How to get a Russian mortgage
Being a resident or non-resident opens up new opportunities for you to get a mortgage if you want to buy a house or apartment in Russia.
There are many options for mortgages in Russia depending on which bank and lender you choose.
In this article, we are going to show you the entire process of getting a mortgage in Russia, interest rates, mortgage calculators and costs:
– does it make sense to buy a house in Russia?;
– how much can you borrow in Russia?;
– mortgage calculators;
– the cost of getting a mortgage in Russia;
– taxes on purchasing housing in Russia;
– documents for applying for a Russian mortgage;
– how to apply for a mortgage;
– types of Russian mortgages.
Does it make sense to buy a house in Russia?
Recently, prices for a house or apartment in Russia have increased slightly, and the real estate market has become more active. According to Rosstat, in the second quarter of 2024, the cost of apartments on the secondary market increased by 0.7%.
The report for November 2024 says that Russians took out mortgage loans for 2,000,000 rubles in the first nine months of the year, because interest rates have dropped significantly. Thus, the average mortgage rate fell by almost half a percent and amounted to 9.41%.
How much can you borrow in Russia?
In general, the maximum loan you can take is 80% of the sale price, although it still depends on the bank’s policy. The maximum loan can be from 40-90%, and it depends on the type of bank and the type of property.
Potential borrowers have income restrictions. Mortgage payments and other debts on assets must not exceed 35% of the borrower’s net income.
Mortgage calculators
Today, the Russian mortgage industry is young, so banks offer to get a mortgage in Russia directly and contact buyers for consultation and cost calculation. Some banks, such as Uni Credit Bank, offer online mortgage calculators and place them on their websites.
Cost of getting a mortgage in Russia
When it comes to Russia, national banks offer mortgages with minimal fees and charges. For example, some banks do not offer mortgage fees, commissions and insurance requirements. But interest rates in Russia are usually 10% higher than interest rates in other countries.
If we are talking about transfer of ownership, then Russians normally pay fees. These fees include the real estate agent’s commission, which is 3-6%, the notary’s commission of 1-2% and the registration fee up to 1%.
Taxes on property purchase in Russia
Fortunately, Russia offers the simplest taxes for Russian non-residents. For example, sources of income such as renting out property require a 30% tax. Moreover, mortgage interest is not deductible and does not count towards income.
For example, capital gains are taxable and require a 30% tax. This does not include acquisition costs, repairs and maintenance, and other similar expenses.
If you are going to rent out your property, you will be required to pay VAT. However, if your property does not generate income, you will not have to pay VAT.
In Russia, residents are forced to pay 13% income tax on many sources of income and on income from renting out property. For both residents and non-residents, you will be required to pay capital gains tax.
If residents buy a new property, they may be allowed to deduct up to 2,000,000 rubles for improvements to the property and up to 3,000,000 rubles for a construction loan. This will help you save a lot on taxes, but you can only use it once.
Documents for applying for a Russian mortgage
Since the buyer pays registration fees, he must first obtain a taxpayer identification number. It connects the resident or non-resident with tax payments. The taxpayer identification number is also used to pay duties, fees and other payments to any government agencies.
The banks will process your application for a maximum of one week. You should first review potential properties and then apply.
The following documents are required to apply for a Russian mortgage:
– Photo ID (such as a passport);
– Property title deeds;
– A certificate from the city registration office confirming that the property is free from encumbrances, has no restrictions on disposal, and a floor plan;
– A completed purchase and sale agreement;
– A description of the condition of the property;
– A Russian bank account for an amount equal to the down payment.
When it comes to lending, Russian banks offer different terms and conditions, so you should definitely discuss with the bank you choose any special requirements they may have for you.
How to Apply for a Mortgage
When it comes to applying for a mortgage in Russia, a borrower can choose which currency to use. There are three currency options you can use, namely rubles, US dollars, or euros.
The currency greatly affects the terms of your loan. The cost of your mortgage is influenced by the prevailing exchange rate and the currency in which you receive your income.
So, first learn all the basics about exchange rates and then apply for a Russian mortgage. Therefore, mortgage loans and the application process are usually the same.
Russian banks are more focused on consultations and do not offer a choice of several different products, which is offered in other European countries.
So potential borrowers can prepare to consult with their lender on terms that are specific to their situation and not relevant to a specific product.
Types of Russian Mortgages
In Russia, the type of mortgage varies depending on the type of property. For example, the term of the mortgage for an apartment will be different from the term of the mortgage for a house in Russia.
But all types of property offer something in common, such as repayment of the principal plus a floating interest rate.
These banks serve foreign investors:
– Raiffeisenbank is one of the largest full-service banks in Russia;
– Sberbank is a leader at the forefront of the changing Russian mortgage industry;
– UniCredit Bank is a leading European commercial bank that also serves individual clients.
