Precontractual information

For home loan and mortgage loan applicant

Taking a loan is an important decision, one that involves risks. We want to help you make this decision. 

When applying for a loan, you need to think through and find answers to the following questions: 

• Make it clear to yourself for what and how much you need, where you will get the money to repay it and what are the costs that will be incurred by taking a loan. 
• Provide us with true and sufficient information about your income, expenses, and the purpose of the loan.
• Consider the possibility that your economic situation may deteriorate, and you must also be able to pay the loan in this situation.
• Carefully read all credit documents (agreement, information sheet, etc.) before signing the agreement.
• If you have problems repaying your loan, contact us and we will try to find solutions together. 

Use the opportunity to ask us for information and clarification on the loan terms and conditions both before and during the loan agreement. You can find our contact details in the agreement documents and on the website at www.citadele.ee.

When reviewing loan terms and loan agreement, pay attention to the following. 

1. Standard European Consumer Credit Information

Before you sign a loan agreement, we will provide you with a personalised Standard European Consumer Credit Information form with summary information on the main terms of the agreement. Carefully review the information in the document. 

2. Joint liability of multiple borrowers 

If there are multiple borrowers, each borrower is fully responsible for the repayment of the loan and other contractual obligations.

3. Loan currency 

We only issue loans in euros.

4. Own contribution 

To conclude the loan agreement, the own contribution must be available in your current account and transferred to the notary’s account before the sales transaction. We also need to know the origin of the own contribution, whether it comes from personal savings, the sale of assets, or another source. 

5. Requirements and obligations related to the collateral 

The property provided as collateral must be in good condition and have proper documentation, including a building permit, usage permit, and other relevant documents. The usage permit confirms that the building has been constructed in accordance with the building permit and may be used for its intended purpose. If a building permit is required, using the building without a usage permit may result in a fine. The owner of the building is responsible for ensuring the existence of a valid usage permit.

We kindly ask you to order the expert valuation of the collateral property from a real estate agency accepted by us.

All collateral and their specific conditions are stated in the loan agreement. The mortgage amount set on the collateral property will be 1.3 times the loan amount. If you want to transfer or additionally encumber the immovable that is the collateral, incl. lease or rent it, you as a borrower or the owner of the immovable serving as the collateral should apply for our consent beforehand, whereas in the case of a loan agreement secured by a EIS guarantee, the Bank must obtain EIS’s prior consent in order to transfer the collateral object or make it available to other persons (except for the spouse who is the joint owner). At the same time, we may ask to see the terms and conditions of the lease or rental agreement to be concluded (draft contract). If the transfer or encumbrance is made without the consent of EIS, the latter may withdraw the guranatee and you will have to find a new additional collateral.

Insurance

The real estate provided as collateral must be insured under the conditions set in the loan agreement. In order to establish that the insurance obligation has been met, you will have to send us the insurance policy. 

In case you do not forward the insurance policy to us on time or the real estate provided as collateral is not insured under the conditions of the loan agreement, we have right to:

• Insure the collateral property on your behalf 
• Cover the insurance-related costs from your account 
• Issue a contractual penalty claim against you.

6. Loan disbursement term and conditions 

In most cases, we will disburse the loan to your Citadele current account after all the pre-conditions for disbursement set out in the loan agreement have been met (e.g. an additional agreement, certificate, invoice, etc., has been submitted, collateral has been provided, and you have not withdrawn from the loan agreement). Depending on the financing project, we pay out the loan in one or several instalments.

7. Right to withdraw from the loan agreement 

After signing the loan agreement, you have the right to withdraw from this agreement within 7 days. 

8. Interest rate

Interest is the fee you pay for using a loan. The interest rate is stated in the agreement. Interest is calculated and must be paid from the outstanding loan balance. 

Variable interest rate consists of: 

• The variable base interest rate, or Euribor; and 
• The individual interest margin, which generally does not change over the duration of the loan agreement.

The period over which the Euribor may change depends on the period for which the Euribor is set in your loan agreement. For example, the new value of the six-month Euribor is fixed every six months. The interest rate set in this way may increase or decrease every six months, and will also decrease or increase the amount of the loan repayment. Therefore, an increase in Euribor means a higher cost to repay the loan. 

Our loan agreement does not contain a clause that would stop the interest rate from rising at any level in the event of an increase in the base interest rate. If the base interest rate turns out to be negative, it is equal to zero. 

Fixed interest rate

The fixed interest rate applies for the period agreed in the loan agreement. We will notify you of the new fixed interest rate at least 60 days before the end of the current interest period.

9. Loan repayment 

Payments due under the loan agreement will be debited from your current account. If you have taken out a loan with a co-borrower, we have the right to take loan payments from their current account as well. 

You will have to make monthly repayments in accordance with the payment schedule. Generally, the repayment is the same and you pay the same amount in monthly payments (annuity payments). The payment consists of a repayment of the loan principal amount and interest. If there is a change in the interest rate or a change in the maturity date of the loan, or if you repay the loan in larger early repayments, the amount of the payment will also change. 

During the grace period agreed with us, you only pay interest. During this period, the loan balance decreases more slowly (compared to the period when there is no grace period) and, therefore, the total interest cost on the loan increases.

