- Applying for an idea loan is flexible and simple and you can do it alone or jointly with a co-applicant. Your total loan and lease payments must not exceed 40% of the income of the loan applicants.
- The minimum loan is 3,200 euros and the maximum you can borrow is 66% of the market value of your collateral.
- Your minimum monthly net income needs to be 540 euros and the minimum monthly net income of your family needs to be 830 euros.
- You can use any property that can be mortgaged as collateral for your loan.
- If you want to apply for a loan, you do not have to have been a customer of our bank before.
Conveniently long loan term
- The maximum term of an idea loan is 20 years
- You will have to pay the loan back before you turn 70
Choose your payment schedule
As a rule, the total loan and lease payments must not exceed 40% of the income of the loan applicants.
You need to make payments each month in order to repay your loan. You can choose between an annuity payment schedule or a fixed principal payment schedule.
- If you choose an annuity schedule, you pay the same amount each month. At the beginning of the loan period a major part of your loan payments consist of interest but with each subsequent monthly payment your payments will increasingly consist of the principal. Interest is calculated on the loan balance.
- If you choose a payment schedule where the principal repayments are fixed, the principal is divided into equal parts and interest is added to each of these parts. As interest is calculated on the loan balance, your monthly payments become smaller each month.
- So the advantage of the annuity payment schedule is that you pay the same amount each month but the disadvantage is that you pay more interest in total over the entire loan period. The advantage of the fixed principal payment schedule, on the other hand, is that you pay steadily less each month as time goes on, but the disadvantage is that you pay more each month at the beginning of the loan period.
How is the interest rate calculated?
- The interest rate for a loan is made up of the base rate and an additional margin that is set individually for each customer.
- The individual margin depends on the size of your income and liabilities, the value of the property that provides the collateral for your loan, and the loan-to-value ratio.
Annual percentage rate of the Idea Loan
When taking an idea loan in the sum of 10 000 euros, a floating loan interest of 7.35% a year, loan period 240 months and agreement fee 150 euros, the preliminary percentage rate of charge is 7.55%. The loan security must be insured for the duration of the loan period, but the total amount of insurance costs depends on the insurance provider and terms and conditions of insurance the loan recipient chooses, and therefore is unknown to the loan provider. The loan recipient will pay the state fee and notary`s fee for establishing the security, and therefore, the loan provider is unaware of the final amount.
You can find additional information on annual percentage rates on the website of the Consumer Protection Board.
What can be used as collateral for the loan?
You can use property that can be mortgaged as collateral for your loan. The maximum loan must not exceed 66% of the market value of your collateral.
- You need to insure your real estate collateral throughout the entire loan period with an insurance company accepted by our bank.
- You can obtain a valuation of your collateral from real estate agencies accepted by our bank (in Estonian)
Bank accepts all property insurance companies registered in Estonia and licensed by the Financial Supervision Authority that are pledged in favour of our bank as insurers of assets in Estonia. The list of companies is published on the website of the Financial Supervision Authority.
- The loan contract states that you need to insure your real estate collateral throughout the entire loan period for at least its reinstatement value.
- The insurance must cover at least the risk of fire, water and natural disaster, and losses caused by vandalism. The maximum allowed liability rate is 500 euros.
- You must set Luminor Bank AS (reg nr 11315936) as the beneficiary in the insurance contract.
- At least three days before your insurance contract expires you will need to submit a new insurance policy to the bank to show that you have entered into a new insurance contract or extended the old contract. Please send the new insurance contract to email@example.com or to address Liivalaia 45, 10145 Tallinn.
What do I need to apply for a loan?
- Your passport or ID-card and those of your co-applicant if you have one.
- Statements from your and your co-applicant's bank account for the last six months. If your income has been transferred to our bank over the last six months, you do not have to submit the account statement.
- A valuation report (in Estonian) of your loan collateral drawn up by a real estate agency accepted by our bank.
- A loan application. You can submit your application on paper. If you are our customer, you can submit your application through our Netbank.
- The bank has the right to ask for any additional documents and information it needs for reviewing the application.
You will have to pay the following fees for your loan contract:
- A fee for valuation of the property
- A contract fee
- A notary fee and state fees
- Property insurance
|Contract fee||Till 1% of the loan amount, min 130 €|
|Increasing the loan amount||2 % of the additional amount, min 100 €|
|Changing the monthly payment date 2||Once a year free of charge|
Changing other terms and conditions of the loan contract / Changing collateral
1.5 % of the loan balance, min 200 €
|Early repayment of the loan either in part or in full||Free of charge if notice is given 3 months in advance; in other cases interest is calculated for up to 3 months on the amount that is repaid early|
|Changing the current account related to the loan||30 €|
|Penalty for failure to submit the insurance policy of the collateral||100 €|
2 Not applicable to loans with a fixed base rate or loans with a limit on interest rate rises.