St. Petersburg - city view
The economy in our country is subject to ups and downs. The global financial crisis also has a negative impact. For this reason, a borrower may find himself in a difficult position – losing part of his income or even losing his job. In such a case, he will be unable to make monthly payments to the city mortgage bank. The situation is aggravated by exchange rate fluctuations. Additionally, currency loans hit the borrower's pocket when his income is in rubles.
The city mortgage bank also suffers from economic instability. The profitability of operations that characterize mortgage in St. Petersburg and other cities declines, inflation rises, and an imbalance appears between the profits and expenses of the city mortgage bank. The result is a forced necessity for this credit institution to raise the interest rate, which entails an increase in the risk of borrower default. Therefore, when drawing up the contract, the bank leaves in it 'loopholes' that can ensure changes in lending conditions by legal means.
The problems of mortgage do not end there. In times of crisis, developers also have a hard time. A rather difficult situation has developed with investments and construction materials. Therefore, many construction projects are frozen. Consequently, the housing for which the mortgage in St. Petersburg and other cities was intended is also lost. In addition, real estate can be subject to various elements (fire, flood, destruction, etc.). Finally, unscrupulous developers can easily deceive trusting clients, who risk losing ownership rights to the housing.
Such mortgage problems are property-related. To protect itself from the consequences of all this, the city mortgage bank prefers to arrange insurance. The borrower, however, has to pay for the insurance.
A 'headache' also turns out to be the decline in prices for mortgage housing for those who use mortgages in St. Petersburg and other cities of Russia. Significant amounts can be overpayments in the case of a mortgage – these are funds 'thrown to the wind.' No benefit is foreseen here for the city mortgage bank either. It invests its finances in the client's loan security. Their return and profit from the transaction depend entirely on the borrower's solvency.
When a client of the city mortgage bank repays the loan early, the bank misses an opportunity for income. In this case, at the most unexpected moment, the bank receives a very large sum of money, which it must reinvest somewhere. Also, it does not earn the expected interest.
However, the city mortgage bank tries to protect itself from some risks. In this regard, insurance of three main risks is provided – loss of real estate, life and health of the borrower, and loss of ownership of the property by the borrower.