FAQ

MORTGAGE LOAN INSURANCE

SUBSIDISED HOUSING LOANS

SECURITY INSTRUMENT - MORTGAGE


MORTGAGE LOAN INSURANCE

1.    How can I apply for a home loan insurance at the NMIC?

You can apply in one of the 23 banks that have entered the Mortgage Default Insurance Agreement with the NMIC. The procedure is fully carried out by the chosen bank which, being a NMIC client, forwards your application and all the required documents to the NMIC.  See the list of the banks here.

2.     Who can be a co-borrower?

If your monthly income is not enough to cover an instalment you are allowed to have a co-borrower. He/she may be any person who meets the requirements that apply on the borrower – a spouse, a family member, a friend or any other person. All the co-borrowers are equally liable.

3.     Do I need any guarantor for a home loan?

You do not need any guarantor for mortgage default insurance by the NMIC.

4.     Can I apply for a mortgage default insurance if I have a part-time job?

To apply for a home loan insured by the NMIC it is required to have a full-time job agreement and at least three months at the current employer. Exempt from this requirement, and in accordance with the Regulation, are persons with part-time job agreements as defined by the relevant laws.

5.     How long will it take to have a home loan approved?

If your bank has attached all the required documents, the he mortgage default insurance procedure at the NMIC takes up to five working days. However, the procedure applied on home loans with government subsidies takes more time as decision-making depends on several institutions – Defence Ministry, Public Attorney’s Office, the competent real estate registry, the commercial bank and the NMIC.

Taking into consideration all the steps, the whole process starting from the date of your application and the date when the payment is made, the procedure takes three weeks for commercial loans and four weeks for loans with subsidies. On the other hand, incomplete documentation is the reason why the procedure sometimes takes more time. And, eventually, if the mortgaged property is unregistered and the certificate of mortgage registration is required for the final approval, depending on the registry office you are related to, the entire process may take another few weeks.  

6.     I had taken a home loan before the NMIC was founded (before October 2004). Can I have this loan insured and thus the interest rate reduced?

The NMIC has offered the banks – partners in this job – to insure retroactively the housing loans approved before entering the Mortgage Default Insurance Agreements with us. Yet, loans taken before this date have to meet the requirements for home loan insurance set by the NMIC. Ask your banker about this possibility.

7.     What are loan insurance costs?

Processing of an application for a home loan insurance costs EUR 30 (converted into RSD), and the insurance premium makes a percentage of the loan amount and the mortgaged property.

8.     How do you calculate the insurance premium?

Ask your banker for the information.

9.     Do I have to pay the insurance premium every year until full loan repayment?

No, you do not. The costs of insurance premium and data procession are ONE-TIME fees.

10.  Shall I pay insurance premium if I take a home loan with Government subsidy?

Yes, you will. Insurance premium is paid for all the loans insured by the NMIC. However, the premium for loans with government subsidies is calculated only for the loan portion approved by the Bank.

11.  If I want to have my home loan, which is already insured by the NMIC,  refinanced by another bank, shall I pay for the insurance premium again?

If you want to have your current home loan refinanced and the loan parameters (for example, LTV ratio) have not changed, you will not pay for the insurance premium again.

12.  Is it necessary to have a current account at the bank where I apply for the loan?

In this respect there are no requirements set by the NMIC, but usually the bank itself will require so. Ask your banker if this is a condition.

13.  Do you insure loans for renovation or reconstruction of existing dwellings?

Yes. The NMIC insures loans for renovation and reconstruction of existing dwellings. However, this does not apply on government subsidies. Apart from standard conditions applied on commercial loans it is necessary to enclose a building permit. Besides, if you apply for a reconstruction, you need to enclose bills of quantities in both cases, that is, a contract with the developer, if you are applying for adaptation.

14.  If I want to build my own house, can I have my loan insured by the NMIC?

The NMIC insures both commercial and loans with government subsidies taken for building purposes. The NMIC’s requirements are as same as the banks’ requirements – a building permit, a bill of quantities (or a contract with a developer). Such a loan will be secured by mortgaging another property. In accordance with the Government Regulation, in order to get a loan with government subsidy for building purposes, the borrower must produce a valid building permit where he/she is specified as the investor.

15.  I have been to several banks working with the NMIC and everywhere I get different information. Is it possible? Do they not apply the same NMIC‘s conditions?

The NMIC defines general requirements that should be obeyed. However, we do not condition any bank in terms of its business policy regarding borrowers and home loan approval. Every bank can approve a loan by its own conditions and in this respect we always advise you to get the information from several banks.

