TONYKO - Mortgage loans with hidden additional costs

Mortgage loans with hidden additional costs

17.07.2008

Mortgage loans with hidden additional costs

Recently the banks buried the consumers with leaflets, brochures, paper, TV and radio adds in which they offer favorable mortgage, purchase money and other loans. Promises fоr ethical attitude towards the client, tempting interest rates, extended grace period, increased credit amounts and extended liquidation period are widely broadcasted. What is common in these promises is that they all come from adds, payed for by the banks themselves. It is only natural that they won't admit that they actually loan credits under unfavorable conditions, with high interest rates and additional taxes and commissions, thus harming their clients. What is the real situation in this sector ?
Knowledge of the real credit loaning conditions ( and not the rosy ones from the brochures) give the consumer the oportunity to make an informed decision. 
You can ask the credit inspector to present you whit this information and conditions. As by art. 58 from the Credit institutions Act, the credit-inspector, should present this information in written form (official sealed blank)  and free of charge. It should contain information about:
1. Data on the collective cost of the loan (interest, taxes, commissions etc.) and the objective criteria for changing their amount;
2. The method of forming the interest rates if the periodical interest debt is not proportional to the annual interest rate;
3. Additional obligations, concerning the payments;
4. The amount of the effective interest rate, formed by the method set by the Central bank.

The banks, however, refuse to issue official documents. Their employees give oral assurance for ethical and meticulous attitude etc, but not documents. On a separate sheet of paper or in a brochure you will receive obscure and not thorough information on the acumulative costs of the loan. You wont'receive information on the effective interest rate. No one will explain this term for you.
The law clearly states that the method of its formation is set by the NBB ( National Bank of Bulgaria), but if you request this info as well as info on the method of computing this interest rate, again you won't receive a sufficient answer.  According to the NBB only a court order can oblige it to give this kind of information. Thus the client with urgent need for money "blindly" sign a contract without being aware of the additional costs the bank set for them. 
 To make proper choice of bank with which to apply for credit institution, strictly check the additional costs demanded by the bank: taxes for market evaluation prepared from a licenced evaluator, tax on revising the credit application,  attorney's fee ( with different banks they vary from 50 to 300 lv), commissions,  penalty interest for premature liquidation of the credit, etc. You should demand for the credit inspector to present this information on a official bank document, signed and sealed. If they refuse, you should be aware- there are hidden obstacles, for sure.