Azerbaijan Mortgage Fund suggests re-introduce borrowers’ obligatory life and health insurance
Azerbaijan, Baku, Feb. 16 / Trend , U.Ismayilova/
Azerbaijan National Bank Mortgage Fund (AMF) suggests re-introducing obligatory life and health insurance with respect to mortgage borrowers. The insurance was abolished by a presidential decree in January 2007, AMF Deputy Executive Director Mustafa Mammadov said on Feb. 16.
"Introduction of obligatory insurance of life and health of mortgage borrowers is important because of high risks," he said.
Introduction of this insurance will provide additional full repayment guarantees. Over the entire period of its work, AMF has registered 1,710 insurance policies. Insurance policies revenues hit 213,760 manat. Average cost of a policy is 124 manat. Only one payment at $20,000 manat was made as a result of borrower's death, he said.
AMF intends to suggest a unified insurance registry in order to create a date base, a single universal form of borrowers' life insurance, a unified scheme of relationship between lenders and the AMF.
Under Azerbaijani President's decree, instead of a document confirming ownership of a living space acquired through a mortgage, now it is enough to submit a document confirming acquisition of living space through a mortgage. If a borrower delays paying off a loan (principal and interest) by more than 90 days, the AMF can provide a notice to bank and demand to withdraw the loan.
Maximum term of a loan was set at 25 years, maximum sum - 50,000 manat, maximum interest rate - 6 percent per annum, ratio of monthly payment to borrower's monthly income (total monthly income of all borrowers) - 70 percent. Persons between 18 and 62 year old enjoy mortgage lending in Azerbaijan.
The AMF suspended mortgage lending in summer 2007 due to a lack of funds. A total of 26 million manat was allocated in the 2007 state budget for mortgage lending, 20 million manat in the 2008 state budget, and 34 million manat in the 2008 state budget. The 2009 budget allocated 14.5 million manat only for social mortgaging.
The AMF has not yet resumed funding of mortgage loans.Do you have any feedback? Contact our journalist at [email protected]