Questions and Answers - Mortgage Standard

The standard for protecting the rights and legitimate interests of mortgage borrowers has been in effect since January 1, 2025. Its main goal is to reduce risks for citizens and ensure that banks provide borrowers with more detailed information about the terms of the loan and the risks associated with it.

For example, the standard requires credit institutions to obtain the borrower's consent if the funds issued under a mortgage loan are directed not to an escrow account, but to a letter of credit, and are stored there for more than 30 days. In letters of credit, unlike escrow accounts, funds are not protected by the deposit insurance system.

According to the standard, the bank cannot include in the down payment the amount that will be returned to the buyer after purchasing the apartment (cashback). The buyer of the apartment must make the down payment only from his own money.

The document also prohibits banks from receiving compensation from the seller (developer) for setting a lower interest rate on a mortgage if this leads to an increase in the price of the property.

In addition, banks are required to honestly inform the borrower of the difference in the total cost of the loan when receiving a commission for lowering the interest rate from the borrower. Thus, when making a decision, the borrower will be able to assess whether this service is beneficial for him. The credit institution will have to return the unused portion of such remuneration in the event of early repayment of the loan.

The standard stipulates that before concluding an agreement, banks must inform the borrower about the terms of the loan in an accessible form with an explanation of special terms. All loan consultations requested by the borrower must be provided in advance. The lender must inform about the terms of incentive bonus programs, the possibilities of using state support, remind the borrower about the risk of foreclosure on the apartment if the mortgage obligations are not fulfilled, and about the need to assess their financial capabilities for servicing the loan.