New interest rate ceiling for consumer loans in Finland

4On September 1, Finland introduced a new interest rate cap of 20% for all consumer loans in order to reduce its indebtedness in the country. In addition, no consumer loans may have fees exceeding USD 150 per year.

These rules do not only apply to fast loans, sms loans, and other high-cost credits but also apply to credit cards, car loans, renovation loans, and installments. If you wish, you can check out the new rules in their entirety on the website of the Finnish Parliament.

Since even Swedish authorities and politicians probably observe this and may follow (if it gives a good result in Finland), we at Good Finance think it may be interesting to look more closely at what is happening there.

In Sweden, an interesting ceiling was also introduced (of about 40%) and then Finland was one of the role models, so if an even lower interest rate yields a very positive result, perhaps it will happen in Sweden as well.

Finland’s previous interest rate ceiling

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Already in 2013, Finland introduced an interest rate ceiling for loans that were less than USD 2,000, but this did not reduce debt in Finland. No, it is rather that the indebtedness in Finland continued to increase, both in terms of mortgages and consumer loans.

After the interest rate ceiling was introduced in Finland, many small quick loans were converted to larger loans with longer repayment periods, and this meant that many who previously took smaller loans chose to take larger loans instead.

In addition, loans of USD 2000 or more were not covered by the interest rate ceiling and this resulted in the indebtedness taking on greater debt than before. The new rules

This is how Finns and credit companies are affected

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Thus, the interest rate ceiling from 2013 did not produce the positive effect that the Finnish state had hoped for and therefore they have now taken another step in the hope that it will produce a positive result.

Prior to the new interest rate ceiling, several lenders of fast loans and sms loans announced that they would cut down on their business due to the interest rate ceiling, or alternatively close it down altogether.

Just a few days after the introduction, however, most lenders seem to roll on as usual but with altered interest rates of course, and some have made some changes with their products.

More payment notes – in the beginning

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Of course, it will take time before you can see if the new interest rate ceiling will have a positive effect or not, but you can always hope.

Sean Cole of the Guarantee Foundation (who helps indebted people in Finland) tells Finnish YLE that the new rules will initially make more people receive payment notes because it will be more difficult for people with poor finances to take a quick loan to manage to pay their bills.

However, Cole believes that it is only good that people receive a payment note at an earlier stage than they borrow money to pay their bills, which only leads to a debt spiral.

Larger fast loans and longer payback times

Larger fast loans and longer payback times

However, there is also a risk with the new interest rate ceiling and it is that more and more fast loans and sms loans will be larger (which, for example, Good Finance in Finland has flagged for) and this, in turn, can cause people to be tempted to take bigger loans than they need to.

Jessica Brown, at the Good Finance Information Corporation, also believes that there is a risk to this and therefore thinks that it would make sense to impose a cost ceiling just like we have in Sweden.

The Swedish cost ceiling means that a high-cost credit must never cost more than the size of the loan itself, including interest and recovery costs.

Military Mortgage and Maternity Capital

Military mortgage and reimbursement of part of the debt with a certificate of certification are two programs of state importance designed to provide housing for families of the military and families with children. About what preferential conditions for obtaining mortgages exist for these categories, how to use them together, will be discussed below.

How to take advantage of benefits

How to take advantage of benefits

The law does not restrict the use of both these programs at the same time. Accordingly, military families in which two or more children can get a mortgage on attractive terms and pay part of the debt with the parent capital.

This sphere is regulated by the regulatory legal acts of our state:

  1. The law “On the accumulative mortgage system of housing for military personnel.” This law describes the economic and organizational basis for the provision of military mortgages, the importance of providing housing for employees.
  2. The law “On additional measures of state support for families with children.” By this act, the state provided significant assistance to families with children, created the foundation of a decent life, and provided an opportunity to provide them with housing.

The housing problem is acute for young families, where parents work in the public sphere and raise children.

Usually, the situation is this: the husband is entitled to subsidies for military personnel, the wife is entitled to receive maternal money.

According to the rules of registration of a military mortgage, after 3 years of service, you can already get a soft loan for housing. Until 2005, this privilege was available only after the dismissal. To get a mortgage for the military, you need to join the mortgage system. Since 2012, the law has approved the ability to repay the mortgage maternal certificate.

