How to cash out a military mortgage? This question is asked by both old-timers and new recruits who have just received the prerogative of using a mortgage loan. Clause 8 of Art. 5 Federal Law “On the savings-mortgage system of housing support for military personnel” dated August 20, 2004 N 117-FZ (latest edition) states that funds for housing support for NIS service members are allocated by the officially operating Russian structure of the authorized body responsible for the functioning of the system - FGKU “Rosvoenipoteka”.
Military Relocation experts provide assistance to military personnel who want to take advantage of the right to receive subsidized housing. We are approached not only by those who do not know how to get a military mortgage, but also by those military personnel who have decided not to take out mortgage loans for military personnel, but to use the funds collected and receive them in their personal open bank account in cash equivalent.
How to withdraw savings on a military mortgage
The legislative framework allows a soldier who is a member of the NIS to use the collected funds only after receiving a legal decision to spend money savings. This right is stated in Article 10 of the Federal Law “On the savings and mortgage system of housing for military personnel” dated August 20, 2004 N 117-FZ (latest edition).
Military mortgage, when you can withdraw the accumulated funds:
- If the military man has served in the service for 20 years or more. He has the right to cash out the money and, moreover, to spend it at his own discretion, and not just on purchasing residential premises.
- If a serviceman’s service is 10 years or more, and the person, for reasons beyond his control, was unable to reach 20 years of service—dismissal due to military service, being declared partially unfit, or reaching the age limit—then he can withdraw the accumulated funds.
- Recognition of the Military Military Commission as unfit for further military service due to deteriorating health.
- The exclusion of a soldier who is a member of the NIS from the ranks of military personnel due to his long unknown absence or tragic death.
Read more in the article: How to cash out a military mortgage
In all of the above situations, the employee can receive money from a military mortgage in cash. How to withdraw the savings portion of a military mortgage? To do this, he needs to submit a report, visit a banking institution, present the necessary documentation and withdraw funds from the deposit.
Military mortgage in 2020: only those who have served 10 years will be allowed to withdraw savings
The military mortgage program is facing changes. By the end of 2019, it is planned to adopt amendments to the law “On the savings-mortgage system (NIS) of housing for military personnel,” according to which contract soldiers will be able to withdraw their savings only after 10 years of service.
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“The bill provides that savings funds for housing under a targeted housing loan agreement will be provided to a military personnel upon reaching ten years of total military service, similar to the standards established by the Federal Law “On the Status of Military Personnel,” says the draft amendments published on the Federal portal draft regulatory legal acts.
The changes should come into force by the end of 2020. The rationale for their need is “to ensure a balance of federal budget expenditures allocated to provide NIS participants with living quarters depending on the duration of their military service.”
According to a Mil.Press Estate source in the field of housing for military personnel, the changes will be painless for contract soldiers. “Many participants in the savings-mortgage system already have 10 years of service.
If this is an officer, then five years of study and three mandatory years of participation in the NIS already provide close to the required duration of service,” the editorial interlocutor explained, adding that the bill will protect military personnel, who are now required to return their military service in case of dismissal before reaching “ten calendars.” mortgage in full.
General Director of the real estate agency "Capital of Apartments" Vladimir Chmelenko believes that information about the upcoming amendments could provoke a surge in the purchasing power of military personnel in 2020. “Based on the negative experience of fellow soldiers who took out a military mortgage at the start of the program, many military personnel went into standby mode several years ago. In 2018, interest rates went down, refinancing began to work, and real estate began to rise in price. All these factors, together with the amendments, may lead to the fact that in 2020 military personnel will want to exercise their right to purchase housing,” he said in a conversation with Mil.Press Estate.
According to Vladimir Chmelenko, the main reason for changing the legislation is the lack of funds for the implementation of the program. But there is one more reason.
The expert recalled that one of the goals of creating the NIS was to encourage military personnel to remain in service as long as possible. “If a serviceman has the opportunity to receive money only after 10 years, then he is guaranteed to serve for these 10 years,” explained Vladimir Chmelenko.
Now, according to official data from Rosvoenipoteka, there are 480 thousand people on the lists of NIS participants. Of these, 220 thousand have already purchased housing. The amount of the annual savings contribution in 2019 is 280 thousand rubles. For comparison, in 2020 it was 268.4 thousand rubles.
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When is the best time to take out a military mortgage?
Initially, when a recruit enters the army, he begins to participate in the NIS savings system. Then, after serving for three years, he has the prerogative of obtaining a mortgage. Then he has the right to submit a Report for inclusion in the register of participants in the savings and mortgage housing system for military personnel of the Armed Forces of the Russian Federation. He will be given a document containing information about the savings on the individual deposit. Subsequently, the serviceman receives a housing certificate, which can be used to purchase an apartment. However, the employee has an alternative in obtaining a credit loan. Namely, that he can apply for it at any time after three years of service.
When is the best time to do this?
- When registering immediately after 3 years, the risk is quite high that you will not reach the age of 20, and then there may be negative consequences in the form of debt obligations, both to the state and to the banking organization.
- Having served less than a decade and resigning of his own free will, the employee undertakes to return all funds spent on him from the state budget for a military mortgage. And also pay the remaining amount of the loan yourself.
