How to Improve Living Conditions Using Maternity Capital

If maternity capital is used to pay the initial contribution or repay the principal debt and interest on a loan for purchasing housing, it can be received immediately after the second child is born in the family. Maria Litinecskaya explains how to get a maternity capital certificate and use it for improving living conditions. 

Maria LitinecskayaExpertManaging Partner of "Metrium Group", a real estate agency and consulting company operating in the Moscow region and St. Petersburg.
1. How to Get a Maternity Capital Certificate?

Maternity capital funds are not provided to parents in cash or by bank transfer. To prevent misuse, the state only issues a certificate confirming the right to use maternity capital. To obtain the certificate, it is recommended to follow this algorithm:

Step 1: Obtain a medical birth certificate (issued in the hospital). If the birth took place at home, a third-party birth certificate is required.

Step 2: Based on the medical birth certificate, obtain the birth certificate at the ZAGS office. In case of adoption, a court decision is necessary.

Step 3: Confirm the child's citizenship. This requires adding a note to the parent’s passport and the birth certificate.

Step 4: Prepare copies of the birth certificates of previous children.

Step 5: Attach the applicant's pension insurance certificate, documents confirming identity, citizenship, and residence to the birth certificates. This set of documents is submitted to the local PFR office. The certificate is received no later than one month and five days after submission.

How to Use Maternity Capital for Improving Living Conditions?

"Improving living conditions" includes the following options:

– Purchasing an apartment;

Investing in shared construction;

Building or reconstructing a private house;

Paying the initial contribution when obtaining a loan for purchasing or building housing;

Repaying the principal debt and interest on loans for purchasing or building housing;

Paying the entrance or share contribution to a housing, housing-construction, or housing savings cooperative.

The purchased housing must be registered in joint ownership of the certificate holder, their spouse, and children with defined shares. Therefore, the certificate holder must sign a notarized commitment to register the housing in shared ownership of family members. This must be done within 6 months after the Pension Fund transfers money to the seller if the maternity capital was used for purchasing an apartment.

If, for example, the MSK was spent on participation in shared construction, the commitment must be signed within 6 months after signing the transfer act. To use maternity capital for improving living conditions, it is necessary to submit all required documents to the local PFR office. 

The basic package, which is submitted in any of the possible variants of directing funds for improving living conditions, includes:

– Original certificate;

– Pension insurance certificate of the certificate holder (SNILS);

– Passport of the certificate holder;

– Copy of the spouse's passport;

– Marriage certificate;

– Application for using maternity capital;

– Written commitment from the certificate holder to register the purchased housing in joint shared ownership. 

How to Use Maternity Capital for Buying Housing?

Maternity capital funds can be used to purchase either ready-made housing (on the primary or secondary market) or an apartment in a building under construction. To direct MSK funds for purchasing housing, the basic set of documents must be submitted to PFR, to which copies of sale or participation in shared construction contracts (DDU) should be added. 

If the apartment is purchased by participating in a housing, housing-construction, or housing savings cooperative, in addition to basic documents, the applicant must provide a registry extract of cooperative members, a statement about the paid share contribution and remaining unpaid amount, as well as a copy of the cooperative charter.

After the application is accepted, the certificate holder receives a receipt-notification about document submission. The review period is one month from the date of submission, after which PFR sends a notification about approval or rejection within five days. In case of approval, the Pension Fund transfers funds to the organization or person specified in the application within two months from the date of submission.

How to Repay a Mortgage Using Maternity Capital?

MSK (or part of it) can be used for the initial contribution, as well as to repay the principal debt and interest on a loan (including mortgage). First, it is necessary to notify the bank of the intention to repay the loan using maternity capital by requesting a statement from the creditor about the remaining principal debt and interest arrears. The bank also indicates the details for transferring MSK funds. Then, the basic set of documents is submitted to PFR, as well as:

– Copy of the credit (mortgage) agreement;

– Document confirming ownership of the housing purchased using a loan (or an EGRN extract);

– Copy of the shared construction agreement (if the housing is purchased under a loan);

– Document confirming that the borrower received funds from the creditor (e.g., a bank statement).

Sometimes certificate holders face the question of whether to transfer maternity capital funds to the bank monthly or pay the full amount (or part of it) at once. The rules do not exclude either option, but it is better to avoid risks and pay the full sum at once. Delays may lead to penalties, which cannot be covered using MSK funds according to the law. 

After the Pension Fund transfers funds to the creditor, the certificate holder must submit an application to the bank for partial or full loan repayment. In case of partial repayment, the bank provides a new payment schedule to the borrower. If the loan is fully repaid, the credit institution provides a statement confirming full debt settlement and absence of claims against the borrower.

How to Build a House Using Maternity Capital?

Improving living conditions can also be done by directing MSK funds to build or reconstruct an individual residential house (ИЖС). As with purchasing an apartment without a loan, building or reconstructing a house using family capital is only possible three years after the birth of the second child.

If the certificate holder manages the construction or reconstruction of a house independently, they receive government support funds in two installments (50% each). For the second installment, proof that the construction is indeed underway is required. Moreover, the second payment is not made earlier than six months after the first one.

When submitting the basic package to PFR, the applicant must specify the specific types and amounts of expenses for building or reconstructing a house. If a contractor is not involved, the certificate holder must separately note this in the application.

To use maternity capital funds for building an ИЖС object, the basic document set must include copies of:

– Construction permit, issued in the name of the certificate holder or their spouse;

– Construction contract;

– Document confirming the certificate holder's rights to the land on which individual construction is taking place;

– Document confirming the registration of ownership rights to the ИЖС object.

If the certificate holder independently manages construction and reconstruction, they must also attach their own details. To receive the second installment from PFR, the certificate holder must provide an act of inspection of major construction (reconstruction) works on the ИЖС object. After a positive decision is made, funds are transferred within two months to the bank account specified by the certificate holder.