Is it possible to lower the interest rate? Is it possible to reduce the monthly loan payment?

Most families can purchase housing in Russia only by taking out a mortgage loan. According to AHML, rates on the secondary real estate market in 2019 amounted to 10.75 - 12.25%, new buildings are purchased at 10-12% per annum.

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Previously, agreements were concluded with Sberbank at 14-15% or more, but after the Central Bank of the Russian Federation reduced the refinancing rate, many banks revised their loan programs. Is it possible to reduce the tariff for using credit funds, what will be needed for this?

Is it possible

It is unlikely that it will be possible to lower the interest rate under an already concluded agreement with Sberbank. This requires compelling reasons. The bank has no such reasons either, since agreements have been reached and the terms of the agreement reached cannot be changed by law.

However, there are several options for resolving the issue:

• applying for loan restructuring or refinancing to another banking institution or also to Sberbank;
• filing a claim in court.

What to do during restructuring? To do this, it is necessary to change the basic characteristics of the mortgage loan. Such applications are considered by the bank that originally issued the loan - Sberbank of Russia or another financial institution.

On-lending is carried out in cases where the financial situation of the borrower has changed significantly after the execution of the agreement. This can happen due to an unexpected deterioration in health, layoffs at work, the need to move to another region and a reduction in wages, and other reasons.

Restructuring may also be associated with an improvement in the financial condition of the borrower. In this case, there is a reduction in the term of the loan and, accordingly, a reduction in its repayment period. The procedure for refinancing is the same as when applying for a loan initially.

To do this you need to submit a package of documents:

• application for debt restructuring under a specific agreement;
• a copy of the mortgage loan agreement;
• a certificate confirming the increase in income;
• size increase document wages or receiving pension or other social security;
• order of appointment to a new position with an increase in income.

When signing an application for restructuring, you must first draw up a preliminary payment schedule based on the new credit conditions.

When restructuring due to a decrease in income, it is necessary to indicate the reasons why it is not possible to pay the mortgage in the previous amount:

• job loss;
• decrease in earnings due to transfer to another position;
• the birth of a child and the occurrence of additional expenses, going on maternity leave;
• loss of a breadwinner;
• the appearance of dependents - disabled relatives, the retirement of parents, etc.

When you might need it

It is not necessarily the deterioration of the financial situation that leads to a change in the interest rate, but also its improvement.

The reasons in practice are usually:

• the birth of children in the family, the appearance of dependents, maternity leave, parental leave;
• an increase in earnings or a decrease in earnings due to a change of position, layoff, receipt of social benefits, or retirement;
• other reasons for changes in financial situation.

If financial problems arise, the bank can offer the following options:

• increasing the loan repayment period by 3-10 years, thereby reducing the monthly payment amount;
• deferment for 2 years - mortgage holiday, during which interest is paid throughout this period, and the body of the loan, the principal debt, is repaid later;
• payment of installments to repay the loan every quarter, and not monthly, as is usually established on the basis of a standard payment schedule;
• creation of an individual payment regime taking into account the financial situation of the borrower;
• the appointment of credit holidays is possible after a detailed study of the debtor’s financial situation and valid reasons that served as the basis for the appointment of such a benefit. Interest rate when participating in state program will be reduced;
• Sberbank has the opportunity to reduce the interest rate also when applying for services in electronic form, details can be found on the official website of the financial organization: a personal manager is allocated, payment for registration services and submission of an application to Rosreestr occurs online.

Alternatively, Sberbank may refuse. In this case, you need to notify the organization about applying to another organization for restructuring. Usually, the bank, not wanting to lose a client, makes concessions and can offer more acceptable conditions.

Another method – refinancing – will be discussed below.

How to reduce the rate on an already taken out mortgage at Sberbank

To receive interest relief, you must submit an application to the banking institution justifying the reason for changing the mortgage agreement. Without this, the bank will not begin to develop an additional agreement within the framework of one of the programs: debt restructuring or refinancing.

If possible, you can apply for participation in one of the government support programs and receive subsidies, through which you need to pay off part of the debt. Typically, funds are transferred directly to the bank if they are accumulated in special accounts financed by the federal budget.

As an option, you can also contact an organization operating with government support - AHML.

If the requirements of the subsidy program are met, it is possible to pay up to 20% of the loan amount if the property meets the parameters specified in the rules, and there is real evidence of the borrower’s difficult financial situation and justification for their non-payment of the debt.

