Individual loans provided to individuals by products / Terms and Tariffs /

Housing mortgages with floating interest rate

Loan purpose

Loan is provided for the purchase or renovation of residential properties, including apartment, house, private house, residential house (both from primary and secondary market), as well as for construction of a private or residential house.

For renovation and construction loan provisions cost estimation of anticipated expenses is taken into consideration.

Who can apply

Individual residents of RA between the age of 18-63, whose age will not exceed 63 years throughout the loan service period or have a co-borrower meeting the above criteria throughout the loan service period.

Loan currency

AMD, USD, EUR

Loan amount

Property purchase, Construction  

Up to AMD 80,000,000  or equivalent in foreign currency

Renovation

Up to AMD 10,000,000 or equivalent in foreign currency

Loan repayment period

Property purchase, Construction  

AMD

Up to 240 months

USD, EUR

Up to 240 months

Renovation

Up to 84 months

Annual nominal interest rate

Property purchase,

Construction  

During the first 36 months of loan provision

Starting from 37th month

AMD

Starting from 11.7 %

4.5% + variable component

USD

Starting from 8.7 % 

8% + variable component

EUR

Starting from 7.7 % 

7.5% + variable component

Renovation

During the first 12 months of loan provision

Starting from 13th month

AMD

Starting from 12.7 %

5.5%  + variable component

USD

Starting from 9.7 % 

9% + variable component

EUR

Starting from 8.7 % 

8.5%  + variable component

In case of property insurance by the bank instead of the customer (implemented from the second year of the loan)

Mentioned interest rate + 0.2%

Calculation method of floating interest rate

The floating interest rate becomes effective upon the expiration of the 36th month of the loan agreement as a loan interest rate specified in the agreement. The variable component of the floating interest rate is revised regularly - twice a year – on February 1 and August 1. As a variable component the interest rate applicable (actually published on the website) in the Bank is applied since the forthcoming revision date following the expiration of the 36th month.
The floating interest rate is a nominal interest rate which is calculated according to the following formula.
𝑹𝐅 = 𝐑𝐕 + 𝐑𝐌
where RF – Floating interest rate
RV – Variable component
RM – Fixed component

The variable component of the floating interest rate (RV) is defined on the basis of the following market rates, depending on the loan currency:

  • The calculation of the main variable component in AMD is based on the yield to maturity of Armenian 6-month Government (treasury) bills. Information on the yield to maturity of Armenian 6-month Government (treasury) bills can be retrieved from the relevant publications (yield curve) on the official website of the CBA at the following link: https://www.cba.am/am/SitePages/fmofinancialmarkets.aspx.
    The variable component is reviewed on February 1 and August 1 each year. The variable component as of February 1 is equal to the average applicable interest rate effective for the period from June through November of the previous year. The variable component as of August 1 is equal to the average applicable interest rate effective for the period from December of the previous year through May of that specific year.
    Whenever the above indicator becomes inaccessible or irretrievable and the definition of the interest rate becomes impossible for the next period, the interest rate for the next period is determined based on the secondary indicator used by the Bank.
  • The calculation of the secondary variable component in AMD is based on the interest rates of the AMD-denominated deposits (except demand ones) of individuals for a one-year term which are published by the CBA. Information on the interest rates of the AMD-denominated deposits (except the demand ones) of individuals for a one-year term can be retrieved from the relevant publications on the CBA website at the following link: https://www.cba.am/am/SitePages/statmonetaryfinancial.aspx.

The secondary variable component is revised on February 1 and August 1 each year. The secondary indicator as of February 1 is calculated as an average of the interest rates published from June through November of the previous year. The secondary indicator as of August 1 is calculated as an average of the interest rates published from December of the previous year through May of that specific year.

  • The calculation of the main variable component in USD is based on the interest rates of the USD-denominated deposits of individuals for a one-year term which are published by the CBA. Information on the interest rates of the USD-denominated deposits of individuals for a one-year term can be retrieved from the relevant publications on the CBA website at the following link: https://www.cba.am/am/SitePages/statmonetaryfinancial.aspx.
    The variable component is revised twice a year on February 1 and August 1. The variable component as of February 1 is calculated as an average of the interest rates published from June through November of the previous year. The variable component indicator as of August 1 is calculated as an average of the interest rates published from December of the previous year through May of that specific year. Whenever the above indicator becomes inaccessible or irretrievable and the definition of the interest rate becomes impossible for the next period, the interest rate for the next period is determined based on the secondary indicator used by the Bank.
  • The calculation of the secondary variable indicator in USD is based on Overnight secured financing rate for 6-month term (CME Term SOFR USD 6 Month). Information on Overnight secured financing rate for 6-month term can be retrieved from the relevant publications on the Bloomberg terminal at TSFR6M link. The variable component is revised twice a year on February 1 and August 1. The variable component as of February 1 is calculated as an average of the interest rates published from June through November of the previous year. The variable component as of August 1 is calculated as an average of the interest rates published from December of the previous year through May of that specific year.
  • The calculation of the main variable component in Euro is based on the European Interbank Offered 6-month Rate (EMMI EURIBOR 6 Month). Information on the European Interbank Offered 6-month rate can be retrieved from the relevant publications on Bloomberg terminal using the EUR006M link.  The variable component is revised twice a year on February 1 and August 1. The variable component as of February 1 is calculated as an average of the interest rates published from June through November of the previous year. The variable component as of August 1 is calculated as an average of the interest rates published from December of the previous year through May of that specific year.
  • The calculation of the secondary variable component in Euro is based on the 6-month yield curve of the German government bonds. Information on the interest rate of the 6-month yield curve of the German government bonds can be retrieved from the publications on Bloomberg terminal using the YCGT0016 link.

