When receiving a mortgage, the borrower for many years becomes dependent on monthly payments to repay the debt. After some time, a person discovers that there is a need to expand and change housing. Sometimes waiting for the completion of the payment of the first debt is long enough, which does not always suit the client. Since the mortgage payment is quite high, there are doubts whether it is possible to take a second mortgage without repaying the first one.
Loan for the purchase of housing is more difficult to agree. If the new non-target loan for the approval of the bank is enough to check the solvency and reputation of the client, then the mortgage will need to make efforts to convince the lender of the reliability of the loan.
Is it possible to take a second mortgage without repaying the first
Mortgage lending, being a product of a commercial financial institution, is governed by federal law. By virtue of the significance of the loan, banks are obliged to adhere to the procedure defined by law No. 102, and the obligations under the contract are regulated by the Civil Code. Considering the question whether it is possible to take two mortgages at the same time, it is necessary to take into account that it is not prohibited by law to take a second housing loan. Determining the possibility of new credit obligations, the bank checks other parameters.
It is unlikely that the bank will refuse in the application only because of the presence of an outstanding loan. However, before you get a second mortgage, the borrower must carefully consider whether he can serve both debts. The main difficulty when buying another mortgage is to provide convincing evidence that the client’s income will be enough to get two mortgages in parallel and pay off successfully. In other cases, it is difficult to save up the amount of the down payment.
If there is a need for registration of other housing, you must be prepared for a fairly tough loan registration conditions. A bank specialist will meticulously consider the candidacy, requesting additional documents and data that will allow you to be sure that payments will continue, even if you lose your job or earn money.
It is easiest if during the repayment of the first mortgage the financial situation of the borrower has improved, which is confirmed by certificates, agreements on the availability of additional income. It would be better if the client clearly knows how he will repay the loan debt if he has problems with work or earnings.
In addition to the two mortgage payments, immediately together we will have to pay utility bills for two apartments, as well as property taxes.
If the second apartment is planned to be rented, it is necessary to coordinate this fact in advance. For some lenders, this use case ensures that mortgage payments will be repaid in a timely manner. Other financial institutions may not like such a statement, since the standard contract contains a direct ban on leasing pledge housing. Moreover, representatives of the bank can check at any time whether the borrower is in compliance with this clause.
In any case, the position of the borrower must be reasoned. It is necessary to convincingly prove the availability of sufficient resources for the successful repayment of the entire debt, and the total amount of the credit burden should not exceed 40-45% of the total income of a person. If there are children and other dependents in the borrower’s family, the average per capita income will be calculated taking into account the costs of maintaining family members.
Who can get approval
It should be borne in mind that to take 2 mortgages means to incur obligations in double the amount, which is very risky in the conditions of an unstable economic situation. If you are not sure that the payments will not affect the quality of life of the family, it is better to repay the first loan and only then take a mortgage a second time.
Unfortunately, it is not always possible to wait for the mortgage to be repaid. While the salary allows you to pay double contributions, there is a desire to use the profitable program and purchase another property. Having average incomes, you should not expect to receive a large target loan, especially since the bank will require you to make a down payment of at least 1/5 of the cost of housing as estimated.
In addition to certificates of income, certificates may be required confirming the availability of savings on a deposit, current checking or card account, an agreement on receiving additional earnings, income. Not differing from the standard mortgage lending procedure, the second loan implies increased requirements for the candidate.
Only a person receiving a stable income more than twice in excess of payments with a new loan, having funds for the first installment, can count on approval.
An unreliable borrower who fails to repay current liabilities in a timely manner will not be able to convince the lender that the new payment will be paid on time. In addition to the current contract, the entire credit history from the CHI database will be verified.
Another factor that will positively influence the consideration of the application will be the willingness to issue full insurance of the pledged object, ensuring the return of the debt with interest, no matter what happens to the borrower or mortgage housing.
How is a borrower evaluated
Before contacting the bank it is recommended to check yourself for compliance with the indicators of a successful borrower.
The following parameters are evaluated:
- High solvency (excellent earnings, additional regular income, confirmed on paper). Payments on two mortgages should not be more than 50% of the candidate’s income.
- The ideal credit history and reliable reputation of the payer, according to data from the CII.
- A stable position at work, a long period of service is common for the last employer.
- The first mortgage was mainly paid (more than 70% of the debt was returned to the bank).
- Readiness to independently pay a certain part of the cost of an apartment (10-30%).
- Willingness to provide additional security from other personal property that is not burdened with security restrictions.
If these parameters are met, there is a high chance of receiving and safely repaying the mortgage on the second apartment, house, other housing.
How to increase the likelihood of receiving
Sometimes it is not enough to comply with the basic requirements for the borrower. The following measures will help increase the chances:
- Provision of additional documents on income, in addition to labor (pension, alimony deductions, dividends on shares, etc.).
- Transfer to the bank of documents on the property, which can also act as additional collateral.
- The presence of persons willing to vouch for the person and guarantee the return of the loan. In addition to the guarantors, it is possible to attract co-borrowers by preparing for the bank a full package of papers on the above-mentioned persons.
In addition to increasing the chances of obtaining a new housing loan, co-borrowers and guarantors can positively influence the limit provided, based on the total income of the parties involved in the mortgage process.
How to take a second mortgage
The procedure for obtaining a second mortgage is similar to the standard scheme, however, there is a difficulty in defining the bank in which new obligations will be issued.
Many banks, for example, Sberbank, are ready to consider the possibility of providing special conditions for their regular and reliable customers.
In the same institution, it can be easier to take a mortgage, since it will not be difficult for the bank to make sure that the payer is reliable, responsible and disciplined.
If the desire to get a loan in a new bank is connected with an attempt to hide the presence of unliquidated obligations, you should not try to deceive the lender by taking borrowed funds from different banks, as the situation with current credit payments will be clarified during the credit history inquiry process from the CII.
Conditions for issuing a second mortgage
The process of obtaining a mortgage is represented by the following steps:
- Filing and obtaining prior approval of the bank.
- Preparation of documents for the transaction. Attention is drawn to the collection of papers indicating an additional source of income.
- Registration of the insurance contract.
- Signing the contract of sale, mortgage agreement, registration of collateral.
Conditions for obtaining a second mortgage require special emphasis on indicators of solvency and integrity, based on the increased requirements for the borrower.
List of required documents
The standard package of papers for re-mortgage is similar to the initial appeal to the bank. Do not think that there is no need to provide new income statements if the creditor is the same bank. On the contrary, it is necessary to carefully consider which documents will be able to confirm the additional income and stability of the borrower.
The main list is represented by the following papers:
- Certificate TIN.
- A document confirming the marital status of the borrower and the presence of children.
- Copy of labor.
- Help on earnings, additional income.
- The contract of sale and technical documentation for the property.
Since transactions with the purchase of real estate are individual, in addition the lender may require any other certificates and documents that confirm the reliability of the client and the purity of the transaction.