The application can be submitted either by the borrower to the organization itself or through Sberbank of Russia, where the mortgage lending agreement was concluded. This is an extreme method when restructuring and refinancing are impossible due to violations of the contract, delays and accumulation of debt.

If the loan has not yet been taken out, and the borrower is just determining the available program for himself, the interest rate may be reduced under the following circumstances:

• when proving solvency, ownership of real estate, vehicles, or other valuable property, you can show documents for deposits, which causes a reduction in the interest rate due to the reduction of the bank’s risks in interacting with such a debtor and the ease of debt collection;
• making a large down payment, based on bank programs, there are conditions for making from 10 to 50% of the cost of the purchased apartment, with maximum financing discounts are provided;
• It’s better to get a salary card from Sberbank, this will help you save up to 1% per year on your mortgage;
• it is desirable to conclude a voluntary insurance agreement, which makes it possible to receive a benefit of 1% of the value of the registered real estate, determined on the basis of the conclusion of independent appraisers;
• pay part of the amount using maternity capital funds or under the Young Family program. For military personnel, it is possible to obtain preferential loans under the Military Mortgage package;
• it is recommended to purchase real estate from developers at the construction stage, their list is approved by Sberbank of Russia and is provided as a recommendation, prices for apartments in such houses are 20-30% lower, which will allow you to save significantly on the loan, while the interest rate is not much higher - 0, 50% annually.

Refinancing

Another option for changing the mortgage debt payment schedule or its characteristics is to refinance the debt incurred in relation to Sberbank. It is important to remember that under this program it is possible to obtain on-lending only if the debt is repaid in good faith during the entire period of making payments to another institution or Sberbank.

There are special requirements for the deadline credit period or making payments over a certain period of time. Usually it must be at least 2 years, during which time payments are checked, their completeness and timeliness.

If the difference in interest rate is insignificant, then you should take into account that refinancing may not be profitable. This is due to the need to re-pay the insurance compensation and bear the costs of registering an encumbrance on the collateral when purchasing a property.

Improved lending conditions are provided when the interest rate is reduced, the loan term is increased or other essential clauses of the loan agreement are changed.

Through the court

As a last resort, when the lending or other bank refuses to restructure or refinance the debt, upon request to reduce the interest rate, it is possible to file a claim in court.

Also trial perhaps when the court arbitrarily increased the interest rate or charged a commission, violating the terms of the contract. It should be noted that the borrower should not stop making loan payments at all stages of consideration of the claim, since in this case penalties and fines may be charged.

And if for some reason the claim is not satisfied, the bank will file an application for collection of debt and penalties within the framework of the agreement and the law, in connection with which the borrower himself may become a violator.

Processes on mortgage agreements drag on for months, or even years. The essence of the first instance is to analyze in detail the payment schedule, confirm the circumstances that served as the reason for filing the claim, send notices of the need to give explanations to the court, and, if necessary, call witnesses.

Banks set interest rates on loans for a reason; this figure directly depends on what the current key rate of the Central Bank of the Russian Federation is. If it is high, credit institutions are forced to inflate their loan rates, and this, in turn, hits the pockets of ordinary borrowers who need a loan right now. But are there ways to reduce loan interest? We have prepared 5 legal ways to reduce the interest rate on your loan.

It is quite possible to reduce the interest rate on a loan - you just need to meet a few conditions.

Method No. 1: Restructuring

If a borrower finds it difficult to repay his loan according to the established schedule, he can contact the bank with a request to restructure his loan. Banks are quite willing to accommodate the borrower, since it is much more profitable for them to offer him a new payment schedule than to never see the money disbursed.

During restructuring, the borrower may be offered an extension of the loan term, a reduction in the monthly installment and even a reduction in the interest rate. True, it may decrease by only 1-2%, but it’s better than nothing. The period for which the bank agrees to reduce interest is also not long - up to two years maximum. After this, the interest rate will be the same as it was at the time of signing the agreement.

Method number 2: Refinancing

Refinancing is taking out a new loan for more favorable conditions, in order to pay for the old one. This can be done at the same credit institution that issued your first loan. For example, if you took out your first loan a year ago, and the interest rate on it at that time was 17%, and now it is 14%, you can ask the bank to refinance. That is, having received a new loan, you, with the help of the issued funds, will close the old, unbearable loan for you, and you will pay off a new loan that is more affordable for you.

