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

Loan purpose

The loan is provided for purchasing (in primary and secondary markets) or renovating of residential property – an apartment, a house or for home construction. The basis for provision of renovation and construction loans is the estimate of future expenses.

Eligibility

RA residents aged 18-63 who during the debt service period will not reach the age of 63, otherwise the potential borrower needs a co-borrower to qualify for the loan.

Loan currency

AMD

Loan amount

Purchase, construction of real property

AMD 2,000,000 - 80,000,000

Renovation

AMD 1,000,000 - 10,000,000

Loan repayment period

Purchase, construction of real property

AMD

60 - 240 months

Renovation

60 - 84 months

Nominal interest rates per annum[1]

Purchase or construction of real property

AMD

Starting 13.2% (fixed component: starting 4.2% + variable component)

Renovation of real property

AMD

Starting 14.2% (fixed component: starting 5.2% + variable component)

The maximum and minimum threshold of floating rate fluctuations

+4%

The variable component of the floating interest rate will be revised on the forthcoming revision date following the expiration of the 36^th month of the loan agreement (for renovation – 12^th month), thereafter, every 6 months with application of the rate (published on the Bank’s website) effective at the moment of revision.

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. 

Penalty charged for loan prepayment

Not applicable

Values of past and present variable components

Penalty for overdue loan principal and interest

For overdue principal - 0.015% per day,

For overdue interest - 0.1% per day.

Loan repayment scheme

Annuity plan or equal principal repayments; payments should be made on a monthly basis.

Loan security

1.    The real property to be purchased or renovated, as well as other real property. In case of construction loans, the plot of land on which the house is built.

2.   The loan may be secured by a right of first offer, in which case the Bank may require that the funds entered in the developer’s special account be pledged by the developer in favor of the Bank in order to ensure the following:

a. fulfillment of developer’s commitment to hand over the real property to the buyer as their own property as soon as the building is complete.

b. fulfillment of the developer’s commitment to return the down payment to the buyer in case of termination of  the agreement on right of first offer of property in the house under construction,

c. fulfillment of the buyer’s commitment to register the Bank’s security interest upon completion of the construction of the house and acquisition of a real property ownership certificate,

3.   If the loan is intended for purchasing an apartment in the house under construction and the developer’s special account is with other bank, then the right of first offer as well as other real property whose market value should not be less than the expected loan amount.

Loan-to Value ratio[2]

Purchasing in the primary housing market (from the developer)[3]

In AMD: up to  90%[4] of the appraised value

Purchasing in the secondary housing market

In AMD: up to 85% [5] of the appraised value

Construction and renovation

Up to 70% of the appraised value

Insurance

Annual insurance of the real property is required to cover the outstanding loan balance.

Loan disbursement method

·     Non-cash (the loan amount is credited to the seller’s account).

Renovation and construction loans are provided in a lump-sum or in tranches, which should be determined by a competent body in-charge of decision-making on Loan approval. In case of multi-tranche loans, the loan portions will be determined on the basis of the estimate of expenses, loan repayment period, loan amount and Customer’s creditworthiness.

Other conditions

·     In case of purchasing real property, the Borrower should make a down payment[6], which is to be frozen in the Bank until the loan disbursement.

·     The Borrower may prefer not to make the down payment, instead pledging additional real property; in which case the Loan amount should not exceed the real property’s appraised market value along with maintenance of the Loan-to-Value ratio at 70%.

·     In case of purchasing the real property in the primary housing market,  as a document confirming the down payment the Borrower can submit the developer’s receipt stating the advance payment and/or advance payment agreements/contracts.

·     In case of obtaining the right of first offer, the loan may be secured by the right of first offer, in which case the Bank may require that the funds entered in the developer’s special account be pledged by the developer in favor of the Bank in order to ensure the following:

a.  fulfillment of developer’s commitment to hand over the real property to the buyer as their own property as soon as the building is complete,

b.  fulfillment of the developer’s commitment to return the down payment to the buyer in case of termination of  the agreement on right of first offer of property in the house under construction,

c. fulfillment of the buyer’s commitment to register the Bank’s security interest upon completion of the construction of the house and acquisition of a real property ownership certificate

2.  Timeframe for making decisions on approving or rejecting the loan application

·      The decision on approval or rejection of the loan application is made within 10 (ten) business days upon submission of the full package of preliminary documents required by the Bank.

·      The loan is provided to the Borrower in case of the Bank’s positive decision within 2 (two) business days upon completion of the pledging process.