16.  What are housing loans for non-residents and what are the requirements?

In order to make home loans available  to Serbian citizens who live abroad – non-residents -  and foreign citizens who live in Serbia, we have extended the list of persons who can apply for having their home loans insured by the NMIC.

Apart from general terms and conditions, it is necessary to produce the following documents:

а.      positive borrower’s/co-borrower’s Credit Bureau Report, including credit and loan histories in the country of residence (Serbian citizens) or the country of origin (foreign citizens);

b. borrower’s/co-borrower’s 12 months’ worth of bank statements with evidence of regular salaries (Serbian citizens who live abroad);

c. a full-time employment contract or аn agreement on temporary assignments with at least six consecutive months with the last employer.

17.  May I have the property that I buy reconstructed or enhanced?

RS Regulation on Construction Industry Support bans to have the mortgaged property burdened additionally or to have its value decreased, or to burden or decrease value of the property that will be bought or built with the bank loan and government subsidy as long as the loan is not fully repaid and the first mortgage is in favour of the bank and the Republic of Serbia, Yet, a) if you have a loan with government subsidy, reconstruction and enhancement are possible if consented by the mortgagee and the Republic of Serbia (assuming that residing space is to be expanded); b) if you have a commercial home loan, reconstruction and enhancement are to be consented by the bank - mortgagee. Then, you will enclose the document issued by the competent authority which certifies the purpose for which the mortgagee has given the consent and the related bank’s letter on which the consent is based. Whatever the case, the bank must be informed of all the works carried out on bought or mortgaged property, and then the bank will inform the NMIC of the same. 

18.  What does it mean: 80% of completion?

A chartered surveyor issues a valid estimate which will include building and market value of the property (with a photograph attached), confirms that the property is 80% completed and that the actual state of the property complies with the building permit  - there is no likelihood of property partial or full demolition that may reduce its value.   Besides, the estimate must contain surveyor’s statement by which he/she confirms compliance with the building permit after he/she has thoroughly examined the main plan and the set of related drawings. 

19.  What happens if the borrower is in default?

If the borrower is in default, the bank may decide to extend the loan term and offer the borrower loan restructuring. Presuming that the borrower is temporary unable to pay off the instalments and that he/she will soon continue with the repayment.  However, if the borrower and his/her banker do not reach an agreement and the borrower is still in arrears, the bank will initiate a foreclosure procedure and the means obtained from the sale will be used for repaying the debt to the bank and, in case of a loan with government subsidy, the Republic of Serbia.

20.  Where can I get the information why my loan insurance application is rejected ?

Complying to the regulation on personal data protection, the NMIC is not allowed to give information by phone. Since the NMIC informs the bank of all its decisions regarding loan insurance applications, you can get all the information from your banker. However, your complaints regarding NMIC’s decision may be sent to our e-mail: info@nkosk.co.rs .

21.  My banker says that my home loan can be insured if I have a full-time job with at least six months with the last employer, but on your website it reads three months.

The NMIC has set up the requirements regarding home loan insurance. Yet, define their own conditions. If your bank’s business policy defines 6 months, check with other banks and find the conditions that are most acceptable for you.

22.  If I want to buy real estate from a relative, may I apply for a home loan insured by the NMIC?

There are no limitations. However, such loans may be suspicious in view of purpose of the loan means. Insurance of such loans will be approved if other parameters meet the requirements – LTV, credit rating, marketability, etc. If you are applying for a loan with government subsidy, you are not allowed to buy real estate from a relative.

23.  May I get a home loan for a modular dwelling?

If you meet the requirements for a home loan insurance, you will be able to have your loan for a modular dwelling insured. You only should take care of the property to be mortgaged – 80% completion.

24.  Do you insure loans for buying business premises?

Pursuant to the NMIC Law, a loan for purchasing/adapting/building/change of use of business premises cannot be insured by the NMIC.

25.  How can I buy unregistered property?

There are two possibilities for buying unregistered property:

§   to buy an unregistered property which is 80% or almost fully completed and establish a mortgage on it, enclosing the following documents:  the building permit, an abstract from the real estate register for the plot of land on which the building is located and all the documents in the chain of title to the property.

§   to buy an unregistered property but to establish mortgage on another registered property (when the purchased property becomes registered, it is possible to shift mortgage from the previously mortgaged property to the purchased property).

26.  How to buy a dwelling which is still under construction?

In such cases the NMIC will apply the same requirements set up for fully completed, but unregistered dwellings, which means that the answer to this question is as same as the answer to the previous question.

Besides, it is possible to get a loan insured if you want to buy and mortgage a dwelling of which construction has just started (level of completion is under 80%), if the bank you get your loan from is the same bank that credits the investor through the so called project funding. This model ensures protection and legal security of all the participants - the borrower, the bank and the NMIC – and a guarantee that the dwelling will be completed.  