It should be borne in mind that refinancing should be discussed only when the difference between the interest rates is at least 3 points. If the interest rate on a new loan differs from the old one by 1-2 points, refinancing the loan is not advisable. Also, you should not do this procedure for those who have an annuity loan payment scheme, and most of the debt has already been repaid. All interest has already been paid to the bank, so there is nothing special to reduce, and the remaining part of the debt is the body of the loan itself.

Method No. 3: Maximum package of documents

The interest rate for each borrower is determined individually. The more documents confirming his solvency the client provides, the more confidence he will inspire in the credit institution. Accordingly, the interest rate can be changed in favor of the borrower, so that the bank will not doubt that he will repay the debt in full and on time. This means there is no need to play it safe with inflated interest rates.

Therefore, when applying for a loan, it is advisable to have with you any papers confirming your positive financial status. It could be work book, and documents for an apartment, house or car, education diplomas, certificates of additional income, etc. Your goal is to assure the bank that you will definitely repay your loan on time.

Method number 4: Good credit history

When a person applies for any loan, a file is created for him in the credit history bureau. Your behavior regarding the loan taken is fully reflected in this organization. All on-time or late payments, repaid loans and current debts all affect your credit reputation. If you are the lucky owner of a good credit history, you can count on the bank’s loyalty and, as a result, a lower interest rate. Especially if you are already a client of the chosen bank and have repaid loans from this credit institution on time in the past.

A positive credit history is another plus for the borrower, since the bank will be confident in your solvency and may agree to reduce the interest rate for you.

Method No. 5: Guarantors and insurance

As mentioned earlier, the bank needs to see that the loan is issued to a verified person, and, if something happens, there are guarantees to return their funds. These guarantees are guarantors, collateral and insurance.

If there is security, that is, a guarantor or pledge, in the event of non-payment of the debt, the bank has a guarantee to receive money either from another person or by selling property pledged by the debtor. And if you have insurance, the debt will be paid insurance company. Therefore, many banks are trying to force their clients to insure their life, health and disability.

If the above guarantees are available, the interest rate may be reduced. However, it should be remembered that the borrower will have to pay for the services of the insurance company during the entire loan period. And it’s not easy to find guarantors - not everyone will agree to take responsibility for paying off your debt in the event of an unforeseen situation. Banks' requirements for guarantors are also quite exaggerated - he will also be required to provide proof of solvency, and the more documents he provides, the better.

Method number 6: Promotions and special offers

Banks often hold promotions for their regular customers in order to retain them. They also offer special conditions for new clients to lure them. If you are already a client of a credit institution from which you are planning to take out a loan, check to see if there is any promotion under which you can improve the terms of the loan provided.

If you don’t yet know which bank is better to take out a new loan from, don’t hesitate to visit different credit institutions and find out where there are interesting offers for new clients. Often, some groups of people are provided with favorable loan conditions, such groups include pensioners, military personnel, teachers, etc.

Today it became known that Sberbank organized an action to reduce rates on consumer loans. It starts on November 14 and will last until the end of 2017. The promotion involves fixing rates on the two most popular loan products - a loan with and without a guarantee.

The discount compared to the base line rates will be up to 7 percentage points. This was announced by Natalya Alymova, director of the department of retail non-transactional products of Sberbank. In particular, for a consumer loan guaranteed by individuals, the rates will be 13.9% and 15.9%, for an unsecured loan - 14.9% and 16.9%, and for separate species loans for refinancing loans - 13.9%, 14.9% and 15.9%.

These interest rates apply to loans from 300 thousand rubles for a period of up to 5 years. The offer is valid until January 31, 2017.

- We already had experience with fixed rates for up to 12 months - we launched such an offer before the crisis, at the end of 2013. The campaign was a huge success - the volume of loans issued increased 1.6 times compared to the same period in 2012. We expect to significantly increase delivery this year thanks to the launch of the offer. On October 1, we brought rates to a level below the pre-crisis level. Today, we now offer the lowest possible rates to Sberbank clients,” noted Natalya Alymova, director of the department of retail non-transactional products at Sberbank (quoted by the Prime agency).

Next year could be a turning point for the consumer loan market. Recently, this market has clearly begun to revive. If a year ago banks were denying loans left and right, now they are already on the hunt for borrowers.

