Thanks to the new legislation, citizens who take home loans after October 20, 2017, are more informed and protected than those who have already purchased apartments on credit. There are several news items, the most important of which are highlights.
Credit is a banking product that most need at some lifetime
The loans are taken for different purposes, and in this relation, the creditor (bank) transfers a certain amount of funds to the debtor for the agreed time and under defined conditions. If the money is used to buy real estate, then it is a home loan that is mostly contracted for a longer-term (up to 30 years), and real estate is an insurance instrument.
The bank will only grant credit to creditworthy individuals, and those are the ones who
- have a steady monthly income in HR
- duly settle their financial obligations (as recorded in the HROK)
- they want to raise a loan amount that is less than 1/3 of the average monthly income (including all loan commitments), which can be promoted to co-debtors or guarantors. It should be emphasized that banks and other credit institutions have different credit ratings, so please contact your bank to see if it can grant you a loan.
The Housing Consumer Credit Act introduced many changes, of which we highlight the most important.
Expanded information on all available channels
As of October 20, banks have been providing more information on loan terms on their channels such as websites, branches, and the like, such as key credit product information or a historical overview of base interest rates.
All loan terms on one form
Before entering into a loan agreement, the bank must provide you with an information form that gives you the best overview of the terms of the loan offered, as it contains the following information:
- loan amount
- the duration of the loan
- the type of interest rate
- total payment amount
- effective interest rate (EIR): a single amount that is the total cost of a loan, expressed as an annual percentage
- expenses to be paid, either on a regular or one-off basis
- number, frequency of payment and amount of war
- information on the repayment terms and fees you would have to pay to pay off the loan early
- If you are taking out a foreign currency loan, examples will be provided to explain how changing the exchange rate might affect your credit.
This makes it easier to compare offers from different banks and choose the one that works best for you.
Deadlines for deciding and giving up credit
When a bank offers you an offer, you have at least 15 days to compare offers, evaluate, and make an informed decision. According to the proposal, you will have the right to cancel the contract within 14 days from the date of the conclusion of the loan without giving any reasons.
Exchange rate notice (Article 23, paragraph 8 of the Housing Consumer Credit Act)
The Bank is obliged to inform citizens who have a foreign currency housing loan or a foreign currency bond whenever the value of the total outstanding amount or regular installments or annuities changes more than 20 percent due to exchange rate movements.