If you are already paying a mortgage with benefits for the military, also apply the family certificate:

  • Pay them a part of the down payment. A suitable option if the spouses promptly provide a package of documents and visit 3 organizations to resolve this issue: the bank, the Pension Fund, and the defense department.
  • Pay a part of your current mortgage debt that you have already issued earlier. It makes it possible to shorten the loan repayment period.
  • Send your family money to pay off your mortgage balance. The most profitable option, as it gives time to collect documents and allows you to fully use the maternity capital.

Banks are more willing to accept money on account of payment of part of the debt. As a down payment, the certificate is not beneficial for banks, since the transfer of these funds takes a long time.

To calculate a payment schedule for a military mortgage, use a loan calculator online.
Sequencing:

  1. The husband turns to the military department, he writes a report about the intention to issue a military mortgage. He receives a certificate from a participant in the accumulation program, which he then presents at the bank when he makes a mortgage agreement.
  2. Borrowers choose a lending institution where they can take advantage of government benefits.
  3. The family applies to the bank for processing a loan on the basis of the received certificate.
  4. Borrowers choose an object for the transaction.
  5. A wife refers to a specialist Pension Fund. It is better to draw up documents at their place of residence. For the transfer of maternal money, an application is filled into the mortgage account, a package of documents is submitted: a certificate for Good Finance, a passport of applicants/certificate holder, marriage certificate, birth certificate of children, mortgage agreement, bank details, paper on the sale of the object, certificate of the right property.
  6. PF reviews the application, examines the paper and reports the answer. We will have to wait no more than a month. If the application is approved, the borrowers will inform the bank of the payment by the certificate.
  7. The husband writes a statement to Rosvoenipotek about the intention to pay part of the loan.
  8. PF transfers funds to the bank account.

Check with a specialist in the PF, which papers should be presented. Requirements for borrowers:

  • the presence of Russian citizenship, permanent registration;
  • housing that is purchased is located in the country;
  • between spouses must be formal marriage;
  • family certificate received at least 3 years ago, that is, the youngest child has reached the age of three.

Family capital is used only once. To repay part of the military mortgage with this money, act promptly, collect the necessary papers and contact the appropriate authorities.

Delays in the process may prevent the payment of Good Finance as a primary contribution. Take this into account and prepare in advance the means for the first payment.

How are housing rights distributed?

According to the rules for granting a military mortgage, a military applicant has sole rights to square footage.

If funds are involved, then both parents and children have the same property rights. At the same time, the common property is issued. Having children gives parents the opportunity to receive a family certificate. Thus, the state protects certificate holders from misappropriation of money.

In order to ensure the legal rights of his wife and children, the husband, as the owner of the property, applies to the Pension Fund, fills in and submits an application, in which he undertakes to distribute the shares in equal proportions between the children and the wife. The allocation of shares is given up to six months.

Is it profitable to use the certificate for debt payment?

Is it profitable to use the certificate for debt payment?

  1. The state transfers a subsidy to the account of a soldier. Due to this, contributions are made under the mortgage agreement. Attraction Good Finance makes it possible to quickly repay the debt. The family can pay off debts earlier.
  2. The use of a family certificate entitles the family members of the military to the right of ownership.
  3. After payment of the debt to the bank, the funds will be transferred to the account of the serviceman. After 20 years of service, this money can be withdrawn from the account. Payments are constantly indexed. In contrast to the certification, payments for which are raised annually, but not at a pace.
  4. Military savings, you can pay the debt on the secondary mortgage. Early payment of the loan, the removal of the burden and the sale of housing make it possible to retake the military mortgage.
  5. Profitable option for that military who are planning to quit and find a job in another area. If the service ends earlier than the loan payments, the maternity capital will cover the missing amount.

The 4 biggest mistakes of mortgage lending at a glance

Financing a house or apartment is not difficult. Nevertheless, there is always talk of builders and buyers who have come in financial difficulties because of their financing. Almost always lack of knowledge and bad advice are responsible.

But it does not have to come that far. We do not offer independent advice without good reason.

Our goal is to help every client get exactly the financing that suits him best. In addition, we would like to point out in this article which are the biggest mistakes that threaten mortgage lending.

Do not secure the family or secure it incorrectly

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Suppose the main earner dies, what happens then? Unfortunately, many people do not want to deal with this question. As a result, the hedge is usually missing entirely, which in some cases ends tragically. Not infrequently this means for the bereaved that they can not keep the property.

