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Can I afford mortgage / Do I need mortgage?

Before commencing on a mortgage quest, and piling up required documents, which will be reviewed in no time, we will look into mortgage terms, payment options and reveal key observations pertaining to mortgage in Uzbekistan.

There are two payment options available for a mortgagee, consequently two methods of calculations that will lead to either more or less gross payment. So, your choice matters to your pocket now.

Your choices are between annuity (also known as “Аннуитет”) and simple r% (also called as “Простой метод”). Since it rolls up to more gross payment with annuity method, people prefer simple r%/“Простой метод”. In fact, my interviewee at “Ipoteka Bank” could not recall anyone choosing annuity payments.

Observation № 1: Annuity method costs you more, thus the majority choose simple r%

Payment story unfolds as follows:

Parameters	Annuity	Simple r%	Simple r% with grace period
Property value	60,000,000	60,000,000	60,000,000
Down payment	15,000,000	15,000,000	15,000,000
Principal amount	45,000,000	45,000,000	45,000,000
Mortgage period	15 years	15 years	15 years
Interest rate	14%	14%	14%
Coupon payment	599,284	513,958	566,458
Total payment	107,871,052	92,512,500	101,962,500

Observation № 2: Grace period is not grace in mortgage payments as you end up paying more in this method

It probably drew your attention that payment option with grace period is not favoring your budget. In fact you end up paying more on interest. Where it comes handy is less gross payment amid the grace period, but more to pay in the future. Thus, rather than having attractive words finalize your decision, being skeptical and using the mortgage calculator is your precaution.

What if banks make “lucrative” offers along with mortgage?

Observation № 3: …deposit costs more than it earns and your hidden “benefits” are actually extra burden.

Indeed, mortgage banks do so. Yet if you remember, there is no free lunch. Given the property value of, say, $100,000, local banks (not all) require you to deposit $25,000 at least and promise 14% return (or different rate not exceeding mortgage interest rate) on it, meanwhile you are charged 20% on property value. Suffice it to say, your deposit costs more than it earns and your hidden “benefits” are actually extra burden.

Ready for paperwork?

Observation № 4: Limited properties under mortgage

Regardless the observations above, if your major goal is cost allocation, finding a mortgage property is your next challenge. Secondary market is virtually void under mortgage, and available options are in the primary market, emanating highly priced apartments. Well if you get lucky enough below are the documents to prepare to apply for mortgage:

• Letter of intend
• Passport copy
• Letter on income from permanent and secondary sources for the last 12 months
• Residence status confirmation letter
• Report from a certified appraiser on property’s value
• Down payment not less than 25% from the value of a property

In preparation of the above documents the mortgagee will have to pay for:

• Independent appraiser fees
• Notarial authentication of buy-sell contract
• Insurance fees
• Other fees

Am I eligible?

Observation №5: Mortgage eligibility criterion shifts from mortgagee’s income report to employer’s solvency if down payment exceeds 50% of the value of a property.

Once you are off the woods and submitted all the required documents, the bank will consider your eligibility. If your down payment is less than 50% of the property’s value, mortgagee’s credibility is rated by income report, if the down payment exceeds 50%, mortgagee’s solvency is attributed to the employer’s credibility.