Sberbank : Sber improves mortgage conditions for individual housing construction

SberBank is increasing accessibility to mortgages for individual housing construction (IHC). Changes have been made to the lending process that will significantly simplify the customer journey and minimize the package of documents needed for the application to be processed and the loan to be granted.

SberBank has registered a surge of interest among Russians in individual homes and countryside property which has only grown since the pandemic and enforced self-isolation measures. The general reduction in interest rates on mortgages, the launch of our own IHC programs, as well as state support measures in this sector have contributed to this rise. In 1Q 2021, SberBank received over 13,000 applications for IHC under various programs, compared to just over 6,000 in 1Q 2020, and issued RUB 1.87 bn in mortgages for IHC, which is more than double the amount issued over the same period last year.

Alexander Vedyakhin
First Deputy Chairman of the Executive Board, Sberbank

What IHC programs are already operational?

For SberBank payroll clients building their own house or using a construction company, the interest rate for the Housing Construction product will start at 8.8%.

If the house is intended for permanent habitation or registered on Rosreestr as a resale property, it qualifies for the Completed Housing credit program, with an annual interest rate starting at 7.3%.

SberBank also offers loans for the purchase of a garden cottage or dacha starting at 8% interest under the Suburban Real Estate program.

Under the state-subsidized Far Eastern Mortgage program, credit for your own house is available with an interest rate starting at 1% per annum.

What changes have been made?

Sber has launched a pilot comprehensive solution for IHC modeled on the solution offered for projects in apartment buildings. The developer receives project financing from the bank and redistributes part of the loan discount in favor of the client - the individual taking out a mortgage with Sber.

This mechanism boosts buyer demand, ensures the buyers' funds are protected, and increases developer interest in IHC project implementation. In this case, the mechanisms of Federal Law 214-FZ on escrow accounts are applied, which reduces risks for IHC buyers and the bank. Over 300 houses are intended to be built under pilot projects. In the second half of the year, the IHC solution will become a mass product offered to clients in all regions of Russia.

Changes will be made to the lending process to simplify mortgage acquisition under the Housing Construction and Suburban Real Estate programs on April 26.

Clients will not need to provide quotes. SberBank will issue loans based on the cost of construction declared by the client in the construction parameters for self-build construction or specified in the work contract when engaging a construction company. This will help borrowers save time and money.

Loans will also be granted in tranches. Clients will not need to provide invoices to prove that the previous tranche was used as intended before receiving the next one.

Disbursal of loans in tranches is in the client's interests, as they take out as much as they need for each specific phase of the project without overpayments. The requirement to provide reports on the utilization of each tranche has been removed. Instead, the borrower must provide a certificate of conformity stating that the completed garden cottage or residential building meets the parameters provided earlier (a legislative form provided by local municipal authorities) or a statement from the Unified State Register of Immovable Property about the registration of ownership of the constructed real estate.

Clients can take out an IHC mortgage remotely via the website DomClick.ru. Documents in electronic format are accepted. Upon acceptance of the application, the client will need to visit a bank branch once to sign the loan documents.