Gifting a Home Under Mortgage: When Banks Approve and What They Require.

The Growing Significance of Mortgages in Ukraine

According to Novyny.live: Mortgage-related issues are becoming increasingly prominent in Ukraine, including the possibility of gifting a property that is still under a mortgage loan. The legal framework, notably Ukraine's 'Mortgage Law', governs the rights and duties of the parties involved. A key provision is that the mortgagor can only transfer ownership of the mortgaged property with the consent of the mortgagee (the bank). Therefore, to gift an apartment with an outstanding mortgage, the bank's explicit permission is a mandatory first step. This process is part of a broader effort to develop a functional housing finance market in the country.

Responsibilities of the New Owner

According to Article 23 of Ukraine's 'Mortgage Law', the recipient of the gifted apartment assumes the role of mortgagor and takes on all obligations under the original loan agreement. Consequently, the new owner becomes responsible for the remaining mortgage debt. While securing the lender's approval can be challenging, it is possible under specific conditions. Banks typically grant consent in cases where:

• the new owner formally assumes the loan obligations;
• a portion of the outstanding debt is repaid at the time of the gift transfer;
• the recipient's financial stability is documented and verified.

Tax implications are another crucial consideration. The gift tax rate for real estate transferred between first- or second-degree relatives is 0%. This exemption serves as a significant incentive for gifting mortgaged apartments within close families. It is also important to note that the Ukrainian government is developing a long-term model for mortgage lending.

"We are currently creating a long-term residential mortgage lending program, which will become a driving force for the development of the stock market." - Danylo Hetmantsev

It is estimated that the necessary funding for housing lending could exceed one trillion hryvnias. By 2026, the gap between mortgage costs and rental prices is expected to narrow, which may influence the real estate market. Thus, the matter of gifting mortgaged apartments remains a significant issue requiring careful attention from potential owners and lenders alike.

The rising relevance of mortgages in Ukraine, particularly the gifting of mortgaged properties, reflects ongoing legislative and economic shifts. Simplified tax conditions for relatives may encourage more people to pursue such gifts, potentially impacting real estate market dynamics. Monitoring the development of new government-backed mortgage programs is also essential for understanding future housing market trends.