Mortgage loan

(1) All amendments to the loan, which have not been indicated under separate clauses in the price list (incl. amendment of collateral in a notarised or other form).
(2) Commission fee applies to certificates issued at a bank office. A certificate issued automatically in the internet bank is free for the client (for enclosing electronically to income tax return).

Borrower’s reminder to the applicant of a private loan secured by real estate

Taking out a loan is an important decision; one that involves risks. We would like to help you in making an informed decision.

Before applying for a loan, we recommend that you do thorough preparatory work:

• consider what you need the loan for and how much you need, as well as how you intend to make the loan payments;
• provide us with truthful and sufficient information;
• make sure you clearly understand what costs are involved in taking out a loan;
• consider the possibility that your financial situation may deteriorate, and that you must still be able to repay the loan even if this happens;
• read all loan documents (agreement, information sheet, etc.) carefully before signing.

If you have any questions about the terms and conditions of the loan before concluding the agreement or during its term, please contact us using the general contacts of SEB Bank.

When examining the loan conditions and agreement, please also pay attention to the following:

1. Standard European Consumer Credit Information

Before concluding a loan agreement, we will provide you with a personal European Standardised Information Sheet, which is a summary of the most important terms and conditions of the agreement. Please read the Information Sheet carefully.

2. Liability of every borrower

Every borrower is fully liable for the repayment of the loan and the performance of other obligations assumed under the agreement.

3. Loan currency

We issue the loan in euros, and it is not possible to change the currency.

4. Loan disbursement term and conditions

The loan will be paid out to your SEB account after all the preconditions for loan disbursement specified in the loan agreement have been fulfilled (for example, an additional contract, certificate, invoice, etc. has been prepared, guarantees have been formalised, and you have not used the consumer’s 7-day right of withdrawal). Depending on the financing project, we will disburse the loan in a single part or in several parts.

5. Proportion of down payment

When taking out a loan to buy real estate, you must provide a monetary down payment. In general, we do not disburse the loan until you have paid the down payment to the seller or deposited it in a notary’s account.

The monetary down payment can be replaced by additional collateral that is suitable for the bank.

6. Claims and additional obligations related to collateral assets 

When buying real estate, make sure that you have all the required documents for the object you are buying, such as a use and occupancy permit, or that these documents are guaranteed to be obtained by the agreements described in the purchase agreement. A use and occupancy permit indicates the compliance of the construction with the building permit and the possibility to use the completed building in accordance with the requirements and purpose of use. If a building permit is required, then the use of a building without a use and occupancy permit is punishable by a fine according to the Building Code. The owner of the building is responsible for the existence of a use and occupancy permit.

The collateral assets and the extent of establishing these (amount of pledge, limit of liability of the provider of surety) are specified in the loan agreement. The mortgage set on the collateral property is 1.3 times the loan amount.

If we require an expert assessment that certifies the value of the real estate provided as collateral, please ask for it to be prepared by a real estate agency that we have approved. 

The real estate provided as collateral must be insured under the conditions set forth in the loan agreement. For us to be able to make sure that the collateral is insured, please provide us with an insurance document (policy, certificate or copy of the contract).

• If you do not provide the insurance document in due time or do not insure the real estate provided as collateral under the terms and conditions of the loan agreement, we will serve you a claim for a contractual penalty.

If you wish to transfer the real estate serving as collateral (for example, sell, gift, or exchange it) or further encumber it (for example, letting), then you, the borrower, or the owner of the immovable, must inform us of this wish. In the case of a loan agreement secured by a KredEx surety, the consent of KredEx must be obtained for the sale, gifting or granting the use of the collateral property (except for when the recipient is a spouse who is the joint owner). In the case of letting, we may request to see the terms of the lease contract to be concluded. If the transfer or encumbrance takes place without the consent of KredEx, KredEx may extraordinarily cancel the suretyship contract and you will have to find new additional collateral.

7. Purposes of using the loan

We provide the loan for a specific purpose. In the event that you do not use the loan for its intended purpose, we may:

• claim a contractual penalty from you, or
• extraordinarily cancel the loan agreement, demanding the repayment of the entire loan.

8. Interest and changes in interest

Interest is a fee that you pay for using the loan. The interest rate is specified in the loan agreement. The interest rate may be variable (floating), or fixed for a specific period.

A variable interest rate consists of:

• the variable base interest rate, or Euribor, and
• the individually established interest margin.

