Home 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) Amendment of student loan schedule due to a grace period (for the time the borrower is engaged in military services or for three years after the birth of a child) - free of charge.

Borrower's checklist and additional information for the applicant of private loan secured with real estate

Taking a loan is an important decision, involving risks. We would like to help you in preparing an informed decision.

When applying for a loan you should do a proper homework:

• consider for what and how much loan you need and what would be your sources for repayment;
• submit us true and adequate information;
• make it clear for yourself which costs are involved in borrowing;
• consider with the possibility that your financial situation may deteriorate and you must be able to repay the loan also when it happens;
• examine carefully all loan documents (agreement, information sheet, etc,) before signing;
• there are no unsolvable problems and situations, but there are different options – we are your partner, who you should contact well in advance even if you encounter problems with repaying the loan.

You may ask information about our loan conditions and get explanations both, before concluding loan agreement as well as during its term. In case of questions, contact us on the general information lines of SEB Pank.
 

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

1. Standard European Credit Information

Before conclusion of a loan agreement we deliver to you for your information a personal Standard European Credit Information sheet, on which we give brief information on the more important conditions of the agreement. Please examine carefully the information presented on the information sheet.

2. Solidary liability of several borrowers

If there is more than one borrower, they shall bear solidary liability upon performance of the agreement: each borrower is responsible for the repayment of loan and fulfilment of other obligations assumed under the agreement to the full extent.

3. Loan currency

We issue the loan in the currency of your residence in Estonia, i.e. in euros.

4. Loan disbursement term and conditions

Generally we disburse the loan to your current account at SEB Pank after all preconditions to loan disbursement have been met (e.g. an additional agreement, certificate, invoice, etc., has been submitted, collateral established and the withdrawal period after conclusion of the loan agreement expired). Depending on the financing project we disburse the loan either in one or several parts.

Collateral and the extent of establishing the same (amount of pledge, limit of liability of the provider of surety, etc.) are specified in the loan agreement. Generally, the amount of mortgage established over the pledged real estate is 1.3 times the loan amount.

If we request a valuation report certifying the value of real estate provided as security, you will be obliged to select the appraiser from among our accepted professionals.

5. Right to withdraw from the agreement

You may withdraw from the loan agreement within seven days after signing it, on conditions set out in the agreement. If by the date of submitting the withdrawal application we have already disbursed you the loan, you will have to return the loan amount and the accrued interest within 30 days as of submitting the withdrawal application. If you do not repay the loan within 30 days, it means that you have not withdrawn from the loan agreement.

6. Rate of self-financing

If you take a loan for buying real estate, you must provide your own financial contribution, the minimum amount of which we shall specify also into the loan agreement. As a rule, the bank shall not disburse the loan before you have paid the self-financed part.

Financial contribution may be replaced with additional collateral that suits the bank.

7. Additional obligations related to collateral

The real estate provided as collateral must be insured on conditions set out in the loan agreement. In order for us to establish that the insurance obligation has been met, you will have to send us the insurance policy.

In case you:

• do not provide us with the insurance policy in a timely manner or
• do not insure the property established as collateral on conditions of the loan agreement,

we shall present you a claim for contractual penalty.

If you wish to lease or rent the property provided as collateral:

• you as a borrower or
• the owner of the collateral

will first have to ask for our consent. Whereas we may ask you to show us the conditions of the lease or rental contract (draft contract). If our consent is not asked, we may demand contractual penalty from the borrower.

8. Purpose of the Loan

We grant the loan for a specific purpose, which shall be stated in the loan agreement. If you do not use the loan for its intended purpose, we may

• demand contractual penalty or
• extraordinarily cancel the agreement, demanding immediate repayment of the entire loan.

9. Interest and changes in interest

Interest is a fee, which is paid for using the loan. Interest rate is specified in the loan agreement.

Interest rate may be unfixed (floating) or fixed for a specific period.

Unfixed interest rate consists of

• floating base interest rate i.e. euribor and
• individual interest margin, which generally does not change over the loan term.

The interval after which euribor may change depends on your chosen euribor period upon conclusion of the agreement. E.g. the new value of 6-month euribor is fixed after every six months. This interest rate could either increase or decrease every half-year.

If the interest rate changes, also the loan repayment will either increase or decrease. This may mean higher cost of repaying the loan.

Our experience shows that loans taken during the low period of base interest rate (euribor) most likely appreciate in the future, since the interest rate will rise. Our loan agreement does not contain a provision, which would stop the rise of interest rate in case the base interest rate increases.

Please consider whether you are still able to make the loan payments should the interest rate rise 2-3%. Please find here a housing loan calculator to assist you, which enables to try out different interest change scenarios.

Negative value of base rate is deemed to equal zero.

In order to mitigate the risk of raising euribor, we suggest fixing the interest rate for an agreed period. Fixed interest rate comprises

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

If your wish during the fixed interest period to

• repay part of the loan or the entire loan not considering the repayment schedule,
• change the fixed interest rate into floating interest or
• shorten the loan term

and the market interest rate is lower at the moment of making the said changes than the fixed interest rate agreed in the loan agreement, the bank will be entitled to request interest difference charge.

Market rate is the interest rate fixed for loans granted in euros at the international financial markets, which is in force until the end of the validity of the fixed base interest rate.

10. Loan repayment

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

To repay the loan and pay interest we shall agree on a payment schedule.

Based on an annuity schedule, you will make equal payments (annuity payments) in each month, consisting of

• repayment of principal part and
• interest.

For annuity schedule, the loan payment is smaller and interest payment bigger at the beginning of the loan term. At the end of the loan term, the division is the opposite. If the interest rate changes or the loan repayment date is changed or if you repay the loan in bigger extraordinary payments, then also the amount of annuity payment will change.

