Mortgage loan

You may select any of the following loan repayment methods:

• Annuity method is the loan repayment method whereby the loan is repaid to the Bank in equal instalments consisting of the loan repayment amount and the interest amount, and such instalments are payable until the date of drawing up a new payment schedule.
• Linear method is the loan repayment method whereby the loan is repaid to the Bank in equal instalments but the amount of the last instalment may differ from other instalments. I
• Fixed payments annuity method is the loan repayment method whereby the loan repayment schedule is drawn up by the annuity method but the instalment consists of the interest payable for the past month and the repayable loan amount. The term of the loan agreement changes (increases/decreases) along with changes in the interest rates, however, not exceeding the pre-set term, and the monthly payment to the bank remains fixed. The fixed monthly payment may be increased for the client only in case if, along with the increase in interest, the term of the loan agreement reaches the maximum term and the fixed payment will be not sufficient to repay the loan and to pay interest. If the interest rate drops, the monthly payment decreases to the fixed amount.

The total interest rate for these loans consists of a variable interest base and an interest margin set for each customer.

The interest margin is calculated individually for each customer and depends on your credit payment history, the sustainability and continuity of your income in the long term, the liquidity of the mortgaged property, etc.

Interest base

The Bank applies the following interest bases:

• EURIBOR interest rate base - Euro Interbank Offered Rate, expressed as an annual interest rate. EURIBOR is determined, administered and published by the European Money Markets Institute (EMMI) or other officially designated organisation. If the EURIBOR is negative, it is considered to be zero.

• PRIME interest rate base for mortgage loans (no new loans are issued with this interest rate base):

  • Published by Swedbank on a daily basis for loans denominated in EUR;
  • consisting of two parts: EURIBOR (if EURIBOR is negative, it is considered to be zero) and the Country Economic Indicator.

For more information on the Country Economic Indicator, click documenthere.

The Variable Interest Base changes every 3/6/12 months, so the total amount of interest you pay may decrease or increase depending on the change in the Interest Base. Currently, only the 6-month part of the variable interest rate applies when signing a new loan agreement or when changing the interest rate under an existing loan agreement to a variable interest rate. The different maturity base is only applicable to loan agreements previously concluded where a different maturity base is already in place. When choosing a variable interest rate, it is important to take into account that the volatility of this interest rate during certain periods may also significantly increase your monthly interest payments to the bank due to the increase in the variable part. In order to ensure that you meet your obligations properly, the Bank recommends that you allocate no more than 30-40% of your income to meeting your financial obligations.

Find out today's Interest Base Rates here.

In the event of arrears or material breaches of the terms of the Loan Agreement, the Bank has the right to unilaterally change the interest margin. The margin will remain unchanged provided that there have been no recurrent and/or more than 15-day delays in the repayment of financial obligations to the Bank and/or the Bank’s group companies during the previous two years and there have been no breaches of the material terms of the Loan Agreement.

The long-term variable rate is fixed for a period of up to 5 years (for a new loan agreement currently being signed, or for a change in interest rates under an existing credit agreement, and for a long-term variable rate, the 5-year fixing period for the long-term variable rate applies). At the end of this period, the interest shall automatically change to a variable interest rate or, by agreement between the parties, the long-term variable interest rate may be reset.

The long-term floating rate may be fixed:

• by signing a new Contract, provided that the maximum drawdown period is 2 months from the date of the binding offer of credit and provided that the amount of the loan is disbursed within one day.
• for loan agreements already concluded, only after the full disbursement of the loan or at the end of the disbursement period.

In the case of a mortgage loan with long-term variable interest, the monthly instalment does not change during the period of your choice. However, it must be taken into account that at the time it is set, the long-term variable interest rate is higher than the variable interest rate applicable at that time.

Also, early repayment of a loan or part of a loan without the expiry of the interest fixation period or the maturity of the long-term variable interest, a change of the type of interest from long-term variable to variable or a change of the maturity of the long-term variable interest shall be subject to the charges set out in the Bank’s Fees for Services and Operations.

Choosing a long-term variable interest rate does not guarantee that you will pay less interest over the life of the loan, but it does allow you to pay the same fixed monthly payment as the economy changes and helps you to better plan your financial flows.

Comments:

¹ Fee for change of the agreement shall not apply in the following cases:

• when a long-term variable interest rate is charged for euro-denominated loans where not more than 1 (one) month has elapsed after the end of the loan use period;
• for change of the servicing bank account;
• for change of repayment day;
• when the property being mortgaged/already mortgaged to the Bank is insured by the Bank;
• when the loan repayment schedule is changed upon early repayment of a part of the loan and the loan balance is arranged over the residual maturity of the loan;
• setting of a grace period for 4 months when borrowers receive 10% or 20% subsidy for existing Mortgage Loan with State Support;
• setting of a grace period upon early repayment of a part of the loan according to the loan agreement concluded before 12 May 2008, provided that no arrangements on the change of its terms and conditions (except for the agreement on property insurance) have been signed after the specified date;
• setting of a grace period when according to the loan agreement concluded from 12 May 2008 or according to the loan agreement regarding the amendment of terms and conditions of which arrangements were signed after the specified date (except for the agreement on property insurance), where the early repayment amount is not smaller than EUR 300⁶;
• loan agreement termination arrangements when borrowers have paid the loan administration fee of the established amount after conclusion of the loan agreement and the loan has not been granted.

