--- description: To apply the client must have private land available for construction. The land can be located anywhere in Azerbaijan, but it must be used exclusively for resi… title: What is a mortgage loan used for construction of residential buildings, and who is eligible to apply for it? -Ipoteka.birbank.az image: https://ipoteka.birbank.az/api/articles/photo/8187a6d4-f090-427c-9978-8d5f6cf81652.png --- What is a mortgage loan used for construction of residential buildings, and who is eligible to apply for it? ![blog](https://ipoteka.birbank.az/api/articles/photo/8187a6d4-f090-427c-9978-8d5f6cf81652.png) To apply the client must have private land available for construction. The land can be located anywhere in Azerbaijan, but it must be used exclusively for residential purposes. Documentation confirming ownership of the land is required. The land plot that will be developed should have a minimum area of 0.03 hectares. One of the main requirements for applying is that the client or other individuals must have real estate property (such as apartments, country houses, private constructions, or non-residential spaces) located in Baku, Absheron, and Sumgayit. The value of the property that will be used as collateral should be at least 70% of the loan amount. For example, if the total construction cost is AZN 100,000, the client would need to make a payment of AZN 30,000 to the bank (15% payment is also allowed). This means they will receive a loan amount of AZN 70,000. Throughout the loan term, a house or other property with a minimum value of AZN 100,000 (supported by a deed of ownership) will be used as collateral. Worth noting that the construction should be fully completed, and the house should be renovated and ready for occupancy to satisfy the loan requirements. The percentage of the down payment is determined as follows: • 15% for individuals who do not currently own a house/apartment. • 30% for individuals who own a house/apartment. Additional steps when applying for a mortgage loan to build a house.  When applying for a construction mortgage loan, a client must provide a detailed description of home project to a construction company that collaborates with the Bank. The construction company will develop a preliminary design of the house, determine the estimated construction costs, and enter into an agreement with the client. Once the client has contacted the Bank and provided the necessary documents, such as an estimate, preliminary design, and Agreement, the Bank will review the client's eligibility for the loan based on other conditions, including information about income, down payment, and real estate collateral. If the client meets all the criteria, an agreement will be reached with the Bank, and funds will be allocated for the construction of the house. Who is eligible for construction under a construction mortgage? Construction on a land plot can be done in two ways: 1\. Individually, by the client. 2\. Through construction companies collaborating with Kapital Bank. When applying for a mortgage loan to build a house, a construction company that collaborates with the Bank examines the estimate. However, the construction work can be carried out either by the client individually or through construction companies collaborating with the bank. The estimated cost determines the amount of the loan that will be allocated to the client, but it does not obligate the client to involve the Company in the construction of the house. However, if the client wishes to work with a partner company for construction, the construction work is carried out in partnership with the company, which estimates the cost. Is it possible to complete an unfinished building with a construction mortgage? Yes, it is possible, provided that an initial payment is made. In such cases, the client needs to contact a construction company that collaborates with the Bank. The construction company will assess the status of the unfinished construction and develop a new preliminary design. The client then contacts the Bank and submits the preliminary design and other required documents for verification by the Bank. If only repair work is needed, the client can apply for a loan from the Bank specifically for repair work. However, if a complete construction is required, a mortgage loan will be provided by the Bank for the construction of a house. Who is eligible to apply for a construction mortgage loan? What are the requirements to obtain a loan? This type of mortgage loan is available to individuals who have official and other sources of income. The main requirement is to make an initial payment and provide real estate as collateral to the Bank. Loan amount ranges from AZN 30,000 up to AZN 250,000. Term and interest rate: Up to 5 years – 7% Up to 10 years – 9% Up to 15 years – 10% Up to 20 years – 11%. The down payment percentage is determined as follows: • 15% for individuals who currently do not own a house/apartment. • 30% for individuals who own a house/apartment. If the total amount exceeds the maximum loan amount of AZN 250,000, the excess portion will be required as a down payment. For instance, if the construction cost is AZN 400,000, the calculation would be as follows: 400,000 AZN (construction cost) - 250,000 AZN (maximum loan amount) = 150,000 AZN (down payment). Articles All articles ![blog](https://ipoteka.birbank.az/api/articles/photo/75289763-0013-4b6e-853c-8e865200d3e9.webp) Who is considered a person with other sources of income? 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