September 12, 2019 Miriam Lee 0Comment

For an average salary – about forty square meters in Osijek and about twenty-five square meters in Zagreb!

Looking back on the previous 2017, it was a good year to address the housing issue. Interest rate drops, APN loans, youth loan action terms … Everything went to the loan seekers. But 2018 brings some significant changes for all those who were planning to “boil” this year.

Best line of credit

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The article deals with the subject in detail. If you’re just looking for the best line of credit and don’t have time to read, you can fill out a credit questionnaire right away.

Newspapers in the field of housing lending came to an end in October when the Good Finance Credit Act came into force. This Law additionally regulates the process of realization and repayment of loans in which the real estate security instrument is. Here we are talking about non-purpose – mortgage loans and special purpose – home loans.

Changes to this law, which will undoubtedly affect the supply and demand of home loans, relate to fees and costs of loans, obligations and ways of informing the client, and most importantly, to credit calculations.

Consumer protection

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For the sake of greater consumer protection, the obligation to fully inform the loan seeker has been put at the forefront so that, based on accurate, comprehensible and comparable information, he / she can make the decision to choose the ideal home loan. Seekers are given a more transparent view of the terms and cost of the loan they want.

With the abolition of certain fees, housing loans have been made cheaper by this Act. For example, there are no longer administrative fees for processing loans, which sometimes amounted to more than USD 2,000.00.

Also, it is possible to repay the loan at no charge, whether it is early or partial repayment of the loan. It is important to mention that all clients who realize a loan with the EUR currency clause are enabled to convert the loan to USD once during the loan repayment.

EIR calculation

So far, some of the ancillary costs associated with the realization of home loans have not been included in the calculation of the EIR.

According to the new calculation, in addition to the interest rate and loan repayment term, the EIR is also affected by:

  • the cost of real estate appraisal
  • the cost of the accident insurance premium of the loan beneficiary and the underlying real estate
  • the cost of housing savings fees
  • the cost of maintaining a housing savings account
  • deposit
  • the cost of a life insurance premium
  • the cost of the loan repayment insurance premium

Credit until retirement

Due to the large fluctuations between earnings during employment and post-retirement benefits, banks have defined lower age limits for repayment of a home loan. Now that age is set to the assumed retirement age, which is usually 67 years. Previously, repayment of a home loan was possible up to the age of 75. The purpose of this decision is to reduce the difficulty of repaying the loan as well as the client’s indebtedness caused by a decrease in income.

With an average salary of up to 40 m 2

With an average salary of up to 40 m 2

In addition, as of this year, banks are required to apply existential minimums when assessing and calculating creditworthiness. More specifically, the client’s assignments must comply with the rules of the Enforcement Act.

This means that for wages up to the average net wage in the Republic of Croatia, the subsistence minimum is ¾ of remuneration, that is, the annuity may be prim of total remuneration. For those salaries whose amount is higher than the average net salary in the Republic of Croatia, the subsistence minimum is slightly less than USD 4,000.

This method of calculating creditworthiness applies to all home loan uses, regardless of whether it is a loan with or without a pledge of real estate.

It should be mentioned that according to the Good Finance of Statistics, the average net salary in the first half of 2017 was USD 5,960.00. It is this amount that will be used to determine the maximum credit for a new home loan.

If we put it in the calculator, the average salary client has the opportunity to apply for a home loan up to a repayment installment of USD 1,490.00, ie ¼ of USD 5,960.00. If the interest rate is, on average, 4% and the repayment period is 30 years, the client will be able to realize a loan of USD 312,000.00 or approximately EUR 42,000.00.

In Osijek, for this loan amount, an apartment of 40 m 2 can be found, while in Zagreb one studio apartment of only 25 m 2 can be bought.

The example in the table shows how much salary you need to have this year, compared to the previous 2017, if you want to buy an apartment of 50m 2 .

Calculations according to the terms of Bank 1 – interest rate 4% and repayment period of 30 years

It is well known that the incomes of citizens are often lower than the average, so it is not difficult to conclude that these changes will make it difficult for many to buy the selected property.

How to get extra squares

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The aforementioned model for calculating creditworthiness is contingent on the ABC’s decision, but banks are still allowed to apply internal criteria when assessing the creditworthiness of credit seekers. Therefore, the maximum possible annuity or home loan installments may differ between banks.

When a customer satisfies a bank’s credit rating, the bank can reward him with a better credit rating by adding certain additions to his net income. These can be various bonuses, recourse, Christmas bonuses, travel expenses and the like.

By adding up the net salary of these allowances, it is possible to increase the annuity or home loan installment.

With some banks, bonuses, recourse, Christmas bonuses or travel expenses can increase the annuity or home loan rate.