- Having taken out a mortgage loan, for example, in the 11th year of service, but in the end, not having reached the long-awaited length of service due to circumstances beyond your control, the state subsidy remains with you, and you do not owe anything to the state itself. However, if the amount of real estate purchased exceeded state support, and you took out a loan, then you pay the balance personally.
- When your service life approaches the 20th anniversary, and you decide to take out a military mortgage, then your risks are absent.
Thus, taking out a mortgage is least risky closer to 20 years of service. In all other cases, you can be left without money and without a roof over your head.
Military mortgage debt
One of the most negative consequences for a soldier can be debt on a military mortgage. Cases of debt obligations:
- Dismissal of one's own free will is the most common situation. This does not apply to a valid reason and therefore the employee who took out a mortgage loan must return the costs spent on it to the state. Moreover, upon dismissal, the military mortgage must be fully repaid. That is, the person turns out to be a double debtor.
- Removal from service due to failure to comply with contract terms. Even if you did not take out a loan, you are not entitled to receive the accumulated money on a military mortgage. And with an existing loan, it is necessary to eliminate the debt both to the state and to the credit institution in full.
Having taken out a credit loan, the employee should think about the possible outcomes of events if he wants to leave the service or does not fulfill the requirements of management. Because then the entire savings part burns out, and you still owe money.
Is it possible for a military man to rent out an apartment?
However, this opinion is fundamentally wrong, since the right to own and dispose of one’s own property is not prohibited by anyone, and these norms are not repealed by any law . Therefore, renting out freehold real estate is certainly possible.
- To begin with, if you have not yet received a loan, and in the future you intend not to live in the registered property, but to rent it out, you should ask the bank if you have the right to do this? If the bank gives you this right, then you can rent out the apartment without any problems. If not, you should find out about the possibility of concluding an agreement on your terms, or look for another bank.
- If the contract has already been concluded, you need to carefully study it, and if it states that rental is not prohibited, then you also have the right to do so. Most banks don’t care whether their collateral is rented out or not, and they enter into agreements that stipulate the possibility of renting it out.
- These issues can also be discussed with the insurance company before concluding insurance, but keep in mind that in this case, insurance will cost you more, since the risk of an insured event increases. If the contract has already been concluded and these issues are not specified, problems may arise when an insured event occurs. The company may refuse to pay the insurance premium, and it is unlikely that you will be able to recover it through court.
- In addition, do not forget that in the case of a military mortgage, the property is double-collateralized, by the bank and the state. Therefore, in order to rent out an apartment, it is necessary to obtain state permission.
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Is it possible to take out a military mortgage without a cash loan?
An army mortgage without a loan can be afforded by a soldier who has been able to avoid spending and accumulate funds in his personal account for several years. For example, Petrov served for 11 years and continues to serve in the ranks of the Armed Forces. During all this time, he did not use the money he had accumulated on deposit and now decided to purchase an apartment in the same provincial city where he serves. The purchase cost 1.5 million and there were still funds left in the account. Thus, the money is not given to the employee during the purchase, and the transaction is carried out using a housing certificate. Is it possible for Petrov to withdraw money from his military mortgage after 20 years of service? The answer is yes. He has the right to use the balance not only for housing, but also for other purposes and, moreover, in cash.
When else can you withdraw money from a military mortgage? With more than ten years of service, but not until reaching 20 years of service for valid reasons (well-being, general medical conditions, assessment as unfit to continue serving).
Should I rent out a mortgaged apartment?
Borrowers, when planning to purchase an apartment with a mortgage, immediately think about whether they will be able to pay off the debt to the bank for a long time. The loan term is significant and the longer it is, the higher the overpayment for bank services. During this time, various events may occur, including a decrease in the borrower’s income level, deterioration in health, loss of a stable job, and others. An online mortgage calculator allows you to weigh all the pros and cons of a mortgage, but the calculation algorithm does not take into account various force majeure circumstances. Is it possible to reduce the burden of credit by renting out a mortgaged apartment? Could the borrower have problems with the credit institution in this case?
Purchasing an apartment with a mortgage, as a rule, is accompanied by registration of it in the form of collateral, which guarantees the fulfillment of obligations to the bank to repay the loan funds. Yes, the borrower has ownership rights to housing, but he cannot freely dispose of it. According to current legislation, the mortgagor (borrower) may, without the consent of the mortgagee (bank), rent out the object of mortgage collateral, but subject to a period not exceeding the date of completion of loan obligations and in accordance with the direct purpose of the property. It turns out that you can rent out a mortgaged apartment without the bank’s consent.
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Military mortgage save or buy
Advantages and disadvantages of choosing savings:
- There is no risk of remaining in debt and without an apartment.
- It is possible to cash out what you have accumulated.
- You can spend the money at your own discretion.
- The long wait mars the overall positive experience.
Pros and cons of buying a home with a military mortgage:
- Small subsidies.
- Lack of funds to purchase housing in a metropolis without obtaining a loan from a bank.
- Binding to service (if you decide to quit, in most cases you will remain a debtor).
- Payment of interest first, and only then the principal amount owed on the property.
- Purchasing economy class housing.
- Payment of the insurance premium at the expense of the borrower.
- Deprivation of an apartment for mortgage debts upon early dismissal.
- There is an alternative to saving up or buying outright.
- Possibility of acquiring your own home at a younger age.
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