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"Real estate projects are so competitive now that they can even offer 'zero down payment'" "Mortgage interest rates have been lowered, and many offer 'zero down payment'"... Recently, Beijing Business Daily reporters noticed that on social platforms, many real estate agents have posted in the tone of home buyers to promote the "zero down payment" plan to attract buyers' attention.

The so-called "zero down payment" mostly refers to developers helping home buyers apply for higher mortgage loans from banks by setting high contract prices, and then using the excess funds after the loan to pay the down payment.

In recent years, the phenomenon of "zero down payment" has become common. Many developers and real estate agents use this as a gimmick to attract customers and promote property sales, but this behavior has violated the relevant national financial credit policies. Recently, regulatory authorities in Zhengzhou, Nanning and other places have issued warnings on "zero down payment" home purchases, reminding consumers to be vigilant against possible financial and legal risks.

“Zero down payment” home purchase rebate card

Recently, real estate agents from Guangzhou, Shenzhen, Zhengzhou and other places have been active on social platforms. They post in the tone of home buyers to promote the "zero down payment" plan and attract home buyers to come for consultation.

Liu Yu (pseudonym), a real estate agent from Shenzhen, is one of the people promoting "zero down payment" for home purchases. He told a Beijing Business Daily reporter that his company has cooperated with many real estate projects in Shenzhen and can achieve "zero down payment" for home purchases.

How to buy a house with "zero down payment"? According to Liu Yu, there are two main forms of "zero down payment" at present: one is that the developer directly sets a high contract price to help the buyer apply for a higher mortgage loan from the bank, and use the excess funds after the loan to pay the down payment. The other is that the developer advances funds or helps the buyer apply for business loans or consumer loans, and "changes the vest" of the bank's regular loan funds into "down payment loans" funds to make up for the lack of down payment.

"We basically do the first type, and we have quite a few successful transactions. Last week I completed two 'zero down payment' transactions," Liu Yu explained. For example, if a buyer is planning to buy a house with a total price of 3 million yuan and a down payment of 1 million yuan, the developer will increase the contract price to 4 million yuan. The buyer can then apply for a bank mortgage loan at 4 million yuan. The extra amount can be used to pay the down payment, which is equivalent to "zero down payment."

This "high appraisal and high loan" method does not require a down payment, but the monthly payment will increase as the loan amount increases. Liu Yu said that the developer will return the increased monthly payment to the buyer in the form of a shopping card, and the buyer can also exchange it for cash if he wants it. The approximate amount of an 80,000 yuan shopping card after exchange is 72,000 yuan.

In fact, the "zero down payment" purchase of a house that Liu Yu mentioned is itself a violation of regulations, and he himself knows it. "We have no cooperation with the bank. 'Zero down payment' is not compliant, but it is not illegal. We just skipped the down payment process. Moreover, we are a large platform with many stores in Shenzhen, so the risks are relatively controllable." Liu Yu added.

Another agent from Guangzhou, Zhao Bo (pseudonym), directly recommended a property. The property poster showed, "Real-life ready, ready to move in, true 'zero down payment'". Zhao Bo introduced that the so-called "zero down payment" means that the appraisal price is raised before taking out a loan. The monthly payment is determined by the area of ​​the house, but a deposit of 13,000 yuan needs to be paid to the developer in advance. The developer has a cooperative bank, and the down payment is funded by the developer, which will be repaid after the loan is approved.

As for the reasons for the rise of "zero down payment" home purchases, Wang Deyue, a lawyer at Beijing Xunzhen Law Firm, said that during the downturn in the real estate market, "zero down payment" as a promotional means can attract potential buyers, stimulate housing demand, and thus drive market activity. "Zero down payment" reduces the initial capital pressure of home buyers, allowing more home buyers with insufficient funds to enter the market, and developers may launch promotional activities such as "zero down payment" to attract buyers in order to quickly recover funds or clear inventory.

Violation of financial credit policy

Under the temptation of lowering the initial "threshold" for home purchase, many home buyers choose the "zero down payment" plan. Wang Mianhua (pseudonym), a home buyer, is one of them. Recently, Wang Mianhua complained to the Nanning Housing and Urban-Rural Development Bureau that the property he had purchased had false advertising and illegal sales, among which the "zero down payment" purchase was mentioned.

According to the complaint, the property purchased by Wang Mianhua used "high appraisal and high loan" to raise the total price of the property. The developer asked the buyers to pay a deposit of 20,000 yuan or 40,000 yuan, and the rest of the house price was loaned out through bank mortgage loans. In order to make the mortgage amount cover the down payment, the developer deliberately raised the total price of the property, and then used the down payment advance to create proof for the buyers that they had paid the down payment in full, thereby allowing the buyers to purchase commercial housing with "zero down payment" or extremely low down payment.

