Little is known about the credit assessment so far: what is available is the baby loan regulation. This states that banks determine creditworthiness in accordance with their own internal regulations.
Under the regulation, loan applicants must also comply with the Good Finance regulations , which will become stricter when the baby loan is launched, on July 1st.
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What exactly does Good Finance mean?
Good Finance stands for Income- Based Repayment Indicator . It is a part of the debt control system developed by the National Bank of Hungary (MNB), the main objective of which is to prevent over-indebtedness of the population. The Good Finance must be examined for any loan over $ 200,000, so it should be taken into account in the credit assessment of a baby loan.
The Good Finance-related change was already known in the October last year amendment, while the details of the baby loan were published in the March 12, 2019 Hungarian Bulletin.
Good Finance calculation for baby loan
So it is certain that the income-to-repayment rate will apply to couples in need of a baby loan, but how this will be applied by banks is still unclear, as it is a 5-year floating rate loan without interest subsidy.
Banks will take into account the couple’s existing loans, even though they are only named, when applying for a loan , as they can only apply jointly for a baby loan . Banks should take into account existing:
credit card contract,
as well as any related financial burden. Of course, only certified legal income can be included in net income.
The couple’s net income counts
According to the decree, the claim can only be filed by married couples, which means that when applying, the bank will examine the income conditions of both parties. The Good Finance calculation must take into account both the verified primary and secondary income of the couple.