How to make money on the mortgage?

07.10.2010 16:10
How to make money on the mortgage? Now a lot of talk about the benefit of leverage for investment in overseas property. But if you make it a rule to our market, it turns out not so rosy picture ... So whether profitable in today's Russia to take credit for buying an apartment, as we try to convince the mortgage brokers and realtors?

Lucrative "pit"
Mortgage rates in our country since the crisis started down slightly. A person who buys a property for the primary market, again the question arises: to bear the full amount of the developer or take a mortgage? "If the rise in property value is higher than your rate on the loan, then this investment is favorable from an investment point of view", - said Andrey Vladykin, head of mortgage and loan company NDV-Real Estate.

But the rise in prices is projected this year at the rate of inflation. "Since January 2010, analysts say the rising cost of real estate in the Moscow region an average of 8%" - confirms Alex Shlenov, CEO of MIEL-Brokerage. Consequently, for the year it will be 12-15%, as predicted by many market participants. Mortgage rates in the primary market now ranging 13-16% per annum in rubles in the secondary - 11.9%. The benefit of the mortgage is drawn is not the most obvious ...

Another thing is that many play on the price rise, which occurs as the construction of the house. As noted by Andrew Vladykin, the difference in cost per square meter from the stage of "pit" before putting the house HA may be around 30%. Case in point leads Vladimir Tribrat, director of marketing GC "Pioneer": "In a newly built residential complex" Lazarevskoye "apartment prices since the beginning of the year, on average increased by 18%. It turns out that at the rate of mortgage lending at 13%, a buyer purchasing an apartment at the end of last year, increased its capitalization by 5%. Thus, at the time of construction of a house mortgage to take advantage, provided of course that the borrower is ready quickly, in about a year, to repay the loan.

Rapid rise is terminated with the surrender of the house in operation, however, over time, acquiring the right property is one more jump.

But then the investor to wait for super nowhere. "The level of increase in the cost per square meter allows you to benefit from investing in new buildings and at current mortgage rates, but only in the short term (1 year), when the rise in the cost per square meter is highest at the expense of approximation to the final stage of construction - sums up Elena Balabanova, CEO of Veritas Real Estate. - In the long term it makes sense to invest in the construction, if the goal - not to increase investment and sberech finances from the impact of inflation and devaluation processes.

Abroad, we can not catch up
Note, however, this investor - one who seeks the means to multiply it, and not just to save. Moreover, the classic investment strategies involve not so much speculation on market growth, as recovery of rental income. This strategy is called - buy to let, «buy to let". The buyer also, invest in new buildings, not in a position to immediately take the apartment, because the first house built 1-2 years, and then the apartment must also fulfill the finish.

So that the receipt of rental income, willy-nilly, to defer until later. And if you bought "secondary housing, which can be immediately surrender, then ruled out the possibility of earning on the growth of property prices during construction.

Funds, professionally involved in investing in real estate, residential sector in Russia is not interested. Cause inefficient operation of money in this market opened Igor Indriksons, head of overseas property investment company IntermarkSavills: «In the markets of other countries, even, for example, in Brazil, there is a mixture: mortgage rates are about equal yield from rents, or even below it, which allows investors to extinguish the mortgage payments from rental revenue. In Russia we have the opposite situation: for rent rates are on average around 3-5% per annum, and the mortgage - 10-15%. "

For these reasons, investors are willing to extract a good profit, invested in overseas property. "In our state mortgage programs, in comparison with foreign, are not profitable due to high interest rates - confirms Julia Geras'kina, director of new construction of Est-a-Tet. - Certainly, we have to pay more profitable purchase of an apartment at once, of course, if a person has such an opportunity. "

The same is said and Elena Balabanova: "With free money, both in the short term (1 year) and long (10 years), it is advisable to invest in real estate without having to mortgage the conditions existing in Russia." In IntermarkSavills also note that investment in Russian real estate market is very profitable, but so far only in the case of using their own funds.

As a consolation it may be noted that the Russian mortgage market is profitable for investments in commercial real estate. As Igor Indriksons here yield from rent is 12-13%, and the classic international proportions, which was mentioned above, work.

Coulda woulda shoulda ...
Why is the situation with the mortgage we have is what it is, and what should be betting that real estate investing has been beneficial? The first question is answered Igor Indriksons: "Such a high rate on mortgages in Russia is, first, high-risk banks, especially when lending to a borrower who buys at the initial stage of construction.

If a person stops paying the mortgage, away from his apartment very hard, spent a mechanism, as in developed countries, we do not yet exist. Secondly, the mortgage rate can not be less refinancing, and she with us now is 7.75%. Reduced refinancing also does not give the desired effect in Russia, as the government does not regulate the banking margin, as in the West. "

Prospects for changing this situation in the near future is not observed. Rent can not grow by much, otherwise it will fall in demand. Mortgage rates can not be significantly reduced if only the government will not impose a rigid incomes policy banks, and will not accept legislation modeled on the western. There is a third way to remedy the situation - a significant decline in property prices, but it's unlikely to happen.

Well, if you did? ..
Elena Balabanova believes that if the annual interest rate on your mortgage will be close to the western (6%), the short-term investors will definitely be beneficial to take a mortgage, and the available funds they can invest in a deposit or other investment projects. In the long term profitability will be about the same as when investing money in a deposit, and when investing in real estate, experts say.

"The main thing that rates continued to decline, and the loyalty of banks for potential borrowers increased. If these processes will go hand in hand, the housing market will receive a powerful stimulus, "- concludes Julia Geras'kina. It is difficult to argue.
Content tags: Mortgages
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