The period after which the Euribor may change depends on the Euribor period that you choose when concluding the loan agreement. For example, the six-month Euribor rate is recorded every six months. The interest rate established in this way may increase or decrease every six months, and this will also increase or decrease the amount of your loan payment. Therefore, an increase in the Euribor rate means a higher cost when repaying the loan.

There is no condition in the loan agreement that would cap the increase in the interest rate at any level in the event of an increase in the Euribor rate. If the Euribor rate is negative, then the interest is equal to the interest margin.

Consider carefully, whether you would be able to make loan payments during a period of increased Euribor, for example, if the Euribor rate is 5% or higher. You can get help in this from the home loan calculator, which will enable you to simulate different interest rate change scenarios.

For you to be able to mitigate the risk of an increase in the Euribor rate, we offer you the opportunity to fix the interest rate for an agreed period. In this case, the interest rate is fixed and consists of:

• the individually established interest margin and
• the fixed base interest rate, which we calculate based on the interest rate quoted for loans granted in euros at the international financial markets.

If, during a period when your interest rate is fixed, you wish to:

• repay a part or the entirety of the loan outside the payment schedule,
• make the fixed interest rate variable, or
• shorten the loan term,

and the market interest rate at the moment of making these changes is lower than the fixed base interest rate agreed in the loan agreement, then we have the right to charge you an interest difference fee. When calculating the fee, we rely on the interest difference fee rate, i.e., the difference between the fixed base interest rate and the market interest rate as a percentage per year.

The market interest rate is the fixed interest rate quoted for loans granted in euros at the international monetary market for the period until the end of the term of the fixed base interest rate. You can ask us the amount of the market interest rate at any time.

If the Euribor is not available, its publishing has been suspended or is about to be terminated, it is not allowed to be used, the methodology for calculating it has changed significantly, or it cannot be applied due to other circumstances beyond the control of the bank, then we will replace the Euribor with a new base interest rate of our reasonable choice and, if necessary, also change the conditions for calculating interest. We will inform you of the starting date of the new base interest rate (replacement date). You can cancel the agreement within 60 days of the receipt of the notice or, in the case of a fixed base interest rate, the end of its term, without paying the early repayment fee, by notifying the bank in advance and performing all contractual obligations. If you do not perform all your contractual obligations within these 60 days, the new base interest rate will apply from the replacement date. If a base interest rate cannot be used, the interest rate is subject to the last available fixation of the base interest rate until the replacement date or the date of change of the interest rate following the base interest rate becoming available again. If the last available fixation of the base interest rate or the new base interest rate is negative, then the interest is equal to the interest margin.

9. Repayment of the loan

We debit the payments to be made under the loan agreement from your SEB current account. If you have taken out a loan together with a co-borrower, we have the right to debit loan payments from their current account as well.

In order to repay the loan and pay the interest, we will agree on a payment schedule, which is available in the Internet Bank for the entire loan period.

In the case of an annuity schedule, you will pay a payment of the same amount (annuity payment) on each payment date, which consists of: 

• the repayment of the principal amount of the loan, and interest.

In the case of an annuity schedule, the share of interest payments in the early years of the loan period is higher, and the loan payment constitutes a smaller part of the annuity payment. At the end of the loan period, this distribution is reversed. If the interest rate changes, or the payment date or the loan term is changed, or if you repay the loan in larger extraordinary repayments, the amount of the annuity payment will also change.

In the case of a schedule with equal principal payments, you will pay the same principal payment of the loan on each payment date, plus interest. This is why the amount paid to the bank on each payment date will be different.

During a grace period agreed with us, you will only pay interest payments. During this period, the loan balance decreases more slowly (compared to when a grace period is not in effect) and for this reason, the total cost of interest paid on the loan increases.
Upon your request, we will send you a sample repayment schedule at the conclusion of the contract, which includes principal and interest payments.

10. Early repayment

You have the right to repay the entirety or a part of the loan early by notifying us thereof 10 days in advance. In the case of early repayment of the loan, we may charge a contractual fee, with its amount depending on the type of interest rate.

