The Main Directorate of the Central Federal District of the Bank of Russia reported a sharp rise in mortgage issuance as a means to improve living conditions for Russians. Real estate can also act as a hedge against currency depreciation in the current economic climate. Nevertheless, a mortgage loan is not a guaranteed savings tool, since payments are usually spread over many years. In the event of an adverse life event, the borrower may face a difficult debt situation.
Unemployment, sudden illness, and other unforeseen circumstances pose real risks for clients seeking mortgage services. Exiting debt burdens and protecting a home is not simple, but it is achievable, according to a banking expert from the Central Federal District. The expert noted that for most Russians, refinancing and mortgage holidays are the most accessible options to manage mortgage debt without losing the dwelling.
refinancing
Refinancing is often described as a loan replacement. In a mortgage context, it means obtaining a new loan secured by the same property but with more favorable terms. To refinance a mortgage, the borrower applies to a bank or a lending institution that will issue a new home loan to pay off the existing mortgage.
Typically, mortgage debt is repaid in yearly installments, with the largest share of interest paid during the early years of the term. Refinancing is advantageous when new loans carry lower interest rates or when a substantial portion of the refinanced loan remains unpaid. Under these conditions, the overall cost of borrowing can be significantly reduced.
As explained by the Central Bank, the actual overpayment reduction depends on the new interest rate and loan term. For long-term loans, it is common to see a rate drop of about 1–2 percentage points after refinancing.
Refinancing may offer benefits beyond pure savings. It is popular among borrowers juggling multiple loans, as it allows consolidation into a single monthly payment to one bank, simplifying finances.
credit holidays
Mortgage holidays enable borrowers to pause payments for six months or reduce installments to a manageable level. This option has been available under Law 76-FZ since 2019. To qualify, the property must be the collateral for the loan and the borrower must demonstrate life challenges such as job loss, illness, or unexpected expenses. The residence tied to the loan must be the debtor’s registered address, and the loan amount typically should not exceed certain thresholds while debt restructuring remains pending.
From March 2022 to June 2023, residents in the Central Federal District received more than 3,000 deferrals totaling 12.8 billion rubles, with Moscow region accounting for over 2,500 deferrals and 11.6 billion rubles. Banks often offer additional holidays under their own schedules, sometimes covering only interest or deferring payments for a period.
Even after a credit holiday ends, borrowers generally transition back to the standard payment plan and resume full payments toward the loan. Yet the demand for temporary relief remains, with many borrowers notifying banks of financial difficulties and, if necessary, considering options such as selling the apartment using it as collateral during negotiations.
Choosing between credit holidays and refinancing depends on the borrower’s situation. Holidays serve as a precaution against sudden income loss or illness, while refinancing is a strategic tool to reduce long-term debt load.
How to sell a mortgage flat on your own
The central bank indicates that selling a mortgaged property can be sensible when repayment problems arise or when the property has lost value or utility. In certain cases, moving to a different region or changing living conditions may prompt a sale, while some borrowers may pursue a sale to avoid a forced foreclosure. The process generally includes securing bank approval, finding a buyer, finalizing the sale, paying off the mortgage, and lifting the lien, which can often be completed by the land registry within a few working days after all documents are submitted.
Experts note that rising interest rates can push up property prices in the market. This has made previously discounted properties more attractive, especially if there is no delay in lender payments. In some cases, properties backed by the bank may be priced more favorably for buyers who can secure financing from the same bank that holds the loan.
It is prudent to avoid purchasing a mortgaged property if the loan is already in dispute or if there are outstanding insurance or communal charges tied to the building. When evaluating such transactions, it is worth confirming that the lender has no outstanding claims before proceeding.
When is it profitable to buy a mortgaged flat?
Buying a mortgaged flat can be advantageous for buyers who qualify for a mortgage and can secure financing from the same bank that holds the seller’s loan. This approach is particularly appealing for buyers applying for preferential mortgage programs, as these often cap the loan amount and still provide favorable terms. While mortgage rates can rise with shifts in key rates, government support programs for housing purchases may remain stable, with maximum rates for some preferential programs staying around eight percent, according to experts.
Mortgaged properties frequently sell for below market price, presenting an opportunity for eligible buyers to enter with less upfront capital. In regions where sellers purchased the properties several years ago, prices may still be aligned with current market trends. Prospective buyers should be prepared for a potential winter market shift that could further adjust values or renegotiate terms with lenders. It is generally advisable not to pursue purchases where the loan is actively in dispute. It is also prudent to verify that there are no outstanding insurance or communal payment issues tied to the unit.