100% financing on home loans for young people: How does it work?
Young people can apply for 100% financing to buy a house with a mortgage credit, through the public guarantee measure.
Official regulation formalizes conditions of public guarantee when purchasing a house for young people.
Young people can already access 100% financing in housing credit, through public guarantee to buy a house.
The regulation establishes the requirement conditions: it is aimed at young people between 18 and 35 years old, with a tax address in Portugal, income up to the 8th tier of the IRS, unable to own another residential property, and for properties up to 450 thousand euros.
It is worth remembering that the State's public guarantee involved 15% of the transaction value, allowing banks to finance the full value of the property. The guarantee in question is provided by the General Directorate of the Treasury and Finance (DGTF) to the banks.
Young people who adhere to the guarantee can benefit from it for 10 years, starting from the celebration of the credit contract, extinguishing the borrower's obligations that are fulfilled before that period. Note that if the credit is partially or fully amortized, the guarantee is also reduced in the same proportion.
That is, if in default, the State can also be called upon to pay up to 15% of the outstanding capital, which will then be subrogated in the bank's rights to recover the amount from the borrower.
Despite this measure bypassing 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 debt service-to-income ratio limit, which determines that the set of loan installments must not exceed 50% of the borrower's net income, unless exception.
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