In the case of a loan with a special repayment schedule, you will pay only interest during the initial period (from the first 12 up to 64 months), and only afterwards will you begin repaying the loan principal together with interest.

10. Early loan repayment 

You have the right to repay all or part of the loan early if you tell us in advance. In the event of early repayment of the loan, we are entitled to a contractual fee equal to three months’ interest on the part of the loan to be repaid, calculated with the interest rate applicable on the date of early repayment. You do not have to pay the contractual fee if you give us three months’ notice and make the repayment within 10 days of the end of the three months from the day we receive the notice. The three-month time limit starts from the day we receive your notification. 

11. Changing the terms and conditions of the loan agreement 

Generally, changes to the terms and conditions of the agreement are made with the agreement of both parties and are formalised as an annex to the agreement. A fee is generally charged for any change to the terms and conditions of the loan agreement. 

In addition, in certain cases, the Bank has the right to unilaterally raise the interest rate in the following case: by 0.3% if the borrower (and the co-borrower) fail(s) to comply with the obligation to transfer their regular income to the account with Citadele Bank. 

12. Special terms and conditions of the loan agreement 

If the loan agreement contains special terms and conditions, then it is necessary to pay special attention to them. Only then can you be sure that the agreement will remain in force. One of the special conditions is the obligation of the borrower to transfer its monthly regular income to the settlement account associated with the loan agreement.

13. Expenses related to the loan agreement 

One-off expenses 

When signing the agreement, it is necessary to pay the agreement fee in the amount and under the conditions stated in the agreement. See also the price list for loans www.citadele.ee/en/private/fees/, the general terms and conditions for banking services  and the rules for processing personal data www.citadele.ee/en/support/terms/. 

If you guarantee the agreement with a pledge, following one-off fees may be added: 

• State fee.
• Notary fee.
• Collateral valuation report fee.
• Insurance payment.
• Guarantee agreement fee in case of a EIS guarantee. 

Fixed expenses related to the agreement 

In addition to the loan and interest payments, you will also have to pay the following fixed expenses related to the loan agreement: 

• Monthly current account fee.
• Cost of insuring collateral.
• Cost of ordering an expert’s report on the collateral if an expert’s report is required.
• Currency conversion fee: if, on the due date of the payment, there is not enough money in the currency of the loan in the account designated for the servicing of the loan, we may deduct the payment in any other currency in the account by converting it into the currency of the loan at the exchange rate prevailing in Citadele Bank at the time of transfer. 

14. Risk of the borrower losing solvency 

Think carefully about how you will fulfil your obligations to repay the loan in case of deterioration of the general economic situation, reduction in wages or unexpected expenses. 

If you should experience payment difficulties, an unexpected termination of employment, enforcement proceedings or a seizure of your bank account, please contact us immediately. Together, we will find the best solution. 

15. Consequences and costs of the breach of the loan agreement 

If you do not pay your contractual payments on time, we may charge you interest on late payments at the rate indicated in the agreement. Should you find yourself in debt, we will first send you a reminder. If the debt remains unpaid, we will send you a payment order. If your contractual obligations are covered by a surety, we will also notify the guarantor about the arrears. For more than 45 days of arrears, we will provide information to the supervisor of the payment register (Creditinfo Eesti AS). 

If you violate a non-monetary obligation, we will be entitled to charge a contractual penalty at the rate set out in the agreement. 

If you fail to fulfil the obligations agreed in the loan agreement, we may terminate the loan agreement extraordinarily and demand immediate repayment of the loan, as well as the interest and any other outstanding amounts arising from the loan agreement.

In case of payment difficulties, you should contact us immediately so that we can find the best possible solution to the situation.

16. Termination of the agreement and its consequences 

We have the right to terminate the loan agreement and demand repayment of the outstanding loan amount, unpaid interest, contract fee, penalties, fines, and any other claims arising from the loan agreement if you fail to meet the payment obligations set out in the loan agreement, including:

• Delaying full or partial payment of three consecutive loan instalments and failing to settle the debt within two weeks after receiving a warning.
• Providing the bank with materially false information.
• Using the loan amount for purposes other than intended.
• Failing to provide additional information and documents as agreed in the loan agreement.
• Failing to comply with special conditions.
• The market value of the collateral property decreases to a level that is insufficient to secure the obligations under the loan agreement.

Upon termination of the loan agreement, we have the right to initiate enforcement proceedings for the forced sale of the mortgaged property or to take legal action to recover our claims. In the case of forced sale, the collateral property will be sold. If enforcement proceedings are initiated, enforcement costs will be added. If we take legal action to recover the claim, court-awarded legal costs may be added to the claim.

17. Complaints and disputes 

If you have a disagreement, try to resolve it by contacting us first. If our response does not meet your expectations and you still think we have violated your rights when we granted you the loan, you can seek advice and clarification from the Consumer Protection and Technical Regulatory Authority (Endla 10A, 10122 Tallinn; www.ttja.ee) or Finantsinspektsioon (Financial Supervision Authority) (Sakala 4, 15030 Tallinn; www.fi.ee). 

You can also take your dispute to the Consumer Disputes Committee of the Consumer Protection and Technical Regulatory Authority or to court.