Q:
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Dinkic outlines home lending model for young people
Belgrade,
13 July 2005
Serbian Minister of Finance Mladjan Dinkic announced today that those younger than 45 will be able to draw home loans under better terms thanks to a plan designed by the Ministry of Finance and the National Corporation for Housing Loan Insurance.
Mladjan Dinkic
Author:
Tanjug
Dinkic told a press conference that loans will be approved in amounts of up to €100,000 with a repayment term of 25 years, except for those over 40, who will repay loans over shorter periods of time calculated by age.
The user of a loan will be obliged to pay a 10 percent down payment, while the state will provide the remaining 20 percent plus a 10 percent collateral to the lender.
This will also help to reduce the composite interest rate to 4.5 percent a year, which is half the level of existing rates, according to Dinkic.
He said that the interest rate on the deposit provided by the state will be 0.1 percent and will be repaid between the 20th and 25th years of repayment of the loan, he explained.
Given that lenders will receive a 30 percent down payment plus a 10 percent deposit, banks have agreed to cut their interest rates from the current 8.95 percent a year to a maximum of 6.95 percent a year, Dinkic said.
According to him, the biggest banks have already accepted this model of home lending, while talks are under way with several other banks. The final list of lenders will be revealed after the parliament approves a revision of the 2005 budget, he added.
Dinkic also said that a monthly instalment will not exceed 50 percent of the borrower’s monthly income and that all those under 45 years of age will be eligible for loans regardless of their marital status.
He also stressed that an apartment purchased in this way cannot be sold for five years, because the state wants to prevent re-sellers from obtaining real estate under these terms.
Also, the apartment cannot be rented until the loan is fully repaid, said Dinkic and added that the approval of loans will be supervised by the Tax Administration and other bodies.
He said that the government has earmarked 900 million dinars for this purpose in the proposed revised budget and that the funds will be disbursed in the final quarter of the year, since the first loans will be approved in October.
Dinkic said that the 900 million dinar fund will help to disburse a total of three billion dinars of housing loans, which means that some 1,000 loans will be drawn by the end of the year.
The user of a loan will be obliged to pay a 10 percent down payment, while the state will provide the remaining 20 percent plus a 10 percent collateral to the lender.
This will also help to reduce the composite interest rate to 4.5 percent a year, which is half the level of existing rates, according to Dinkic.
He said that the interest rate on the deposit provided by the state will be 0.1 percent and will be repaid between the 20th and 25th years of repayment of the loan, he explained.
Given that lenders will receive a 30 percent down payment plus a 10 percent deposit, banks have agreed to cut their interest rates from the current 8.95 percent a year to a maximum of 6.95 percent a year, Dinkic said.
According to him, the biggest banks have already accepted this model of home lending, while talks are under way with several other banks. The final list of lenders will be revealed after the parliament approves a revision of the 2005 budget, he added.
Dinkic also said that a monthly instalment will not exceed 50 percent of the borrower’s monthly income and that all those under 45 years of age will be eligible for loans regardless of their marital status.
He also stressed that an apartment purchased in this way cannot be sold for five years, because the state wants to prevent re-sellers from obtaining real estate under these terms.
Also, the apartment cannot be rented until the loan is fully repaid, said Dinkic and added that the approval of loans will be supervised by the Tax Administration and other bodies.
He said that the government has earmarked 900 million dinars for this purpose in the proposed revised budget and that the funds will be disbursed in the final quarter of the year, since the first loans will be approved in October.
Dinkic said that the 900 million dinar fund will help to disburse a total of three billion dinars of housing loans, which means that some 1,000 loans will be drawn by the end of the year.
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