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SUBSIDISED HOUSING LOANS

27.  How can I apply for a home loan with government subsidy?   

You can see the requirements here.

28.  What interest rate is applied on the portion of the home loan with government subsidy?

The interest rate on the loan portion subsidised from the budget of the Republic of Serbia, which makes a part of the down payment, is 0%, without prepaid interest for the repayment term of the bank loan. The interest rate applied on subsidies for military professionals is 0.1 %, also without prepaid interest.

29.  Which banks offer loans with government subsidies?

See the list of the banks which have entered the Mortgage Default Insurance Agreement in 2011 here.

30. Are the budget funds sufficient and will there be additional funding for loans with government subsidies?

According to RS Regulation on Construction Industry Support, the budget funds allocated for this purpose make RSD 1.7 billion, and RSD 200 million for military professionals. Considering the pace of loan application approval, we expect the amount to be sufficient by the end of the third quarter of the year. However, the progress cannot be fully forecast. So, we always recommend our clients to apply on time.

31.  Are government subsidies anticipated for the next year?

The regulation is passed by RS Government and this issue depends on government targets and budget funds.

32.  Is it possible to buy property from a civilian and apply for a loan with government subsidy?

 RS Regulation on Construction Industry Support  sets the condition that real estate must be bought from the investor to whom building permit was issued, meaning that the investor can be either a natural or a legal person, assuming that the real estate consists of  several units.

In this respect, loans with government subsidy for military professionals are not limited.

33.  May I apply for a home loan with government subsidy if my spouse owns 30% of another real estate?

The borrower subsidised from the budget or his/her spouse is not allowed to own real estate in full. If any of the two owns another real estate partially, the loan can make the difference between new property and the property they own. You can get a loan with government subsidy if you own a property partially, but only if the owner of the other part is not your spouse.

34.  May I alienate the dwelling I bought with government subsidy?

Reply to this question depends on the Government Program that your subsidy has been realized with, and the agreement you have entered. Nevertheless, you should ask the NMIC in writing to give a consent for selling the property and closing the loan.

35.  Are superstructures above residential buildings considered to be newly built dwellings ?

If the investor has a permit for building a superstructure above a residential building (based on a written agreement with the residents’ council) with several residential units and assuming that all other requirements have been met, it is possible to get a loan with government subsidy.

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SECURITY INSTRUMENT - MORTGAGE

36.  What requirements should be met by a property to become mortgaged?

  1. Property must be registered in land registry or cadastre or through the title deed system (on territories without a land registry or a cadastre);
  2. estimated property value must be verified by the NMIC;
  3. property must be insured from basic risks, and insurance policy assigned to the bank;
  4. the NMIC retains exclusive right not to insure loans that either meet or not the set requirements.

37.  Do you insure home loans without a mortgage?

The National Mortgage Insurance Corporation is an institution specialized in insuring home loans approved by banks to natural persons for purchasing, having homes adapted or built which are secured by mortgages, meaning that it is not possible to apply for loan insurance at the NMIC without a mortgage.

38.  Will you accept mortgage on property registered through the title deed system?

Yes. The NMIC will accept mortgages registered by any of the valid systems: cadastre, land registry or title deed system.

39.  What is second mortgage?

Since we would like to have a constantly improved and active home loan market, we have decided to accept second mortgages assuming that certain conditions are to be fulfilled.

Second mortgage is accepted as loan security pursuant to the requirements defined in the Mortgage Default Insurance Agreement. Thus the borrowers who offer as security a real estate of value much higher than required may apply for another loan. For instance, a borrower already has an active home loan with a mortgage on property that exceeds the loan value and can have another loan, let’s say for adaptation, with second mortgage. Loan approval based on second mortgage may be realized only at the same bank at which the borrower has an ongoing first mortgage loan, on condition that the ratio between LTV and the full loan amount  is 90. By introducing such an option of additional crediting through second mortgage, the NMIC wishes to meet the needs of present and past borrowers who have addressed the NMIC with this issue. This option is not possible for real property with first mortgage within the government subsidy programme, considering that the programme/regulation itself stipulates ban on additional burdening of real estate bought with government subsidy.

40.  Can real estate owned by a legal person be mortgaged?

The NMIC does not accept property owned by a legal person to be mortgaged. The only exception is when the legal person is the real estate vendor at the same time and at the moment of mortgage registration the legal person is still the owner of the property to be mortgaged.

41.  Can land be mortgaged?

The NMIC will not insure loans if only land is mortgaged only.

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