• If you repay the loan during the period of validity of a variable interest rate, the maximum contractual fee is equal to the three-month interest calculated on the part of the loan to be repaid, on the basis of the interest rate valid on the date of early repayment. You will not have to pay a contractual fee if you give three months’ notice of the repayment and make the repayment within 10 days after three months have passed from us receiving your notice. The three-month period starts from the day of us receiving your notice.
• If you repay the loan during the period of validity of a fixed base interest rate, and if the market interest rate valid on the date of repayment of the entire loan or a part thereof is lower than the fixed base interest rate, the repayment fee will be equal to the interest difference fee. When calculating the interest difference fee, we are guided by the market interest rate valid on the day of repayment.

11. Amendment of the terms and conditions of your loan agreement

Amendments to the terms and conditions of the agreement are made by agreement of both parties, and such amendments are generally established with an annex to the contract. An amendment initiated by you is generally subject to a fee.

12. Consequences and costs of violating the loan agreement

If you do not make the contractual payments on time, we may charge a penalty for late payment. We calculate the corresponding amount on the basis of late payments, guided by the default interest rate specified in the agreement.

Should you find yourself in arrears, we will send you a reminder. If the arrears remain unsettled, we will send you a debt notice that is subject to a fee, and will also inform the persons providing a guarantee to the agreement.

If the payments are overdue for a period of more than 45 days, we will forward the debt information to the payment default register (Creditinfo Eesti AS).

If you violate a non-monetary obligation, we are entitled to charge a contractual penalty at the rate set out in the agreement.

13. Cancellation of the agreement and its consequences

The grounds for cancellation of the agreement are set out in the terms and conditions of the agreement. We have the right to cancel the agreement extraordinarily, for example, if you are late with the payment on three consecutive occasions.

If you do not pay the loan balance, interest and other payments due, we will start the debt collection process, which may mean execution proceedings or court proceedings and the forced sale of the collateral. All costs related to debt collection are borne by you.

14. Non-recurring costs related to the conclusion of the loan agreement

Upon signing the agreement, you pay an agreement fee in the amount and on the terms and conditions specified in the agreement. Also review the price list for loans and the General Terms and Conditions of the Bank and the Terms and Conditions for Processing Personal Data.

If you guarantee the performance of the agreement with a pledge, the following may be added as a non-recurring fee:

• state fee;
• notary fee;
• collateral valuation fee;
• insurance premium;
• in the case of a surety from KredEx, the guarantee agreement fee.

15. Fixed costs for the loan period

The following fixed costs related to the performance of the loan agreement are added to the loan and interest payments:

• monthly fee of the current account;
• the cost of insuring the collateral;
• the cost of ordering an expert assessment of the collateral, should the need for an expert assessment arise;
• the cost of loan protection coverage, if you have chosen this cover;
• currency conversion cost: if there is not enough money in the loan currency on the account designated for servicing the loan on the due date, we may debit the payment in another currency on the account by converting it into the loan currency at the exchange rate valid at SEB Pank at the time of the transfer.

16. Obligation to open an account and receive income to it

By the date of signing the loan agreement at the latest, you (and the co-borrower) must have opened a current account in SEB Pank for the entire loan period. We are entitled to require that you (and the co-borrower) receive all your income to your current account at SEB Pank, and that settlements be made through SEB, unless otherwise agreed in the loan agreement.

17. Risk of decrease in solvency

Think about how you will cope with the repayment of the loan in the case that:

• the overall economic environment deteriorates;
• your salary or other income decreases;
• your other expenses increase.

To make a considered decision, analyse the actual financial situation of your family and consider concluding a suitable insurance contract (for example, SEB loan protection coverage). If solvency problems start to arise, please contact us immediately. For example, make sure to contact us immediately if:

• your employment is unexpectedly terminated;
• execution, debt restructuring or bankruptcy proceedings are brought against you;
• your bank account is seized.

Together, we will find the most suitable solution to the situation. This could be, for example, a change in the payment date or a grace period. At the same time, you can apply for the final repayment date of the loan to be postponed by a grace period.

18. Complaints and disputes

In the case of any disagreements, it is reasonable to first start seeking solutions by negotiating with us.

You can read about the general procedure for resolving complaints on our website at www.seb.ee/en/how-complain.

If you feel that our response does not meet your expectations and you still find that we have violated your rights when granting the loan, you can ask for advice and explanations from the Consumer Protection and Technical Regulatory Authority (www.ttja.ee) or the Financial Supervision Authority (www.fi.ee).

Furthermore, in order to resolve a dispute, you may contact the Consumer Disputes Committee operating within the Consumer Protection and Technical Regulatory Authority, or take the matter to court.