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Security and Insurance
- The residential property is pledged to the Bank until the full repayment of the loan
- The customer must have the ownership right to the residential property to be pledged
- If the loan is provided for purchase of residential property from primary market and it is under construction, (i.e. no Ownership Certificate is available for the property) the borrower will be asked to secure the loan by pledging any other privately owned residential property. Once the final Ownership Certificate of the completed residential property is issued it should be pledged to the Bank. All the documents related to and verifying the purchase of a new residential property should be submitted to the Bank at the earliest (maximum in 12 months)
- Borrower must provide pledged property insurance opting from suggested list of insurers. The insurance policy should be reissued every year within the whole term of agreement. Should the borrower fail to arrange the insurance, the Bank will arrange insurance at the borrower’s cost1
- The Bank may require that the Beneficiary rights of the insurance policy are entitled to the Bank until full repayment of the loan
- The insurance amount must be equal to the market value of the property
- The Bank reserves the right to demand early repayment of the loan, if insurance terms of the pledged residential property specified in residential property mortgage agreement are breached
- The renovation loan is secured by the pledge over the residential property to be renovated. The customer must have the ownership right to the residential property to be pledged
Important notes
- Fluctuation of foreign currency exchange rate may impact the loan repayment amount (for USD Loans)
- The Bank makes the decision on provision of loans at its discretion taking into consideration the conformity of the loan application to the announced requirements of the given loan type as well as evaluating such essential factors as the creditworthiness of the applicant, any overdue payments and other factors
- Loan drawdown will be done after submission of pledge and insurance agreement / policy
- The loan will be transferred to customer’s bank account
- Valuation and security pledge expenses are born by the customer2
- For renovation loans, a report from an independent authorized valuator in evidence to the renovation done should be provided after 6 months from the date of the loan drawdown
- Any property that is pledged to the Bank and secures facilities with total outstanding of more than USD 250,000 or equivalent in AMD must be re-evaluated on annual basis; the property securing facilities with total outstanding of more than USD 100,000 or equivalent in AMD must be re-evaluated once in three years. In addition, if the property prices in the market are demonstrating negative trend of 20% and more, the Bank may require additional re-evaluation of pledged property
Warning
- If the customer fails or regularly delays the loan repayment or any of obligations specified in loan agreement, the Bank reserves the right to repossess the pledged residential property, without recourse to the court and use the sales proceeds for full repayment of the loan outstanding amount
- In case if the value of such pledged residential property is not sufficient to cover the customer’s obligations, the obligations may be paid-off at the expense of the creditor’s other property, in accordance with the RA legislation
- If the borrower does not pay the interest and loan principal amounts in time, information about credit history will be submitted to the Central Bank of Armenia credit register and ACRA Credit Reporting cjsc
Required documents
- Valid passport
- Social Security Card
- For the Bank payroll customers: a letter from the employer undertaking to process the applicant’s remuneration through HSBC Bank Armenia cjsc (in the form acceptable by the Bank)
- For the Bank non-payroll customers: any official evidence and/or documentation on source/size of income, e.g. dividend certificate, lease agreement, banks statements, etc
- If the applicant is other bank customer: the applicant’s bank statements proving salary transfers for the last 12 months, an official advice on source / size of income, advice on account average balance for the last 12 months (for non-payroll customers)
- Ownership Certificate (the original is kept in the Bank until full repayment of the loan), copy of basis of acquisition of residential property (e.g. inheritance certificate, sale and purchase agreement, decision, resolution, death certificate, power of attorney, etc), owners’/co-owners’ passport copies. In case of need the Bank may request to provide statement from passport agency on registered persons in the mentioned address of residential property and demand that no person is registered in the mentioned address
- Valuation report of the residential property securing the loan. Evaluation is to be conducted by an independent valuator authorized by the Bank
- A combined certificate issued by the respective department of the State Committee of the Real Estate Cadastre on restrictions in respect of the residential property (original). Provided the fact that the mentioned document expires in 15 calendar days it should be submitted after initial approval of the loan eligibility and after all other documents are ready
- Other documents that may be required during loan application process
The deadlines for decision making of loan application and loan provision/drawdown
- The maximum period for decision on loan application – within 7 working days after the submission of necessary documents on income
- The maximum period for informing the applicant about the decision – within 5 working days after the submission of all other necessary documentation as requested by the Bank
- The maximum period for loan provision/drawdown – within 2 working days after the signing of loan agreement, proper verification and registration of the security agreement, submission of security insurance and necessary payments stipulated in the loan agreement
1 Cost of property insurance may vary from 0.17% to 0.2% of the property value
2 Property valuation cost may vary from AMD 18,000 to AMD 35,000. Property pledging costs may vary from AMD 40,000 to AMD 120,000
