Mortgages for young people
Banks will start issuing new, low-interest mortgages to young people and couples aged up to 39 years through the program of the Public Employment Service in the first quarter of 2023, while the government’s housing policy includes actions that also benefit the owners of unused property.
Based on the planning, the relevant draft law is expected to be submitted to Parliament within November (immediately after the passing of the mini social security bill), with the aim of the first measures to run from early next year.
Specifying the housing policy actions for the next period, the Labor Ministry clarifies that those who choose the low-interest mortgage program will in practice pay an installment that will to be much lower than the rent corresponding to the house they choose, as the interest rate will amount to a quarter of commercial rates. It will also be zero for families with three or more children. The loan will cover 90% of properties’ commercial value, higher than the 80% usually covered by typical mortgages. Therefore, the private participation that young people will have to contribute is reduced to 10% of the value of their home.
The ministry points out that with this program, households that under normal circumstances would hardly meet banks’ financing criteria can gain access to bank loans.
In the bill being prepared, there will be a ceiling of 200,000 euros on the value of the residence that the beneficiaries can purchase, the acquisition of the property by a first-degree relative of the borrower will be prohibited, and there will be no loan guarantor.
At the same time, there will be an eight-month period (six months initially with the possibility of an extension of two months) from the pre-approval of the loan until the signing of the agreement.
There will also be a ceiling of €150,000 on the amount of the loan, with the ministry noting that in dozens of urban areas as well as in the countryside there are available properties in this order of size that can meet the housing needs of young people.
