Azerbaijan to launch new mortgage lending mechanism

He added that a German model will be introduced in Azerbaijan.

Rustamov said there are two types of mortgage lending practices in the world, of which one is in use in Azerbaijan.

“The other is a German model. Savings from population are used to finance mortgages. This model implies existence of a bank (house building saving bank), which accumulates people's savings for three years. The new mechanism also envisions upfront depending on the cost of a house.

The bank issues the accumulated funds to a customer on maturity date.

The government pays 8-10% of the cost of the house.

This practice is widely spread in Europe. By creating a legal basis for the said mechanism we intend to create an alternative mortgage program,” he noted.

The German model was tested positive in restoring the housing stock in Germany after the World War II.

/APA/