Azerbaijani banks change mortgage requirements

Baku, Azerbaijan, Apr. 16

By Anvar Mammadov - Trend:

The banks, which are authorized organizations of the Azerbaijan Mortgage Fund (AMF), increased the amount of the subsistence minimum for each member of the family for obtaining a mortgage loan, said a message posted on the AMF website.

According to the message, this is connected with the approval of the law "On the subsistence level for 2017". According to the law, the subsistence minimum for the current year in Azerbaijan is set at 155 manat compared to 136 manat in 2016.

According to the message, 13 out of 25 banks which issue mortgage loans through the AMF increased the amount of the subsistence minimum from 136 manat to 155 manat, Muganbank - up to 160 manat, AGBank - up to 170 manat, VTB Bank (Azerbaijan) - up to 175 manat, Expressbank, AtaBank and Azer Turk Bank - up to 180 manat, the International Bank of Azerbaijan, Kapital Bank and Bank Respublika - up to 200 manat.

The amount of the subsistence minimum remained unchanged in three banks, namely, PASHA Bank and Bank of Baku - 180 manat, while UniBank - 200 manat.

Moreover, the banks reduced the amount of the initial payment, in some cases two times. In particular, the amount of the payment on standard mortgage decreased from 50 percent to 25 percent in Bank Respublika, while preferential mortgage from 50 percent to 15 percent.

The initial payment on standard mortgage decreased from 40 percent to 30 percent in PASHA Bank, Muganbank, Express Bank, International Bank of Azerbaijan and AtaBank.

The initial payment on preferential mortgage reduced from 40 percent to 30 percent in AtaBank, Muganbank and Express Bank.

New conditions of banks for obtaining a mortgage loan:

According to the new mortgage loan issuance order, approved in June 2016, an ordinary mortgage loan will be issued only to Azerbaijani citizens and only in the national currency for a term from 3 years to 25 years, while preferential mortgage - up to 30 years to purchase a house, owned by the citizen. Interest rates on conventional mortgage must not exceed eight percent, while 4 percent per annum in preferential mortgage loan.

The maximum amount of the mortgage loan (including preferential) is determined by Azerbaijan Mortgage Fund JSC and must not exceed the cost of repaired housing with an average of 100 square meters in zone #7 in Baku. Annual interest rates on the loan are determined by the company’s Supervisory Board.

The amount of preferential mortgage loan must not be more than 90 percent of the cost of purchased housing by the date of the loan issuance, except for cases when a borrower appeals to decrease the loan amount. The amount of conventional mortgage loan must not be less than 75 percent and more than 85 percent of the cost of purchased housing by the moment of the loan issuance, except for the cases when a borrower appeals to decrease the loan amount.

The monthly payment for a mortgage loan must not exceed 70 percent of a debtor's monthly income. The age of the borrower must not exceed the retirement age according to the legislation. An agreement on life insurance is required.

The family members of war victims, national heroes, internally displaced people, civil servants with at least a three years' experience, teachers of secondary schools with at least a five-year service term, PhDs, doctors of science and those having special merits in sport as well as the military with at least a three-year service term can use the preferential conditions. Each family having the right to such a mortgage loan can use it only once.

Around 25 out of 32 banks in the country, as well as 16 insurance companies [in total 21] and eight appraisal organizations are the authorized banks of the Azerbaijan Mortgage Fund.