Offset is a loan feature based on which the bank calculates the amount of accrued interest. The product is offered to individuals who have mortgage loans.

An offset account can be the borrower’s/co-borrower’s non-interest bearing card/current account.

Fees and rates applicable to a current/card account used for offsetting:

No special terms apply to accounts used for offsetting.

Information about standard fees and rates on card/current accounts is available on TBC Bank’s website www.tbcbank.ge

Offset account currency: GEL. The offset account currency should be the same as the loan currency.

One loan can only be linked to one offset account in the same currency. Interest will be calculated according to the same-currency balance in the offset account. Balances held in different currencies in a multicurrency account will be excluded.

Replacement of an offset account: the customer may request a new offset account. In this case too, only one active offset account will be linked to the customer’s loan.

Opening an offset card account:

Only one GEL-denominated offset account may be opened.

The offset period shall be less than or equal to the term of the linked loan

Calculation of interest under the offset arrangement:

If an offset feature is activated on a loan, interest will be calculated as follows: the current loan balance – the balance in the offset account * annual interest/365 * number of days

Example: The client’s loan balance is 80 000 GEL and the payment date is the 25th day of each month. The client had 25 000 GEL in the offset account from day 1 to day 15, and 0 GEL from day 15 to day 25. Thus, from day 1 to day 15, the interest will accrue on 80 000–25 000=55 000 GEL, while from day 15, the interest will accrue on the total loan balance, that is, 80 000.

If the repayment schedule is revised on a loan on which offset has been activated, the monthly loan payment is calculated as follows: the monthly payment slightly changes through reducing the interest component and increasing the principal component correspondingly, for the benefit of the client. Thus, on the first payment date following the revision of the schedule, the client will pay more towards the loan principal than he/she used to before revision. After the first payment under the revised schedule, the subsequent monthly payments will revert to the schedule before revision. This plan will apply to any revision in the repayment schedule during the term of the loan.

Example: The monthly payment on a loan is 500 GEL. Once offset is activated, the payment decreases to 300 GEL. However, if the repayment schedule is revised during the period when offset is active, on the first payment date after the revision, the reduced payment amount (300 GEL) will change to equal the amount before the activation of offset (500 GEL), with one important difference: if before offset, 200 GEL out of 500 GEL went towards principal and 300 GEL towards interest, after the activation of offset and revision of the repayment schedule, the first payment under the revised repayment schedule will have the following structure: 400 GEL out of 500 GEL (the monthly payment) will go towards principal and GEL 100 towards interest.

Under the Offset arrangement, the accruable Bank Credit balance (on which monthly interest shall accrue) can be reduced to max. 75% of the current outstanding balance of the Bank Credit

Example: The loan amount is 100 000 USD and the borrower has 100 000 USD in the offset account for 7 days. During these 7 days, the interest will accrue on 25 000 USD (the difference between the loan balance and the offset balance but no less than 75% of the loan balance).

The calculation is based on the daily (end-of-day) balance in the offset account.

Payment: the client will benefit from offset in terms of accrued interest, while the scheduled principal remains the same.

The minimum required balance in the offset account shall be 100 units.

If the end-of-day offset balance is less than 100 units, the offset feature will not apply.

Example: The client’s outstanding loan amount is 80 000 GEL and the payment date is the 25th day of each month. The client had 25 000 GEL in the offset account from day 1 to day 15 and 50 GEL from day 15 to day 25. From day 1 to day 15 the interest will accrue on 80 000–25 000=55 000 GEL, while from day 15 the interest will accrue on the total loan balance of 80 000, as the offset balance is below the minimum threshold – 100 units.

The offset feature can be activated on new as well as existing mortgage loans.

The Bank may unilaterally cancel the offset arrangement at any time, without notifying the client in advance.

The activation of offset is free.