In fact, the phenomenon of "zero down payment" is not uncommon in recent years. Many developers and real estate agents use this as a gimmick to expand their brand influence, attract customers, and promote sales of related properties, but this behavior has violated relevant national financial credit policies.

In November 2017, the Ministry of Housing and Urban-Rural Development, the People's Bank of China, and the former China Banking and Insurance Regulatory Commission jointly issued the "Notice on Standardizing Housing Purchase Financing and Strengthening Anti-Money Laundering Work", strictly prohibiting real estate developers and real estate agencies from illegally providing down payment financing, down payment installments, and disguised down payment advances.

Why is the practice of "zero down payment" housing purchases still rampant despite repeated bans? Guan Rongxue, a senior analyst at Zhuge Data Research Center, said that there are many reasons why "zero down payment" housing purchases are still rampant. There may be imperfect regulatory policies or inadequate implementation, which provide developers with room for maneuver; or in a low-interest environment, financial institutions may be more inclined to provide such loans to increase business volume; or in the face of preferential treatment such as "zero down payment", some consumers may ignore risks and pursue short-term interests. Therefore, subsequent supervision and financial institutions should strengthen loan qualification review, increase repayment capacity assessment, severely punish violations, and strengthen standardized management and risk control of the real estate market.

Regulatory documents issued in many places warn of risks

The seemingly low-cost "zero down payment" actually hides multiple risks. Wang Deyue pointed out that first of all, it violates relevant laws and regulations. Regulatory policies explicitly prohibit "zero down payment" purchases, and strictly prohibit the diversion of funds such as personal comprehensive consumer loans to purchase houses; secondly, "zero down payment" purchases are often accompanied by illegal operations and yin-yang contracts. These operations cannot be agreed upon in the contract and are not protected by law. Once the real estate company or intermediary fails to fulfill its promise, the buyer may lose both the money and the house; in addition, "zero down payment" loans are often accompanied by higher interest rates and additional fees. These fees may include loan handling fees, appraisal fees, insurance premiums, etc., which increase the total cost of buying a house; finally, "zero down payment" purchases seem to reduce the economic pressure in the early stage of buying a house, but in fact, buyers may need to bear higher monthly payments and longer loan terms, and buyers will face greater repayment pressure.

Buying a house with "zero down payment" not only destroys the market environment of the mortgage business, but also affects the order of the financial market. Amid the chaos, regulators in many places have increased their warnings.

Recently, regulatory authorities in Zhengzhou, Nanning and other places have issued warnings on "zero down payment" home purchases, reminding consumers to beware of possible financial and legal risks.

Zhengzhou Housing Security and Real Estate Administration Bureau said that "zero down payment" not only cannot fundamentally solve the problem of short-term capital shortage of home buyers, but also usually requires illegal behaviors such as signing yin-yang contracts and overvaluing house prices to achieve. This not only increases the loan interest and mortgage monthly repayment burden of home buyers, but also poses a greater legal risk of loan fraud. At the same time, "zero down payment" is usually obtained by real estate developers or real estate agencies through advance payment or virtual raising of house prices in order to obtain down payments from banks in the form of mortgage loans. There are legal disputes in the purchase contracts signed by developers and home buyers, so the parties involved may be held criminally liable.

The Nanning Housing and Urban-Rural Development Bureau pointed out that for homebuyers, "zero down payment" means that no down payment is required in the early stage of homebuying. Although the pressure of homebuying is reduced in the early stage, it may actually make homebuyers bear higher loan amounts, thereby increasing the monthly payment burden. In the long run, it may cause homebuyers to fall into financial difficulties and find it difficult to maintain stable repayment ability. At the same time, due to market instability, the value of homebuyers' assets may shrink while the loan balance remains unchanged, thereby increasing the financial pressure of homebuyers.

Faced with the temptation of "zero down payment" and other housing purchases, what should buyers do? Wang Deyue suggested that buyers should fully consider their own economic conditions, market trends, loan conditions, and legal compliance when making decisions to ensure that they can make wise and responsible choices. Conduct comprehensive financial planning and budget analysis before buying a house to ensure that you have sufficient repayment ability. Pay attention to changes in market interest rates and housing prices, and choose the right time to buy a house and the loan method. When signing a house purchase contract, buyers need to read the terms of the contract carefully to ensure that they fully understand and agree to the various provisions therein. In particular, clauses regarding loans, repayments, defaults, etc. require special attention to avoid potential legal risks.

"When it comes to temptations like 'zero down payment', homebuyers are advised not to believe in sales pitches, let alone falsify loan information. Past cases show that once faced with risks such as loan withdrawal or loan suspension, intermediaries will shirk responsibility or even simply run away, and the homebuyers will ultimately bear all the consequences," said Su Xiaorui, senior researcher at Suxi Intelligence Research Institute.

Beijing Business Daily reporter Li Haiyan