On the social network, people shared how they managed to get a home loan without a down payment. They assured that no one complains, because all sides win: both the buyer and the seller, as well as the broker himself.
Specialists do not hide that this scheme, by changing the number in the price of the property, was and possibly still is being used, and it would hardly be possible to track it down and punish those who contributed to it.
However, according to the interviewees, this method is becoming more and more difficult, for example, due to the restriction of cash payments.
It is said that not a single Lithuanian got away without the initial contribution
A heated debate erupted in a Facebook group after one person asked whether or not an apartment with no down payment was possible:
“There is little information, but the broker would “arrange” the documents in such a way that the initial deposit is not required. A very simple and natural question arises – how? For example, the apartment is in a big city, the price is about 80 thousand. euros.”
One woman wrote in the comments that “of course, it’s possible.” And he told me that he bought an apartment for 56 thousand 7 years ago. euros, having only 3 thousand euro advance and document processing.
“Only the apartment needs to be evaluated more,” she added.
Another resident also said that it is possible: “We bought it that way. Maybe 4 thousand was needed. euros for that contribution. The brokers, as they say, arranged the documents.
But as far as I understand, it was possible for us to do that because the apartment was just built and unfurnished.”
When questions poured in about how this is done in the comments, one resident of Vilnius explained: “If the apartment costs 80 thousand. euros, the brokers do this by valuing the apartment at 95 thousand. euros. Then, in the sales contract, the price is 95 thousand. (not 80 thousand) euros.
It says that 15 thousand EUR – own, and 80 thousand. euro loan. The bank is asking for 80 thousand. euros. It somehow shows that those 15 thousand euros were paid to the buyer, but not actually. And the bank transfers 80 thousand to the seller. euros. The buyer does not pay anything of his own.
Threats – only hypothetical?
One commenter questioned how a broker would “handle” the paperwork, since banks still ask for proof, such as a bank statement, that the down payment has been paid:
“Oh, on top of that, it’s illegal and such brokers should be reported to certain authorities.”
The woman who answered her assured that there is no one to complain, as all participants in the scheme have an interest in making the scheme work.
I.e. the buyer gets away with no down payment, the seller sells faster, and the broker’s deal is a success.
Another woman explained that if the false, inflated price of the apartment is indicated, the bank manager is likely to turn a blind eye to the fact that the client’s account does not have savings for the down payment and does not require a copy of the order or it can be forged.
“The broker apparently has his own “broker-appraiser-manager” circle and makes deals. It remains to convince the seller to participate in the scheme, because the contract must indicate a higher price than the real one.
But the seller is likely to agree because he wants to sell. And the threats arising from breaking the law are more hypothetical than real. “We have not yet heard of such schemes being made public, and the participants of the scheme being punished,” the woman from Vilnius thought.
There are all kinds of ways, but is it worth it?
The representatives of the “Housing Department” company stated that the mentioned method of purchase was particularly popular until 2008. financial crises, when loans were distributed in banks very easily. And property appraisers could easily change the values.
“Such a medium made it possible to simply change the value of the property shown to the bank, and thus, by simulating the fact of depositing one’s own funds, obtain a loan for the entire amount paid for the property.
Currently, the situation has changed significantly. A number of real estate appraisers have lost their licenses, and those who have retained or continued to work honestly now value the work they have and refuse fictitious real estate appraisals,” the interviewees said.
However, they did not hide that it is very difficult to see such an act of trickery. According to the interviewees, all attention is paid to property valuation:
“The bank, suspecting that the value does not correspond to reality, may not accept the assessment and ask another specialist to assess it. But whether the observed assessment that does not correspond to reality and its author can be charged with any violations of the law, hardly. He himself runs the risk of being an unrecognized bank appraiser.”
Specialists hinted that there are also more complex schemes to bypass the actual payment of the down payment: “But is it worth going into it, talking about it and educating the public about the wrong ways?”
