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Mortgage in Kyrgyzstan: How to Get it and Where?

Own house gives a sense of security, reliability and confidence in the future. However, not everyone manages to save the amount required to buy so desirable square metres. A mortgage can become a way out of this situation.

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Kyrgyzstan has two options of mortgage loans – from commercial banks and from the state. In 2015, Kyrgyzstan opened a Public Mortgage Company (GIK) to improve housing affordability and to solve the housing problem of the population.

Together with press secretary of GIK, Melisbek Erzhigitov, we are taking a look at where and how a mortgage can be obtained in Kyrgyzstan.

What is a mortgage?

A mortgage is a type of loan to buy a house. It is secured by the collateral of specified real estate property or another available real estate property. 

Who can get a mortgage?

Any Kyrgyzstani aged 18+ with stable monthly income. 

Where can you get a mortgage?

There are two options:

  • anyone can get a mortgage in commercial banks (at 17 per cent per annum on average) if he/she meets all requirements;
  • public sector employees and citizens of the region can get a mortgage from the Public Mortgage Company (6-8 per cent per annum on average).

GIK offers two types of mortgage loans:

  • «Concessionary» – for public sector employees – teachers, doctors, public servants.
  • «Affordable» – for citizens of the region who do not own houses – self-employed entrepreneurs, private company and public sector employees.

All those who get a public mortgage loan must be solvent and have a family.

Why mortgage rates are high in commercial banks?

The mortgage rate includes bank’s operating expenses – salaries, cash logistics, branch offices maintenance, etc. The banks cannot lower mortgage rates because the market of Kyrgyzstan is small and expenses cannot be paid off.

The public mortgage company gets money from the national budget and international organisations. In this case, a commercial bank is just a mortgage broker. Therefore, the interest rate offered by the GIK is almost three times lower. 

How to get a mortgage from the state?

It is quite simple. If you are a city dweller, you do not need to provide any documents. Everything is automated and GIK officers will get all required documents via the ‘Tunduk’ electronic interagency system. 

Rural citizens must provide a package of following documents: 

  • Employment history and/or own business and/or small holdings for at least 12 months;
  • The borrower (husband or wife) must have no minor children and owner-occupied dwelling in Kyrgyzstan;
  • No family member must own a dwelling house. If a wife or a husband owned a dwelling house, three years must have passed after its sale;
  • A solvency certificate;
  • A positive credit history;
  • The customer must have at least 1 family member in their family. 
What documents are required for a mortgage from commercial banks?
  • a passport;
  • a marriage certificate (for those who are married), spouse’s passport;
  • salary certificate for 6 months. It should indicate your position and have a seal;
  • documents for the real property purchased;
  • if you are married, you must provide a spouse’s salary certificate;
  • if a borrower is married, the spouse must have a notarised consent to the mortgage.
Is a down payment required?

Yes, it is. In commercial banks, it amounts to 30 per cent of the loan. In other words, if you want to get 35 thousand dollars to purchase a house, you should pay 10.5 thousand dollars as down payment. And then you will have to pay the remaining amount plus the interest rate for 5-15 years.

At the GIK, the down payment is 10 per cent. In other words, if you get a mortgage for a studio apartment that costs 20 thousand dollars, you will have to pay 2 thousand dollars as down payment. In this case, your interest rate will be 8 per cent per annum. The more the down payment, the lower the interest rate (6 per cent at a minimum).

The mortgage term is 15 years, and monthly payment at 8 per cent per annum is 182 dollars. For 15 years, the total payment to the bank will be nearly 33 thousand dollars. Out of them, 19 thousand dollars are the price of the apartment, and 14 thousand dollars is the interest rate.

The mortgage can be paid off early, and you won’t be charged a fee. 

What if I do not have a down payment?

In this case, you cannot get a mortgage loan from commercial banks.

However, if you are a public servant or a rural citizen, you can provide an additional collateral (real property) to the GIK if you don’t have a down payment.

Moreover, from the late 2019, the Kyrgyzstanis can use their funds accumulated on their personal insurance account from the State Savings Pension Fund to pay a down payment on a mortgage. However, the account must have at least 50 thousand som (590 dollars) for this purpose.

How long does it take to process a mortgage application?

It takes a week and more in commercial banks.

It takes 1 to 3 months in the GIK.

How many people have already received the mortgage from the GIK?

From the date of GIK establishment to November 18, 2020, 4,985 mortgage loans were granted in the total amount of 70.76 million dollars. 6 thousand Kyrgyzstanis more have applied for a mortgage.

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