Here, a hedge is easily possible – and it does not have to be expensive. Many a consultant may recommend classic life insurance. But a risk life insurance is much cheaper and is completely sufficient.

No interest rate comparison

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Anyone who trusts his house bank blindly and therefore makes no interest rate comparison need not be surprised later. In any case, financing offers from several banks should be obtained and compared.

Even a small interest rate differentials lead to long-term savings in interest rates. After all, it’s about big loan amounts and a long financing period.

Therefore, even small differences in the interest rate have a significant impact. Clever borrowers use interest savings and thus save money in the medium and long term.

Use the entire equity

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Who uses all his savings to realize the dream of owning a home, takes a high financial risk. The danger is that even smaller unpredictable expenses will grow into big problems.

It is better to withhold part of the savings as a nest egg. For example, if a car repair pending, the budget does not immediately come under pressure.

Even from a health point of view, such a procedure makes sense. A small financial cushion means security and lets borrowers sleep better.

Waiver of interest rate hedge

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If the market interest rates rise significantly, the subsequent follow-up financing could be really expensive. In the worst case, it will no longer be possible to continue using the new monthly installment, even in conjunction with a low minimum eradication rate.

But it does not have to come that far. Our consultants are happy to discuss what concrete possibilities of interest rate hedging exist.

Advice on the construction financing

Take advantage of our non-binding advice. Taking into account your personal situation, our finance specialists work out tailor-made mortgage lending and compare the conditions of numerous banks.

The advice is free of charge and not non-binding, ie you decide in the end, if and by whom you finance your property.

Loan application under deflation explained clearly

Deflation – lowering money supply and falling prices

Deflation - lowering money supply and falling prices

Deflation is a gradual process. Deflation is the general persistent decline in price levels. It is therefore the counterpart to inflation, the general price increase. Deflation usually occurs in combination with an economic depression. Deflation describes the situation when aggregate demand is lower than aggregate supply. Deflation is therefore an impact of an economic downturn, as real economic purchasing power remains at a lower level than the supply guaranteed by the production of goods over a longer period of time. This creates an oversupply of goods on the market that is not in proportion to the (falling) demand.

Deflation – causes of deflation

Deflation - causes of deflation

The causes of deflation are diverse and affect a wide range of areas of business and politics. From an economic point of view, consumer and investment reluctance is one reason for deflation, as individuals fear an economic downturn that wages or conditions on the labor market will deteriorate. There are fears of existence that lead to cost-cutting measures and accordingly to lower consumption. Similar reluctance can also be observed in companies that reduce expenditure and investments to a minimum due to the decline in consumption. In addition to the decline in consumption, there is a generally falling total demand for goods with a relatively unchanged range of goods. Another economic cause is, for example, asset deflation, which occurs in combination with the bursting of speculative bubbles. This leads to a sudden reduction in asset prices, which lead to household overindebtedness and loan defaults. This shift in debt at the expense of the banks means that fewer new loans are granted than loans that expire or fail. The money supply is falling and with it the overall economic demand. However, politics can also be a source of deflation. If the government decides to cut government spending sharply due to a budget deficit, government demand in the markets will drop while supply remains unchanged. There is again a gap in demand.

Deflation – consequences of deflation

Deflation - consequences of deflation

If goods and services continue to get cheaper, people, provided wages and salaries remain constant, will become relatively richer. Because of the existing assets you can afford more because of the falling prices. Deflation is the result of an extreme reduction in the money supply by the central bank responsible. The real economic effects of deflation are much stronger and more damaging than those of inflation. It is therefore not surprising that deflationary trends are much less common than inflationary trends. Deflation can have a real economic impact, for example, if companies cut production and cut wages or cut jobs. Rising unemployment sustainably increases the decline in consumption. Deflation is therefore an ever worsening trend unless countermeasures are taken.

Calculation example deflation

Calculation example deflation

This calculation example illustrates deflation using the example of the MCB. This is about the monetary value or the money put into circulation by the MCB: (1) There are 1000 USD in circulation. (2) A bread costs 1 USD. (3) A man earns 50 USD, so he could buy 50 loaves of bread.

The central bank prints 20 USD less: there are now 980 USD. In order to be able to sell as much as before, the baker lowered the price of a bread to 0.98 USD. The man still earns 50 USD, but can now buy 51 loaves. His 50 USD are really worth more.

How do I know if I qualify for a mortgage debt transfer?