In individual cases higher fee for change of loan conditions may apply.

² Before entry into force of the Law of the Republic of Lithuania on Credit Relating to Real Property, interest fixed for the period exceeding 12 months, but not for the entire loan maturity, was considered to be fixed interest. As from 1 July 2017, such interest is designated as “long-term variable interest”.

³ No fee is charged when, upon expiry of the term specified in the loan agreement, the long-term variable interest specified in the loan agreement is changed into variable interest in accordance with the terms and conditions of the loan agreement.

⁴ Were the amount obtained by dividing the outstanding amount of the loan by residual maturity (in months) is smaller than EUR 300, the borrower shall have the right of early repayment of such part of the loan which is smaller than EUR 300.

⁵ Where the reason for the approval of remortgage is the sale of the mortgaged property to another person who must mortgage such property in order to secure the repayment the loan being taken, the granting of such approval shall be charged a fee as specified in the common Service and Operation Fees of the Bank for the issue of certificates (about loans being granted / already granted / repaid loans.

Annex 1:  Compensation amount (C) shall be calculated in accordance with the procedure

A typical example:

If the total amount of a real estate mortgage loan is EUR 89 000, with a loan agreement term of 26 years, at a variable annual interest rate of 4.4%, with a one-off agreement administration fee of 0.4% of the loan amount (EUR 356), a minimum daily service fee (EUR 1 per month), a mortgage registration fee (EUR 8.60), and with the mortgage repayments made by annuity, the annual rate of the total cost of the loan 4.62%, and the total amount payable by the borrower would be EUR 151 241.51 The total number of repayments is 312 and the repayment amount is EUR 482.58

The annual percentage rate of charge, the total amount payable by the borrower, the total number of loan payments and the amount of each instalment are calculated under the assumption that the credit agreement will be valid for a period equal to the duration of the credit agreement, that the entire loan will be paid out on the day that the agreement is signed, that the parties will fulfil all of their obligations properly, and that the variable interest rate, fees and other costs will remain the same as at the time of conclusion of the credit agreement and will continue to apply until the end of the credit agreement. A customer shall also bear the costs of property insurance and appraisal. These costs depend on the individual characteristics of collateral and, therefore, are not included in the total credit price in the example above.

If the loan agreement is concluded in a foreign currency, i.e. if the currency of the customer’s revenues (or the major share thereof) and/or the customer’s state of residence, which is an EU member state or a member state of the European Economic Area, from the currency of the loan issued in euros, the change of the foreign currency compared to euro may significantly increase the amount of the issued loan and the associated payments.

The loan must be secured by mortgage of real estate acceptable to the bank, and the mortgaged property must be insured by concluding an insurance agreement. A report by an independent property appraiser may be required on the value of the collateral. The costs of property insurance and appraisal depend on individual characteristics of collateral, and shall be prescribed by agreements you may have with the relevant service providers.

By using these financing services, you are assuming financial obligations. Improper fulfilment or non-fulfilment of financial obligations may have a negative impact on your credit history and make borrowing more expensive; you also risk losing ownership rights to the mortgaged real estate.

Besides, a loan administration fee may be charged at the time of entry into a credit agreement. Loan administration fees and other fees are provided here.

Since Lithuania is part of the eurozone, the Bank has decided to replace the EUR LIBOR variable interest rate with the Euribor (Euro Interbank Offered Rate), which is the average interest rate for EU Member State loans. The 3-, 6- or 12-month Euribor rate will be used for credit agreements, depending on the base interest rate period of the previous LIBOR interest rate.

Euribor – the Euro Interbank Offered Rate for the duration of the interest period, expressed as annual interest (this concept does not apply when the Credit is a Preferential Credit for which the Agreement was signed in 2006. If the Credit is a Preferential Credit for which the Agreement was signed in 2006, and the currency of the Preferential Credit was the litas until 1 January 2015, the following Euribor concept shall apply to said Credit: Euribor – the arithmetic mean (expressed as annual interest) of the Euro Interbank Offered Rate published during the 30 (thirty) calendar days prior to the Interest Rate Change Date.) The Euribor reference rate is set, administered and published by the European Money Markets Institute or other officially designated organisation.

The total loan interest rate consists of the interest margin and the EUR LIBOR variable base interest rate. This change will not change the interest margin, but, like the EUR LIBOR variable interest rate, the Euribor fluctuates, which in turn may affect your monthly credit instalments, so the total interest paid may decrease or increase depending on the change in the variable interest rate.

You can find all of the latest information on Euribor benchmarks and their changes at: www.emmi-benchmarks.eu/euribor-org/euribor-rates.html