“Sberbank is the locomotive of the industry, and if it is now reducing loan rates, then other banks will support this trend,” says Finam Group analyst Bogdan Zvarich. - I think that rates can drop down to 10% per annum. But only by the end of the year. And only if a favorable economic forecast for next year comes true. If economic growth begins, the Central Bank’s refinancing rate drops to 6-8%, then interest rates will also decline rapidly. consumer loans. At the same time, requirements for borrowers may be reduced. For example, banks may become more loyal to borrowers with problematic credit histories.

Large domestic banks with state participation, such as VTB and Gazprombank, in particular, promised to provide a comment later.

For 9 months of the current 2016, Sberbank issued consumer loans by almost 70% more than in 2015. The volume of issues amounted to 575 billion rubles.

In October, Sberbank already reduced the minimum rate on consumer loans to 13.9% per annum, without collateral - 14.9%. Also, the minimum rate on loans for refinancing loans from other banks was reduced to 14.9%. Personal loan rate for persons running subsidiary farming, in October it decreased to 20%.

Photo: Valery Sharifulin / TASS

What is being refinanced?

The new loan under refinancing can cover any type of loan - consumer, car loan, cash loan, card loan or mortgage. You can refinance one or several, combining the payment schedule for them and reducing interest rates.

Mortgage refinancing is one of the most popular programs. “Now, for the most part, clients who took out a mortgage in the first half of 2015 are being refinanced,” says Alexey Tartyshev, head of the marketing department of the DeltaCredit mortgage bank. At that time, the average rate for this type of loan was 14% per annum. In July 2017, it dropped to 10.94%. Against this background, mortgage holders began to turn to banks to alleviate their debt burden. “After the rate cut in August, a sharp increase in demand for the product was recorded,” confirms Nikolay Vasev, director of the DomClick division of Sberbank.

Cash loan refinancing is also in great demand - this service was the leader in the VTB Group in the first half of this year. “Loans from last year and the year before that are mostly refinanced,” says Yulia Demenyuk, deputy head of VTB’s retail products department.

How to apply for loan refinancing

You can apply for refinancing either from your bank or from a third party. To do this, you need to prepare a standard package of documents: passport, income certificate 2-NDFL, loan agreement or notification of the full cost of the loan, SNILS - and write an application. In this case, the borrower must be over 21-23 years old, depending on the bank, have worked for at least three to six months at his current place of work, and have an income of 10-25 thousand rubles. per month, depending on the region of loan servicing, and also be a conscientious borrower, that is, repay existing loans on time over the past 12 months.

Banks impose requirements not only on the borrower, but also on the loans that he is going to refinance. In particular, the loan must be opened and serviced for at least three to six months before applying for refinancing. At the time of refinancing, at least three months must remain until the loan expires. Experts say that the closer the time of repayment, the less profitable refinancing becomes for the client, but such credit movements are not unprofitable.

As for the rate level, some market participants determine it depending on the planned service life of the refinanced loan. The period of the new loan provided ranges from 12 to 60 months. In rare cases, the maximum term reaches 84 months, but the rate will be higher. The conditional rule “the longer the repayment period, the higher the rate” applies to Sberbank, Rosselkhozbank and Gazprombank. Other banks set the rate based on the loan amount: “the smaller the volume, the higher the rate.” According to this logic, they work in all banks of the VTB group, Rosbank and UniCredit Bank.

Photo: Alexander Koryakov / Kommersant

Special requirements

Banks describe the refinancing service as widespread and available to any client. However, for some categories of the population, refinancing is less accessible. For example, it will not be easy to find a bank and favorable refinancing conditions for people who have reached retirement age. The maximum age at which such a loan is granted is set at 65 years in most banks. The refinancing program for clients over this age at Pochta Bank is almost the only one in the entire market.

Banks may have other unusual requirements for the borrower. For example, Raiffeisen Bank refuses refinancing to individual entrepreneurs, lawyers who have established their own office, and business owners. The bank explains this by minimizing risks. VTB also has restrictions in relation to this category of borrowers, however, one year of successful business is enough to fall under the refinancing program. “This indicator is enough to consider a self-employed client reliable. Such calculations are applied throughout the market,” experts from VTB clarify.

Banks are most loyal to their payroll clients. Firstly, the number of necessary documents that must be provided is reduced for them - a passport, a loan agreement and SNILS. Moreover, the rate for them is set on average 2-3% less.