If a broker offers similar services, it should be understood that he does not really care about your financial future as a buyer. His goal is to sell the property under any circumstances.”
According to representatives of the “Housing Department”, such a deal can be very unsustainable, and after hearing such an offer, it would generally be good to think about whether it is worth continuing to work with such a seller.
Banks may tighten conditions or even stop providing services
The Lithuanian Banks Association (LBA) stated that it negatively assesses any type of fraud.
And emphasized that the person (or persons) who committed it is subject to legal responsibility according to the laws in force in our country.
“We would also like to point out that a credit institution, upon learning that a home loan recipient has provided false information or committed other fraud, may terminate the home loan agreement or apply stricter loan repayment conditions, according to the provisions of the specific agreement with the credit institution,” the association warned.
According to the LBA, if the recipient of a home loan made an advance payment to the home seller in advance, the credit institution requests documents proving such payment.
The association emphasized that the relationship between credit institutions and their clients is based on the principle of mutual trust:
“After learning that a specific person has committed fraud, a credit institution may decide not to provide services to him.”
The buyer may lose money
Ieva Šikšnytė-Brazienė, head of the Mediation and Sales Department of the Inreal group of companies, commented that such “schemes” could have been possible until November 1, 2022, when there was no restriction on cash payments.
According to her, this probably happened only among natural persons, because none of the developers who value their reputation are involved in fraud.
“When buying real estate with a loan, banks and notaries check all orders extremely thoroughly, so there are simply no theoretical possibilities for such a “scheme” to purchase property without a down payment.
And if the seller offered it – transfer it, I will return it after the transaction – the buyer would get into a very dangerous situation, risking losing the corresponding amount”, said the interviewee.
Will appraising the property at a higher price really sell for less?
In the opinion of the “Housing Department”, at present such schemes, when the purchase is organized without a down payment, are a very rare case.
“First of all, appraisers are no longer making mock appraisals. Banks have selected appraisers whom they trust and whose appraisals they accept. This is one of the main factors that make such a way of buying without a down payment either impossible or very difficult,” the representatives highlighted.
As a second reason, they cited the fact that the loan is issued based on the property’s appraisal price. Thus, in such a case, neither seller, knowing that his property is valued at a higher price, will sell it at a lower price.
“Banks have also introduced safeguards – it has become difficult to falsify the receipt of an initial deposit, as banks require such payments to be made only by bank transfer.
In this case, if the buyer did not have the required amount in the account, but suddenly deposited it and made an order for the initial deposit, the bank may be interested in the origin of the money”, the interlocutors shared their observations.
Such scams can only make things worse
According to the “Housing Department”, this fraud scheme is the irresponsible behavior of all parties involved in such activities.
According to the representatives, the buyer himself violates the principle of safe lending. In order for the debt not to cause financial problems in the future, the loan must be properly prepared:
“There must be enough accumulated funds for both the initial contribution and payments, and for some time in case the income decreases or is temporarily absent.”
And according to the “Housing Department”, property appraisers’ easy alternation of values did not provide clear statistics to understand the real estate market, which is also rather irresponsible.
“Proposals of real estate brokers to organize such purchases without an initial deposit in order to sell the property posed a risk to the buyers themselves.
Because, if a person has not accumulated a down payment to buy real estate, it is very likely that he will face insolvency problems in the future,” said the specialists.
Borrowing without a down payment is also possible legally
I. Šikšnytė-Brazienė recommended the leasing service, which is offered by a number of developers, for those who do not have a down payment, but dream of owning their own home.
The “Housing Department” also mentioned that if there is already a strong desire to buy a house, and the down payment cannot be collected, there are sellers on the market who offer to buy apartments for lease.
“This is the easiest and completely legal way to buy a home without a down payment. But it is always necessary to rationally assess your ability to pay regular installments and know exactly the possibilities of getting a loan later.
Buying a home without properly evaluating your options can cause financial losses,” the representatives commented.
