100% financing in housing credit available for young people can now be requested.
Young people can now apply to access 100% financing when buying a home with a mortgage, through the new public guarantee measure.
The ordinance now formalizes the conditions of public warranty for young people buying a house.
Young people can now access 100% mortgage financing, through public guarantee, to buy a house.
The Government published the Ordinance formalizing the conditions for the implementation of the new measure, with Banks now having 90 days to request membership and put it into practice.
The regulation establishes the requirement conditions: it is intended for young people between 18 and 35 years old, with fiscal address in Portugal, income up to the 8th IRS bracket, not being able to own another residential property, and for properties up to 450 thousand euros.
Remember that the public guarantee of the State in question will cover 15% of the transaction value, allowing banks to finance the full value of the property.
Warranty will be provided by the Directorate-General of the Treasury and Finance (DGTF) to banks, which may join within 30 days of the entry into force of the Ordinance - through a specific protocol - then have 60 days after joining to implement the procedures provided.
Young people who join the guarantee can benefit from it for 10 years, starting from the credit agreement celebration, extinguishing the borrower's obligations that are fulfilled before that deadline. Note that if you partially or fully repay the credit, the guarantee also reduces proportionally.
In other words, if there is a default, the state can also be called upon to pay up to 15% of the outstanding capital, which will then be subrogated in the rights of the bank to recover the amount from the borrower.
Despite this measure circumventing the macroprudential measure of the Bank of Portugal regarding the maximum financing limit of 90% for the acquisition of own and permanent housing (the lowest between the acquisition value or appraisal), the banks still have to follow the other rules.
For example, they must continue to respect the limit of the debt service-to-income ratio, which determines that the set of loan installments must not exceed 50% of the borrower's net income, except in specific cases.
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