What I think is necessary is to introduce it as a measure in the hands of the judge or arbitrator, along with others such as withdrawals, deficiencies, interest rate reductions or extensions of time limits, within a special procedure for bankruptcy of natural persons.

If you are preparing to buy your home, it is natural for you to have a question: Do I qualify for a mortgage debt transfer? To know if you qualify or you should not go through a credit evaluation where some aspects will be reviewed.

 

What aspects are evaluated to access a mortgage loan?

What aspects are evaluated to access a mortgage loan?

There are two key aspects that banks evaluate to grant a mortgage loan:

  • The availability of money: It is one of the key elements in the evaluation because this ensures that you can pay the monthly payments and for this you will check the amount of your income for the month. They will also verify that you have at least 10% of the initial down payment.
  • The credit history: The bank will verify how your behavior has been when paying your debts, verifying that you have not had arrears.

 

Do I qualify for a mortgage transfer with a low salary?

Do I qualify for a mortgage transfer with a low salary?

The positive rating for a mortgage debt in terms of salary depends on two issues:

  • The percentage that covers the monthly payments: The amount of the salary to qualify is relative as everything will depend not on the absolute amount but on how much percentage of the monthly payments payable and this is according to the value of the property.
  • The origin and constancy of the funds: The bank will be interested in both the amount of salary accrued and the stability and legality of the income.

Hence, to know if what you earn is enough to access the loan you must take into account the value of the property or else the bank will remind you.

For example, you may have a high salary, but even so, the monthly payments of the credit you aspire to almost reach half of your income. It is essential that the fees be less than 35% of your total income.

In short, to know if I qualify for a mortgage debt transfer I must focus on the types of income I have and the credit history. And do not worry if you are one of those who receive income from the fourth category, that is, they pay you for fees, because for this credit institutions have arranged savings plans.

More security and lower costs for credit cards

A draft law passed by the federal government today is intended to ensure greater security and lower costs for consumers when paying online or shopping at the checkout by credit card. Current information from the banking association.

In the bank letter, the Association of German Banks provides information on current news and events from the world of finance and banking every day.

Legislators take action against credit card surcharges

Legislators take action against credit card surcharges

More security and lower costs for consumers when paying online or shopping at the cash register by credit card: This is provided for in a bill that the Federal Cabinet passed today. As of 2018, merchants should no longer be able to demand separate fees for card payments, transfers, and direct debits. The Federal Government is thus implementing the EU Payment Services Directive (PSD2). At the same time, the protection of consumers when shopping online via credit card or online banking is to be increased.

Customers will have to identify themselves with at least two authentication features in the future, for example with a card and a transaction number (TAN). Such strong authentication would have to require payment service providers for high-risk payments. Justice Minister Heiko Maas said, “The often annoying fees charged by merchants for credit card payments, SEPA transfers, and direct debits are eliminated in most cases.” The legislative plans also envisage further opening payment transactions in the EU to non-banks.

For example, banks and savings banks should provide regulated service providers with access to their customers’ account details. In this connection, the banking industry referred to the effort, among other things, through the bank interfaces to be set up free of charge by third-party providers. But there are also new market opportunities for the institutes.

More news of the day

That was also important today:

Passbook is still the most popular investment – 23 percent hoard savings at home

Only 12 percent of consumers consider the classic savings book attractive in view of the mini-interest rates. Nevertheless, 40 percent consider this type of investment to be preferred. This was the result of a GfK survey published today. There is also a discrepancy in occupational pensions, which 42 percent consider worthwhile but only use 18 percent.

The purchase of a property (46 percent), the home savings and loan agreement (29 percent), the private pension insurance and the private life insurance (both 21 percent) and the call money account (18 percent) were also classified as popular investments. 23 percent said they would deposit their savings at home or anywhere else.

Digitization is revolutionizing bank business models

Digitization is revolutionizing bank business models

Established credit institutions are accelerating so as not to fall behind the FinTech companies when digitizing the banking system. “Digitalization is revolutionizing many business models,” said Florian Frank, banking expert at management consultancy Willis Towers Watson. Many financial institutions are successful in adapting to this change. HypoVereinsbank is breaking new ground.

She has installed a reverse mentoring program: trainees coach the managers in their role as “digital natives” and explain how to use Web 2.0, social networks, forums, and blogs. “We do this on both sides on a voluntary level,” said HR Manager Ulrich Leckner-Grevel. “But almost all managers are enthusiastic because they understand that these issues are extremely important to the bank.”