For a schedule with equal principal parts, you will pay equal principal amounts, to which interest shall be added, throughout the loan term. Accordingly, the amount payable to the bank is different each month.

During a grace period, agreed with us, you will pay only interest. In this period the loan balance will decrease at a slower pace (compared to the period without grace period) and accordingly, the total cost of interest paid on the loan will increase.

Upon request, we will forward you a sample repayment schedule at the conclusion of the agreement, which shows the principal and interest payments.

11. Early repayment

You may prepay the loan in full or in part, if you inform us of your wish 10 days in advance and pay a contractual fee. The amount of contractual fee depends on the collateral and interest rate.

If you prepay a loan secured with mortgage

• during the floating interest rate period, the maximum contractual fee will equal three-month interest, which is calculated on the part of loan to be prepaid on the repayment date based on the effective interest rate. Contractual fee is not applied if the term for advance notice is at least three months;
• during the fixed base interest rate period, if on the loan repayment date the valid market rate is lower than the fixed interest rate, the contractual fee shall equal the interest difference charge. We calculate the respective interest difference charge on the amount repaid pre term, based on the rate of interest difference charge, effective until the end of validity of the fixed base interest rate. The rate of interest difference is the difference between the fixed base interest rate and the market interest rate as a percentage per year. Market rate is the interest rate fixed for loans granted in euros at the international financial markets, which is in force until the end of the validity of the fixed base interest rate. We calculate the interest difference charge based on the market interest rate effective on the repayment date.

12. Amendment of conditions of your loan agreement

Generally, the conditions of the agreement (incl. interest rate) are amended upon agreement of both parties and this shall be recorded in the annexes to the agreement. As a rule, a fee is charged for amending the conditions of a loan agreement.

13. Special conditions of the loan agreement

If the loan agreement contains mandatory special conditions, you will have to follow these with utmost care. Only this way you may be sure that the agreement will remain in effect.

14. Consequences and costs of violating the loan agreement

If you do not make the contractual payments in due time, we may demand penalty for late payment. We calculate the amount on the delayed payments proceeding from the rate of penalty for late payment specified in the agreement. If you violate a non-monetary obligation, we will be entitled to charge contractual penalty in the rate as set out in the agreement.

Should you remain in arrears, we will first send you a reminder. If the debt is still not settled, we shall send you a debt notice, for which you will be charged and we also inform the persons, securing the agreement, of the debt.

If the payments are overdue for more than 45 days, we shall forward the debt information to a payment default registry (AS Krediidiinfo).

15. Cancellation of the agreement and the consequences thereof

We are entitled to extraordinarily cancel the loan agreement for example if you have partly or fully delayed at least three successive payments.

If you do not repay the loan upon cancellation of the loan agreement, we shall request repayment of loan and fulfilment of other monetary obligations from the provider of surety or settle from the sales proceeds of collateral. All costs related to debt collection shall be borne by you.

16. Non-recurrent charges related to conclusion of the agreement

When signing the agreement you will pay a contract fee in the amount and on conditions set out in the agreement. Please read also the price list of loans.

If you secure the performance of the agreement with a pledge, you may incur as single charges:

• state fee;
• notary fee;
• fee for the valuation of collateral;
• insurance premium;
• security contract fee (in case of KredEx guarantee).

17. Fixed costs of loan period

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

• monthly fee of current account;
• costs of insuring the collateral assets;
• costs related to ordering an expert opinion of the collateral assets, if an additional expert opinion of necessary;
• loan protection coverage, if you have chosen this cover;
• currency conversion cost: if on the payment date the funds in the account determined for servicing the loan are insufficient in the loan currency, we may debit the payment in the funds of the account available in other currency, converting them into the loan currency based on the exchange rate effective at SEB at the moment of transfer.

18. Obligation to open an account and transfer the earnings

You (and your co-borrower) will have to open a current account with SEB Pank by the date of signing the loan agreement for the entire loan term. Your regular earnings transferred to the account determined for servicing the loan must be sufficient to cover at least the monthly loan payment.

19. Risk of possible decrease in solvency of the borrower

Please consider how you will cope with the repayment of loan, should

• the overall economic environment deteriorate
• your salary or other income decrease and/or
• your other expenditures increase.

Analyse the actual financial situation of your family and consider taking out a suitable insurance contract (such as SEB Loan Protection).

Contact us immediately if you encounter solvency problems. Call us right away also if your employment is terminated or an execution proceeding is commenced against you or your bank account has been seized. Together we shall find the most suitable solution to the situation. One possible solution could be for example amendment of the payment date or granting a grace period.

Grace period means that we shall suspend the repayment of principal part of loan for a certain period. Whereas you may also apply for postponement of the final repayment date by a grace period.

20. Complaints and disputes

If you have any complaints concerning our activity, then first try to resolve the issue by negotiating with us. You can read about the general procedure of settling the disputes on our website at http://www.seb.ee/eng/legal/how-complain, however you may always contact also your private client executive.

If you feel that our answer is not the one you expected from us and you still think that we have violated your rights when granting the loan, you will have the right to turn to the Consumer Protection Board (Pronksi 12, 10117 Tallinn; www.tarbijakaitseamet.ee) or the Financial Supervision Authority (Sakala 4, 15030 Tallinn; www.fi.ee), for advice and explanations.

Furthermore, in order to resolve a dispute you may contact the Consumer Disputes Committee operating at the Consumer Protection Board or turn to court. A complaint to the Consumer Dispute Committee can be submitted also digitally via Online Dispute Resolution website at https://webgate.ec.europa.eu/odr/main/index.cfm?event=main.home.show&lng=ET.