A mortgage is a bank loan granted to a borrower for the purchase of real estate or improvement of housing conditions.

The term "mortgage" comes to us from Ancient Greece, where it referred to a pillar inscribed with a notice that a land plot served as security for a debt.

In Kazakhstan, mortgage lending began to develop actively in the early 2000s and today is one of the primary tools for solving housing issues.

Currently, this is the most accessible way to purchase real estate, which explains the growing popularity of mortgage lending.

Mortgage lending is a standard method by which individuals and legal entities can acquire real estate or other property without paying the full cost upfront from their own funds.

According to Article 1 of the Law of the Republic of Kazakhstan "On Mortgage of Real Estate Property," a mortgage of real estate property (mortgage) is a type of pledge in which the pledged real estate or a share therein remains in the possession and use of the pledgor or a third party; a mortgage loan is a loan, including a bank loan or syndicated loan, secured by a mortgage of real estate property; a residential mortgage loan is a mortgage bank loan provided for the purpose of constructing housing or purchasing and/or repairing it.

In Kazakhstan, mortgage lending comes in several types:

– A standard mortgage loan differs in interest rate, loan terms, and individual calculations for each borrower based on income level and credit history.
– Concessional lending differs based on the bank's individual program or government-backed mortgage programs.

These mortgage programs are intended for specific categories of citizens and are offered under certain conditions. The goal of government mortgage programs is to provide the population with affordable housing. Therefore, the programs feature reduced interest rates and minimal down payments.

In accordance with Article 6 of the Law, a mortgage agreement must be concluded in writing and signed by the pledgor and the pledgee, as well as by the debtor if the pledgor is not the debtor (surety).

The mortgage agreement serves as the basis for registering the mortgage. The right of mortgage arises from the moment of its registration.

Notarization of the mortgage agreement is performed at the parties' discretion.

Mortgage loans are granted for terms ranging from several months to several decades. Applicants must have a sufficiently high income level so that monthly payments do not exceed 40% of their salary.

When entering into a mortgage agreement, the pledgor is obliged to notify the pledgee of all third-party rights to the mortgage property known to the pledgor at the time of registration of the agreement, even if these rights are not registered in the prescribed manner. Failure to comply with this rule entitles the pledgee to demand early fulfillment of the main obligation or to change the terms of the mortgage agreement.

A mortgage agreement has several characteristic features that distinguish it from other types of lending:

– Long loan term
– Relatively low interest rates compared to consumer loans
– Mandatory insurance of the pledged property
– Requirement to make a down payment
– Strict requirements regarding the borrower's solvency
– Possibility of using government support programs

When arranging a mortgage, the bank carefully checks the borrower's credit history, current income and expenses, and appraises the property being purchased. This is done to minimize risks, as the bank is lending a substantial amount for a long term.

When taking out a mortgage loan, it is important to understand the difference between payment types:

1. Annuity payment – This type of payment involves equal monthly installments throughout the loan term. At the beginning of the term, a larger portion goes toward paying interest, while toward the end, a larger portion goes toward repaying the principal.
2. Differentiated payment – This type of payment is characterized by a gradual monthly decrease. The principal debt is repaid in equal installments, while interest is charged on the remaining balance.

Additionally, in Kazakhstan, mandatory conditions for obtaining a mortgage include insurance of the pledged property, as well as life and health insurance of the borrower (if required by the bank).

Starting July 1, 2026, amendments regarding the issuance of mortgage loans will take effect.

One important change will be the abandonment of a single interest rate. Mortgage terms will be determined individually.

The interest rate will be influenced by: the down payment amount, income level, credit history, debt burden, and family composition.

Starting July of this year, banks will consider exclusively official income confirmed by pension contributions and taxes. Obtaining a mortgage without income verification or against additional collateral will become impossible.

The essence of the above changes is that control over debt obligations will be strengthened.

In addition to the existing Debt Burden Ratio (DBR), a new indicator will be introduced – the Debt-to-Income Ratio (DTI).

While the DBR limits monthly payments (to no more than 50% of income), the DTI will take into account the total volume of debt relative to annual income.

The new rules aim to reduce risks for both banks and borrowers. However, obtaining a mortgage may become significantly more difficult for many Kazakhstani citizens.

Banks will establish separate limits for different types of loans: mortgages, auto loans, and unsecured loans.

All of this will operate within the overall Debt-to-Income Ratio, which shows how much a person can borrow relative to their income.

In other words, the total debt is limited first, and then the specific amount that can be borrowed for each type of loan is allocated.

In conclusion, it can be confidently stated that the main advantages of a mortgage are housing accessibility and the ability to immediately become a homeowner; however, the interest overpayment is the primary disadvantage of a mortgage loan. In addition to the cost of housing, the borrower is obliged to pay interest. But these are not the only expenses. During the loan application process, a person will also face the need to pay for appraisers, notaries, and bank application processing fees.

Mortgage lending is an excellent opportunity to purchase your own home. However, one should carefully study the lender's terms to avoid unforeseen circumstances after purchasing real estate that could lead to certain financial problems.

Saltanat MAMANOVA,
Judge of the Auliyekol District Court, Kostanay Region

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