Military personnel can legally avoid paying interest on loans: who is entitled to the benefit

Military personnel, mobilized individuals, and reservists have the right to a legally provided loan benefit that allows them not to pay interest, fines, and penalties on loans during their service. However, the conditions for its application vary depending on the type of service, and to apply, the relevant supporting documents must be submitted to the bank. The "Judicial and Legal Newspaper" reviewed the clarifications from the Ministry of Defense and gathered key information about who can use loan holidays, which loans the benefit does not cover, and what documents need to be prepared.

What the loan benefit for military personnel entails

During military service, certain categories of defenders of Ukraine, as well as in cases defined by law their spouses, are exempt from paying interest on loans, fines, and penalties.

This means that banks and other financial institutions are not allowed to charge such borrowers interest, penalties, or fines during the benefit period.

At the same time, loan holidays do not apply to all types of loans.

Loans not covered by loan holidays

The benefit does not apply to loans obtained for the purchase of:

• housing, including unfinished construction projects;
• vehicles;
• equipment for ensuring energy independence.

Specifically, this refers to photovoltaic modules, wind power installations with hybrid inverters, and other equipment if the interest on such loans is already compensated by the state or third parties.

Loan holidays do not apply to loans for purchasing housing, vehicles, and energy independence equipment if the interest on them is already reimbursed under other state or compensation programs.

Who is entitled to loan holidays

The right to the benefit depends on the category of military service.

Mobilized personnel and reservists

For mobilized servicemen and reservists, loan holidays begin automatically from the day of conscription and last until the day of discharge from service.

The place of service does not matter. The benefit is granted regardless of whether the serviceman serves on the front line or in the rear.

Contract soldiers and other categories of servicemen

For contract servicemen and persons serving in other types of service, the right to a loan benefit arises only if they directly participate in combat operations or activities ensuring the defense of the state.

This includes participation in:

• anti-terrorist operation (ATO);
• Joint Forces Operation (JFO);
• measures to repel and deter armed aggression by the Russian Federation after February 24, 2022.

If a serviceman participated in such activities even for one day, the right to the benefit arises from the first day of such participation and remains valid throughout the entire subsequent period of service during the special period.

Even a single participation in combat or defense activities grants the right to apply the loan benefit for the entire subsequent service period.

At the same time, contract soldiers who serve without participating in combat or defense activities cannot use this benefit.

It also does not apply to foreigners and stateless persons serving in the Armed Forces of Ukraine.

The right to loan holidays is provided for in paragraph 15 of Article 14 of the Law of Ukraine "On Social and Legal Protection of Servicemen and Their Families".

Documents required to apply for loan holidays

To stop the bank from charging interest and penalties, the serviceman or their spouse must submit the appropriate set of documents.

Documents for mobilized personnel and reservists

The basic document package includes:

• military ID or officer's certificate;
• certificate in form No. 5 confirming military service;
• extract from the appointment order if the type of service is not indicated in the form No. 5 certificate;
• marriage certificate if the benefit is being applied for by the serviceman's spouse.

Additional documents required for contract soldiers

Contract soldiers and other categories of servicemen must provide not only the basic package of documents but also confirmation of direct participation in combat or defense activities.

Such a document may be:

• certificate in form No. 12 confirming participation in combat;
• or a certificate issued according to annexes 1, 4, or 6 to Procedure No. 413, which are used to grant the status of combatant participant.

Where to obtain documents for the bank

All documents required to apply for loan holidays are issued by the military unit at the place of service.

After submitting the supporting documents, the creditor is obliged to apply the legally provided benefits and stop charging interest, penalties, and fines in cases defined by law.

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