks need to obtain confirmation that the property will be able to attract buyers in case of problems with loan repayments.

The following indicators are assessed:

How far is the land from populated areas;
Ease of travel for transport;
Are the soils on the site fertile?
How far are the garbage and waste collection points located?
The site must be registered in the city cadastre;
Infrastructure development;
The allotment should not be under arrest or leased;
Reliability of documents and information contained in them;
Many banks make it a mandatory requirement that the plot of land purchased with a mortgage be located near one of their branches.

Look at the same topic: What documents are needed to pay off a mortgage with maternity capital in [y] year?

Consumer Reviews

Olga, 29 years old: “My husband and I are young entrepreneurs who do not have much savings, since we invest all the money we earn in business. We were thinking about buying a plot of land, but there wasn’t enough for the down payment. Sberbank consultants offered a housing deposit instead of a down payment. This is what saved us! We mortgaged our own apartment without fear of losing it, because we will pay for the mortgage from business income. Now I know that loans without a down payment exist, and we have the land for construction that we so dreamed of!”

Valentin, 37 years old: “I decided to buy a plot of land for my mother in order to build a dacha there, where she could relax with her grandchildren, digging in the garden. The amount of the down payment of 15% on the mortgage, established by Rosselkhozbank, turned out to be quite affordable. The employees took into account all my wishes and drew up an agreement with acceptable terms. Mom is happy and is trying to guide the builders who have already started work.”

Stepan, 30 years old: “I would like to thank the Sberbank employees for their efficiency in drawing up the agreement - literally in half a day we completed all the procedures, and this was on the eve of the holidays. I took out a mortgage for 20 years, and the first payment was maternity capital. Now we have land for construction and development!”

Subtleties of the procedure for obtaining a mortgage on a land plot

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How to obtain a mortgage on a plot of land

A mortgage on a house with a plot of land or simply on a plot of land can be issued with the involvement of a significant number of necessary documents. The process of collecting them is very labor-intensive.

First of all, you need to know that the Land Code of the Russian Federation regulates situations in which land plots can be sold using a mortgage. It is prohibited to pledge state or municipal land in a mortgage agreement. The minimum size of land is also taken into account, which is established in accordance with the regulations of the constituent entities of the Russian Federation and local governments. Dimensions may vary depending on the purpose of the land and are regulated in accordance with Article 33 of the Land Code of the Russian Federation.