Employees of budgetary organizations from the fields of healthcare, education, public administration and law enforcement agencies can count on some preferences. Banks set a minimum rate for such clients. But those borrowers who do not have or refuse to purchase either personal insurance or insurance for the property serving as collateral receive the maximum.

What are the benefits

The main benefit for the borrower is a reduction in the monthly payment. “The new loan is issued on more favorable terms than the previous ones, and the monthly payment is lower,” says Nikolai Volosevich, head of the department for the development of credit cards and cash loans at Alfa Bank.

“The benefit from refinancing depends on the period that the client has already serviced the loan, on the loan amount and on the rate - past and future,” explains Alexey Tartyshev. In a mortgage, if the loan was taken out recently, in the current conditions “the greatest rational benefit arises when the rate is reduced by about 3-4%,” he explains.

For example, if the borrower took out a mortgage loan for 5 million rubles. for a period of ten years at 14% per annum, then its payments for the entire period will be about 9.3 million rubles. If he manages to refinance the loan at a rate of 11% per annum, the total payments over ten years will be just under 8.3 million rubles.

“On average, the difference between the old and new rates on cash loans is about 5 percentage points. However, the “discount” can be 10-15 percentage points if we're talking about on the refinancing of unsecured loans issued in 2015,” notes Yulia Demenyuk, Deputy Head of the VTB Retail Products Department.

Financial advisors also see the ability to consolidate a borrower's loans as an advantage. “The danger of having several loans is that it becomes difficult for the borrower to control the level of his expenses and he may forget about the need to service the loan or he may not have enough of the required amount on the right day,” warns Associate Professor of the Financial University, independent financial adviser Said Suleymanova. “Loan consolidation allows you to clearly monitor your capabilities and loan obligations,” adds financial consultant Natalya Smirnova. Daniel Zelensky notes that many borrowers have already begun to understand that in the current economic situation it is irrational to service several loans at the same time from different banks.

Photo: Vladimir Smirnov / TASS

Pitfalls

Some experts believe that it is easier to get a refinancing loan from a third-party bank. “Loan interest is the bank’s profit. If the bank reduces the interest rate for the borrower, it will simply reduce its own profit. But the bank, as a commercial organization, does not want to reduce its own profits,” explains Dmitry Ovsyannikov, director of the mortgage broker Ipotek.ru.

Zelensky notes that it is often easier to obtain refinancing from another bank, since banks use this service as a cross-selling tool and attract new clients with a positive credit history, for which they are ready to soften the conditions or make a lucrative offer.

The VTB group of banks does not refinance loans issued by banks of its financial group, but offers alternatives. “We offer our clients banking procedures similar to refinancing, in particular, a pre-approved loan for a larger amount to repay the previous loan and at a lower rate,” explains Yulia Demenyuk. Sberbank has found another solution that combines the opportunity to refinance its own clients and at the same time lure them away from competitors: the bank refinances up to five loans at once, but at least one of them must be taken out from another bank.

You also need to keep in mind that those who want to refinance on more favorable terms will face a kind of credit trap. Transferring funds from a new bank to an old one does not automatically repay the debt without the participation of the borrower, warns Nikolai Volosevich. “The new bank transfers funds to the old one, but this does not mean automatic closure of the previous loan: the funds will remain in the account until the client submits an application for early repayment,” says the expert. As a result, it may turn out that for some time the borrower will have to pay both the old refinanced loan and the new refinanced loan.

Financial advisors recommend preparing for this in advance and stocking up on the documents necessary to pay off the old loan, thereby reducing costs. “Banks, on the one hand, offer clients to take a certain amount in excess of what is necessary, supposedly to reduce the financial burden during this time. But this is another one of those tricks that will really help one client, and relax another, and the latter will end up spending more time and money on repaying the old loan,” warns Saida Suleymanova.

Some banks set an increased rate for the new client during the re-registration period, which will remain in effect until he ends his relationship with the previous bank. Such a scheme, for example, is provided at DeltaCredit Bank.

“The situation, however, can be the opposite: initially a low rate is given, which can be sharply increased if the client has not repaid his previous loans - usually 40-50 days are given for this,” Volosevich clarifies. At Raiffeisen Bank, this period has been increased to 90 days, and after its expiration the rate will increase by 3 percentage points if the client does not fulfill his obligations.