Azerbaijan, Baku, May 20/Trend, I.Khalilova/
The Central Bank of Azerbaijan (CBA) is discussing with local banks the possibility to use mortgage loans through a system of savings of deposits, a source in the banking sector said.
"As part of improvement of mortgage lending in Azerbaijan, there are plans to introduce the German model, providing the establishment of savings banks, which can operate as separate banks. Discussions are also conducted over the possibility to open similar accounts in the existing banks," said in banking circles.
This practice is used in other countries where the bank can open an account, which over time accumulates funds in an amount equal to the entry fee on a mortgage. This allows to get a more simplified loan.
The introduction of such a mortgage system is stipulated in the draft law on housing and construction banks.
The CBA previously prepared a draft law on housing and construction banks, but the crisis that took place in the world market did not allow to implement this project.
Under the AMF's terms, the maximum amount of the issuance of conventional mortgages in Azerbaijan is 50,000 manat at a rate of eight percent and for 25 years. But the amount in the social mortgage is 35,000 manat, at an annual rate of four percent and the term - 30 years.
Initial fee for the ordinary and concessional loans is 15 percent.
Conditions of the mortgage lending are as the following: loans must be issues in the national currency with manats and only to Azerbaijani citizens, and an object of the mortgage can only be an apartment or private houses, volume of the mortgage lending must not exceed 85 percent of the market price, monthly payment for a loan must not exceed 70 percent of debtor's monthly income, as well as presence of an agreement on life insurance and others.
Preferable conditions are granted to members of families of war victims, families of national heroes, internally displaced persons, civil servants with at least a three-year experience, candidates PhD and PhD, persons making special contributions to sport, as well as militaries with at least a three-year service term.
Each family having the right to a lax mortgage loan can use this chance only for one time.
At present, AMF has 22 authorized banks.