At the primary and secondary markets the mortgage credits are registered mainly on 1 – or 2-bedroom apartments of economy-class with square of 50-100 square meters (60-70% of all housing in this class), because clients do not have the required amount for the acquisition of apartments. However, accommodation of “business” class and “premium” is also purchased in a (30%)mortgage .
Builders, selling apartments in the primary market, say that a mortgage loan activity is sold 40-70% of the housing they had built.
It is wondering to what extent yield_rate of return of this project will increase, if customers take mortgages more actively. Experts’ opinions were divided. Some say that the builder operates with such parameters as the cost of building and sales plan, and therefore the mortgage does not impact the yield of the project. We can speak only about the rate of turnover of developers. Others – that profitability still increases, since thanks to the mortgage a builder obtains a full pay for the housing at once, but no monthly fees, as in the case of instalment(30%) system.
Obtained funds can be invested, for instance, in new projects. With the emergence of mortgage lending the customers have a wider range of payment variants (full payment, instalment system before the end of building or long-term credit) and this facilitates to the increase in the rate of sales. Others said that profitability of the developer increases with the overall increase of mortgage market, but this is a temporal phenomenon, which may have the opposite result in future. They say that with the enhancement in credit conditions the mortgage will become more popular that leads to the growth in housing prices and, consequently, to destabilization of the market.
Typically, the developer starts selling the apartments when there is an official site for building (project is agreed and a building permission is obtained. Theoretically you can purchase such housing with the assistance of bank loans. In practice, before issuing a mortgage credit to the customer to buy an apartment, the banks carry out the analysis not only of the buyer’s solvency, but also the degree of risk, which happen to collide when dealing with a concrete builder.
The bank is ready to lend the construction (including through the issuance of mortgage loans) only if the flats are sold through the fund to finance construction, established by the bank. Builders also are not delighted about this scheme of work. This system has a lot of negativity for the builder. Inter alia, the developer must bring a house into operation in a definite term without reference to funding and its terms.
Therefore, plenty of developers though recognize the work through this system still tend to finance the construction by other ways, such as through the issuance of bonds by mutual venture investment funds, the organization of housing cooperative.
It is still actively used different direct contracts between the developer and the client (an investment contract, commission contracts, assignment, joint activities), the legality of which professionals impugn. However, it is required time and material costs for all official permissions for construction, as well as the organization entirely “fair” scheme.
Are you one of those people who were lucky to take a mortgage loan some time ago and now are facing financial problems? If yes, then consider mortgage note buyer service. Such mortgage note buyer service can be of real help in some situations which otherwise could seem desperate.