Housing Loans for People up to the age of 35

On July 10, Decree-Law no. 44/2024 was published, establishing the conditions under which the state can provide a personal guarantee to credit institutions, with a view to making it possible to grant loans for permanent housing to young people up to the age of 35.

This measure is part of a package that the government announced in May to mitigate the effects of the housing crisis, which is particularly affecting young people. As such, this Decree-Law provides for the possibility and under what terms the State can grant a personal guarantee, intended for the purchase of own permanent housing, with a view to making it possible to grant housing loans to young people.

Therefore, with a view to granting credit institutions this personal guarantee from the state for the first transaction of own and permanent housing, the following requirements must be met cumulatively:

1. The borrower(s) of the contract are between 18 and 35 years of age and have their fiscal domicile in Portugal;
2. The borrower(s) of the contract have an income that does not exceed the 8th bracket of personal income tax;
3. The borrower(s) of the contract does not own an urban building or an autonomous fraction of an urban residential building;
4. The borrower(s) of the contract have never used the State's personal guarantee under this decree-law;
5.  The value of the transaction does not exceed €450,000.00;
6. The State's personal guarantee does not exceed 15% of the transaction value of the urban building or autonomous fraction of an urban building;
7. The State's personal guarantee is intended to enable the credit institution to finance the entire transaction price of the urban building or autonomous fraction of an urban building.

When granting loans for permanent housing, banks are subject to a maximum limit regarding the ratio between the amount of the loan and the value of the property given as collateral, calculated on the basis of the minimum between its purchase price and the value of the appraisal.

The guarantee only exists until the young person pays the first 15% of the loan to the bank, and as soon as this is paid, the State is out of the equation.

Thus, the State will only be called upon to pay an amount if there is a default on the payment of the loan, and this amount will have to be paid to the State - in the same way that a default with the Bank does not exempt the client from liability.

This Decree-Law came into force on July 11th.
 

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