Estonia to simplify switching banks on home loans
The Estonian government has greenlit amendments that will make switching home loans between banks faster and easier, spurring competition and lowering costs for borrowers.
The bill of amendments, approved Thursday, will allow borrowers to switch banks and refinance their mortgage without going to a notary or paying notary fees, the Ministry of Justice and Digital Affairs said. All the necessary paperwork can be handled online.
Minister of Justice and Digital Affairs Liisa Pakosta (Eesti 200) said the change is meant to encourage competition in the lending market.
"If taking your mortgage to another bank is quick and easy, people can review the terms of their loan more often," she said, adding that this will make it easier to refinance with another bank offering more favorable conditions.
Pakosta said the change will also bring direct savings. For a €150,000 mortgage, for example, borrowers would avoid a €275 notary fee, while a €350,000 loan would save about €653.
The new conditions will apply in cases where the borrower and collateral remain the same, with only the bank changing.
State fee still applies
The refinancing process itself will remain largely unchanged: borrowers compare offers, the new bank issues a loan decision, and the property's land register entry is updated digitally.
A state fee will still apply, but borrowers will be able to skip the notary step altogether.
The amendments will update the Law of Property Act and related registration, eliminating the notarization requirement and expanding the use of digital solutions in the process.
The bill of amendments will now head to the Riigikogu for consideration.
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Editor: Marko Tooming, Aili Vahtla
