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The Banking Supervision Department distributed an update to the Proper Conduct of Banking Business directive on “Procedures for Providing Housing Loans”, which includes new guidelines.  The guidelines improve processes with the aim of making it easier for borrowers who want to pay off their loans early or refinance them by taking out a loan from another lender. 

Supervisor of Banks Daniel Hahiashvili said: “The amendment of the directive to the banks on early repayment and refinancing of mortgages is another step by the Banking Supervision Department to improve the state of the banking customer and to encourage competition in the field.  This measure removes bureaucratic barriers to refinancing a mortgage, so that economic considerations are the main factor guiding borrowers in making decisions on the matter.  The directive was formulated in cooperation with MK Yaakov Asher with the intention of benefitting the public, and we thank him for this.”

The following are the main points of the new guidelines:

  • A customer may notify the bank from which he took out the mortgage, online or by phone, of his intention to make early repayment.
  • There is now a possibility to obtain the necessary information and documents from the bank online, should the customer be interested in doing so.
  • The customer may choose to announce his intention to make early repayment directly to the new bank without endangering his rights. For instance, notice to the new bank will not affect the number of days for providing advance notice to avoid paying fees.
  • A customer will not be required to go to the branch of the old bank in order to receive the documents necessary for refinancing. The old bank will send these documents directly to the new bank.
  • The banks will determine processes between them in order to complete the necessary actions to implement the improvements.
  • Refinancing through an institutional nonbank lender will be possible provided that the same processes and infrastructure are used, at the same level of security and reliability. The joint work processes will be established within a reasonable time.

The updates to the directive will come into effect one year from the date of their publication.