Credit account: Everyone has a right to it!

An account is one of the things you have to have today – because almost nothing, especially in times of the Internet, is possible without an account. Be it the conclusion of contracts that require an account or payment in advance in order to take advantage of cheap offers on the Internet.

However, anyone who gets into over-indebtedness often has the problem that one can suddenly be left without an account: If the account is overdrawn or the overdraft facility is used permanently, many banks apply the emergency brake – at the latest when the account is seized – and cancel the account.

An account termination in itself would not be a problem

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But one problem is that after an account termination due to an account attachment or due to the permanent overdrafting of the account there is a negative Schufa entry, which alerts every other bank and they often refuse to open an account. In an application to open an account, consent to the storage of personal data and comparison with the Schufa is mandatory, which will then make you aware of the personal situation of your new customer.

Breaking the account usually triggers an avalanche of follow-up problems, because from an account the direct debit is used to collect the telephone fees, pay the rent and much more – things that then no longer (almost all telephone providers or landlords refuse to pay cash) or only are possible with considerable additional effort.

A bank is not obliged to give a customer an account of their choice

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However, it is obliged to set up a so-called credit account for a customer. The banks imposed the obligation themselves with the voluntary commitment to anticipate a bill that was planned at the time, ie: Everyone has the right to a credit account!
 It is often argued that banks can still decide “voluntarily” whether to open a credit account or not – this is wrong, because their voluntary nature only relates to the submission of the voluntary commitment at the time to grant every citizen a credit account!

Unfortunately, many banks often forget their commitment at the latest when an over-indebted customer actually requests a credit account. Here one should not be fooled and refer to the voluntary commitment of the banks – if the bank still refuses, then it can even be warned (usually by consumer protection, if you report this incident to them) and the account can even be sued.

A bank can only reject a customer for one reason

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If it is a customer who has already received a credit account and has not fulfilled its obligations, the bank can refuse to open a new account due to breach of trust.

Those who place little value on anger and shy away from going to consumer protection and to a lawyer should contact savings banks, Volksbanken or ethics banks with the opening of a credit account – these grant a credit account rather than big banks.

 

Important

The voluntary commitment stipulates that anyone can open a credit account, but this does not have to be free or particularly cheap or grant a customer with a credit account the same conditions as others (eg free transfers, an EC Card or a disposition) . A credit account is therefore usually more expensive than other accounts because the fees for account management or transfers are higher. Therefore, it should only be used as an interim solution until you have consolidated enough to get a normal current account or salary account. A credit account cannot be overdrawn either.

A way to get quick cash

You have probably found many times that you needed money. Kind of a small problem because you can reach for them in your wallet. But what to do when the wallet is empty? In fact, there are often many opportunities on the financial market that offer cash at a very wide interest rate ceiling. However, not everyone wants to use the offer of financial institutions, right?

More often, we choose the option of borrowing money from friends, family and banks and leave the rest for later. Check the ranking of online payday loans on the Good Finance. However, as the old saying says “you want to lose a friend, lend him money”. This saying works very often because we rarely pay money from family or friends on time. And there are misfires when we don’t give up the money at all.

We lose contact with people who supported us

We lose contact with people who supported us

It’s even worse because it remains a disgust that can last for years. That is why it is best when we are short of cash to try our hand at parabank. There we can get the money fastest.

The offer of online payday loans that are available in parabanks is very diverse. This is due to the fact that the multitude of offers in this industry is directed to various recipients.

You can apply for money without checking in the BIK when the installments and the full cash repayment will amount to us more than when borrowing on normal terms. Normal, i.e. after presenting all documents regarding earnings, account statements etc.

If we decide to pay for the online payday loan

If we decide to pay for the online payday loan

we choose the offers presented on the pages that provide insight into the comprehensive ranking of such loans. In such a place we will find the most optimal offer the fastest and easiest. Optimal, i.e. offered with the best interest rate, for the longest period of time and for the highest amount.

This is the basic information responsible for choosing the best loan. Remember to carefully review all the contracts we sign in the case of borrowing.

Let’s pay all liabilities within the period specified in the contract. In this way, we will not be exposed to the consequences of not complying with the contract. Thus, we only sign documents in which we clearly and precisely know what we are choosing.