There are plenty of foreign terms and terms about both property sales and rentals. No wonder you don't understand every one of them! But we are here for you! This time we’ll tell you what the apartment's annuity is, what it involves and whether you need to pay more attention to it.
WHAT IS A FLAT ANNUITY?
You often come across the term annuity when looking for housing in a cooperative apartment. The annuity is the unpaid amount to the cooperative. It is a kind of loan, which is paid when the cooperative was created for the purpose of privatization of apartment buildings.
This loan is repaid by the cooperative to the original owner, most often the town or municipality. It is paid until it is fully repaid. And because you’re a co-owner in the cooperative, you are also paying the annuity for full repayment.
WHAT TO WATCH OUT FOR
It follows from the above that if the cooperative apartment is burdened with annuity, it is necessary to count on a regular monthly extra amount. And it's usually a few thousand. The amount is not the same for each apartment; it is different according to the layouts of apartments or by size. Therefore, ask the housing co-operative how high the total unpaid portion of the annuity is and your regular amount as well and also the amount of time you have to pay.
DOES THE ANNUITY HAVE ANY ADVANTAGES?
You can repay it at once. If the cooperative does not have a gradual repayment in terms of conditions, it is possible to pay the entire annuity at once and have the flat rewritten in private ownership.
You don’t have to pay property tax because you’re buying a share in a cooperative, not an apartment. Therefore, these expenses are lower.
FLAT ANNUITY VERSUS MORTGAGE
Is it possible to take a mortgage loan for an annuity apartment? It's a little more complicated. This type of financing must be in your personal property. However, this means that it’s necessary to pay off the entire annuity. The bank can apply for a pre-mortgage loan and thus pay the entire apartment with an annuity.