Choosing a mortgage lending model in the Kyrgyz Republic

Abstract

In the modern world, mortgage plays an important role in the life of the citizens of the country due to its important role in providing their housing needs. Thus, it is important to find the most effective model of mortgage lending for the country to maximize the living standards of its citizens. The aim of the work is to choose the most effective model of mortgage lending that can be used in the country and bring the greatest benefit to it. The main methods used in the research were analysis, deduction, induction, and abstraction. The paper examined various aspects of mortgage lending, focusing on the different payment models and their implications for borrowers. Two types of mortgage loans were considered: with annuity and differentiated payments, their main differences in terms of payment rates were described, and mathematical formulae for their calculation were specified. To illustrate the impact on the borrower of each of them, a theoretical example was provided, on the basis of which the differences between the two systems were described. The paper also describes three models for organizing mortgage lending systems: a closed (stand-alone) mortgage system, a truncated open model and an extended open model. The suitability of these models for the development of the Kyrgyz mortgage market was assessed based on their characteristics and features, positive and negative components. The work brings new knowledge in the context of studying the peculiarities of mortgage lending as a whole, as well as allows finding opportunities for improving its functioning in the Kyrgyz Republic