“Interest rate” trouble in Mortgage
Posted by meb at February 9th, 2007
The government has launched new initiatives for the ‘Mortgage’ Law. The draft law, which is expected to come onto the agenda of the Plenary Session of the Turkish Grand National Assembly (TBMM) next week, will bring in many facilities for the companies in addition to the citizens. The draft law is dealt with the long-term housing credit utilization based on mortgage. If the agreement with the bank is determined in variable interest, the index used frequently in the payments will be mainly considered. The citizens will be able to take advantage of the regulation which enables the reduction of the mortgage interest rate from the tax base after two years.
The government will try to bring the Housing Finance Draft Law, which was approved at the TBMM Planning and Budgetary Commission, to the Plenary Session. According to the draft law, if the agreement with the bank is determined in variable interest, the index used frequently in the payments will be mainly considered. The incomes received by the banks, insurance companies, pension companies, mortgage financing institutions via the stocks issued during the capital increase will be exempted from the banking and insurance transactions tax.
According to the draft law, if the interest rate is determined as fixed, it will not be changed without the approval of the both sides. However, if variable interest rate-credit is used, the credit interest rate will rise according to the market conditions. The draft law says: “The rate determined in the agreement if the interest rate is regarded as variable could be changed by considering the frequently used and generally accepted index to be declared again in the agreement on condition that the term repayment amount will not exceed the maximum repayment amount to be determined in the agreement at the beginning.” The reference interest rates and indexes to be used to this end will be determined by the related Ministry according to the principles regarding the Central Bank’s information methods for the consumers. If the debtor is in default, the housing finance institution will be obliged to make a declaration to the debtor within five workdays.
What does the
agreement include?
The agreement will include the information about the credit amount, the total rent amount for the financial leasing arrangements, information on the dwelling for which mortgage in ensured, the annual interest rate and the index to be considered in the agreement with variable interest rate payment. Moreover, the payment plan, wanted guarantees, the default interest rate not exceeding 30 percent of the conventional interest rate for the credit agreements when there is a default and the insurance information on dwellings if available.
source: The New Anatolian
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