What is more profitable to take to buy an apartment: a mortgage or a consumer loan

When their own funds to buy housing are not enough, citizens of the Russian Federation often seek help from banking organizations. Getting a loan is the only way for many people to improve their living conditions. However, people often wonder what kind of loan to take: mortgage or consumer? Indeed, it is difficult for a person to figure out which of the loan programs is more profitable.

In fact, both mortgages and consumer loans have their advantages and disadvantages. What is more suitable for a particular person, it is difficult to say. When evaluating the benefits, you should pay attention not only to interest rates, but also to other factors.

Consumer credit for the purchase of housing

It is worth noting that most consumer credit programs have their own restrictions on the maximum possible loan amount, as well as the terms during which you can repay the debt. This program can only be used by those who have enough of their own savings and can initially pay for most of the cost of housing – from 50% or higher.

The advantages of a consumer loan include:  A relatively simple registration procedure. Often, a consumer loan is issued to one person without involving co-borrowers or guarantors.Quite large amounts of credit. The final loan amount depends on the borrower's income level, credit history, etc. The absence of collateral. Some banks also do not require you to specify the purpose of the loan.

The disadvantages of consumer credit when buying a home are also obvious:

inability to borrow the entire amount of the housing cost (limits of many consumer credit programs are limited); the need to repay the loan in a relatively short period of time (from 2 to 5 years) and, consequently, large monthly installments.

Specifics of mortgage loans

It is possible to get a mortgage in our country even if you can make no more than 10-20% of the total cost of housing as the first payment for an apartment. Mortgage programs have their undeniable advantages: More favorable interest rates on loans (in comparison with consumer programs). The ability to attract relatives (second spouse, parents or adult children, for example) to get a large loan. The Bank will assess the total financial condition of the family in this case. Long loan terms-they often vary between 10-20 years.

It should be understood that you can only buy an apartment on the secondary real estate market that is approved by the Bank. Other disadvantages of a mortgage include:

not being able to register in the purchased apartment until the mortgage is fully paid off;  finding real estate pledged by the Bank that issued the loan (if you can't repay it, the financial institution will get ownership of the property and sell it to repay the debt); a number of sellers refuse to cooperate with you if the property is purchased on a mortgage (due to the length of the transaction). Which program to use, everyone decides on their own. It all depends on what is more suitable for a particular buyer, taking into account their current financial situation and capabilities.