Mortgage during wartime? Navigating loans amidst armed conflict in Ukraine

The armed conflict in Ukraine raises numerous questions for borrowers. Should loans be repaid during wartime, or might they be forgiven? Unfortunately, even with property destruction, difficulties may arise with the bank.

Business Insider says wars and other armed conflicts do not automatically nullify loan agreements. This means that even if properties are destroyed, mortgage loans remain active.

In exceptional situations, banks may implement loan extension programs that allow payment deferrals until the armed conflict is over. Such an extension may apply to the entire installment or its principal part.

Loan restructuring can include reducing the margin and extending the repayment period, which helps borrowers better manage their obligations during tough times. The National Bank of Ukraine's response is an example of such actions.

As of 25 February 2022, the day after the invasion, the central bank of Ukraine recommended that Ukrainian commercial banks not treat loan delinquencies as defaults if repayment issues stem from Russian aggression. This recommendation is in effect for the duration of the conflict and 30 days after its conclusion.

According to data from the National Bank of Ukraine, in March 2022, loans totalling ₴2.5 billion (Ukraine's official currency) were issued, with a significant portion allocated to support the sowing and harvest campaigns. This was done amid the ongoing armed conflict.

The portal notes that standard property insurance policies typically do not cover damage resulting from wartime actions. Similar exclusions apply to life, accident, automotive, and travel insurance policies, where coverage for war-related damages is usually excluded.