There is a big change in the purchase of housing for young people, which, if approved by the government, will come into effect immediately. The amendment provides for a more favorable condition for applicants where at least one of the couple has not been 36 years old. And what exactly is it?
Housing support for young families
The aim of this new form of cheap loans for young people is to achieve at least a small change, as ordinary housing loans are becoming less and less affordable. In addition, rural areas are becoming increasingly depopulated, as young people are increasingly moving to large cities. And this change is mainly to help young people outside big cities.
This is also the reason why the amount of this cheap form of loan is limited – the applicant can borrow up to two million dollars for a house or up to 1.2 million per apartment with a maturity of 20 years. Alternatively, even 300 000 dollars intended for the modernization of the apartment.
For the purchase of cheap housing, the loan will cover up to 80 percent of the value of the property. The rest will have to be paid, as elsewhere, best by the applicant’s own reserve.The interest rate is one percent per year for five years of fixation – compared to the average bank mortgage rate, which is now around 2.5 percent.
Smaller and larger conditions
The state will then be able to provide this form of state mortgage to young couples when at least one of them is less than 36 years old. If the couple is not married, they must have at least one child under the age of 6. The state wants to support housing for young families with children and marriage in general.
This, however, encounters one major problem – young people are not much expected to have the remaining amount saved. They would have to pay at least one fifth of the price anyway – because the ‘state mortgage’ could not be combined with another loan.
So, as always, this is one of the other changes that is better to approach with healthy skepticism. As usual, we will have to wait and see what the change will look like and work in practice.
These conditions report, inter alia, to the instructions of the Cream Bank. This concerns in particular the amount of income and the value of the pledge. In recent years, the central bank has set limits on these areas.
LTV – the ratio of the loan amount to the value of the property. The Cream Bank determines that the maximum amount of the mortgage is 90% of the value of the property. At the same time, however, it reduced the number of such loans. According to its instructions, more than 80% of the mortgage may account for a maximum of 15% of the volume of mortgage loans provided by the bank. Mortgages with LTV up to 80% are therefore more common.
DTI – ratio of total debt to net annual income of the applicant. According to Cream Bank guidelines, the total amount of your loans may not exceed 9 times your net annual income.
DSTI – ratio of installments to the applicant’s net monthly income. Again, not only mortgage payments, but also all other loans are counted. They may not exceed 45% of your net monthly income.
Although the instructions of the central bank are not binding, providers comply with them. So if you want to get more advantageous terms, it pays to guarantee more real estate and apply for a mortgage with other people.