In case of moving from the primary to the secondary variable component an adjustment factor can be applied.

Floating interest rate review process

Twice a year the Bank amends the variable component (VC) of the floating interest rate, and the information about the change is being published in the Bank’s official website not later than on 1 February and 1 August of each year.

Values of past and present variable components

Definition Date

AMD

USD

EUR

15/07/2019

6.0%

0.5%

0.0%

15/01/2020

6.0%

0.5%

0.0%

15/07/2020

6.0%

0.5%

0.0%

15/01/2021

6.0%

0.5%

0.0%

15/07/2021

7.0%

0.5%

0.0%

15/12/2021

8.0%

0.5%

0.0%

01/03/2022

6.0%

2.0%

0.0%

Maximum and minimum fluctuations of the floating interest rate

 +4%

Early loan repayment penalty

Not applicable

Penalty for loan principal and/or interest overdue

For overdue principal - 0,015 % daily,
For overdue interest - 0,1 % daily

Loan payment schedule

Annuity or with equal principal installments. Payments must be done on monthly basis. 

Loan repayment security measure

1.  The property that is being purchased, renovated, other property. In case of construction, the land plot where the property should be constructed/the property under construction.
2.  The right of purchase of the property can be accepted as pledge. In this case the Bank can request to pledge the funds credited on the constructor’s special account in the favor of the Bank in order to secure:

a) the constructor’s obligation to transfer the property to the buyer upon completion of the construction
b) the constructor’s obligation to return the prepayment to the buyer in case of termination of “the right of purchase” agreement
c) Upon completion of the construction and along with receiving the ownership certificate of the property, to fulfill the obligation to register the pledge on the name of the Bank

Loan to Value ration[1]

Purchase from primary market /from constructor/ [2]

AMD-Up to 90% of the property value
Other currency-Up to 70% of the property value

Purchase from secondary market

AMD-Up to 85% of the property value
Other currency-Up to 70% of the property value

Construction and renovation

Up to 70% of the property value

Insurance

Property insurance – mandatory to do each year on loan’s outstanding amount

Loan provision methods

· Non-cash – the amount is transferred to the seller’s account
· Loans for renovation and construction purposes are granted one-off or in phases. It is determined by the Authorized body responsible for loan approval.
· In case if loan is provided in phases, then those phases are defined taking into consideration anticipated cost expenditure provided by the customer, loan term, loan amount, customer’s creditworthiness.

Other terms

· In case of property purchase the Borrower credits prepayment[3], on the Bank’s account, which is being frozen till loan disbursement 
· The borrower may not make a prepayment and instead pledge additional property. In this case the loan amount provided to the Borrower should not exceed the estimated market value of the property to be purchased, meanwhile keeping 70% loan to value ratio.
· In case of property purchase from primary market as a document confirming the prepayment, the Customer may present to the Bank payment slip provided by the constructor and/or prepayment agreements/consents.
· In case of obtaining the “purchase right” of the property, the “purchase right” can be considered as loan security. In this case the Bank can request to pledge the funds credited on the constructor’s special account in the favor of the Bank in order to secure:

a) the constructor’s obligation to transfer the property to the buyer upon completion of the construction
b) the constructor’s obligation to return the prepayment to the buyer in case of termination of “the right of purchase” agreement
c) Upon completion of the construction and along with receiving the ownership certificate of the property, to fulfill the obligation to register the pledge on the name of the Bank 

Deadlines for approving or rejecting loan provision

· The decision to approve or reject the loan is made within 10 (ten) working days maximum, after fully providing all the initial documents requested by the Bank.
· The loan is disbursed in case of positive decision made by the Bank and within maximum 2 (two) working days since the property is pledged.

[1] Loan to value ratio is calculated based on the lower value as per property’s  valuation act or purchase price
[2] In case of incomplete construction (when purchasing from constructor) property value is considered to be the sales and purchase price which is stated in the advice provided by the constructor, and later is captured in the Sales and Purchase agreement
[3] By the difference of property purchase price and loan amount