Redemption may reduce the repayment installment of former FX-denominated customers, but caution should be exercised in making the decision, because although exchange rate risk has been eliminated with forint conversion, interest rate risk still exists, said József Szabó, director of the Good Finance’s Financial Consumer Protection Center.
The Good Finance’s loan and lease selector application
Average interest rates were estimated, based on the average reference rate of home loans 7.09 percent, the average minimum interest rate 5.80 percent and the maximum 6.55 percent. For free-to-use mortgages, the reference thm is 8.50 percent, the average minimum interest rate is 6.43 percent, and the maximum interest rate is 7.87 percent.
The director pointed out that by now the majority had already received the settlement notice, many had reduced their capital and installments, and there were opportunities to further reduce their installments. He added that banks have launched a strong campaign to get solvent customers, and consumers need to think carefully and reconsider their loan redemption.
Recalling the data in the Stability Report, he said that 14 percent of foreign currency lenders would not convert their foreign currency loans to fixed-rate forint loans, and those wishing to convert would expect the same or lower installment.
It is worthwhile to use a loan redemption
The director said that it is worthwhile to use a loan redemption if the client can expect the same maturity but lower interest, or if the repayment installment is higher, but the maturity is shorter, so you can get rid of your loan faster.
József Szabó said that it is worth considering the amount to be saved, the size of the new installment, the change in the maturity, the interest rate and the thm. He also has to look at the terms of the new contract and what other costs may vary for each loan, he added.
Regarding the contract modification deadline, the director explained that if the customer does not initiate the non-forint conversion, the modification date is the 31st day after receipt, from which time the loans can be canceled and inquired about, and an additional 60 days are available to terminate the loan.
If the consumer initiates the non-conversion
But does not meet the conditions, his contract will be modified on the day following receipt of the rejection. If the initiative is accepted by the financial institution, the date of the amendment to the contract shall be the day following the receipt of the annexes to the amended contract.
József Szabó also drew attention to the fact that the law on fair banks restricts the modification of the terms of fixed and variable interest loans.
In connection with the termination of the contract, József Szabó said that the consumer has a total of 90 days to repay the entire debt, and the redemption of the loan is free, the bank cannot charge any costs, but this applies only to the old loan to be repaid. The bank providing the new loan may charge a fee as set out in its business conditions.
József Szabó explained that it is advisable to terminate the contract if there is already a written “promise” for the underlying loan. He also stated that the bank has no legal obligation to restore the canceled loan, but that it can decide according to its own rules.
In case of FX loans, it is worth considering whether to redeem, as the redemption installment is likely to increase.
At a home savings fund, when a particular contract expires, the payout is about 90 days, which can be a problem if we consider that the consumer has 90 days to repay the canceled loan. It is therefore worth asking for an expedited payment procedure in the event of termination.