2024-07-25
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:
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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