100% financing in mortgage credit for young people can now be requested.
Young people can already apply for 100% financing to purchase a home with a mortgage, through the new public guarantee measure.
Formal ordinance now establishes the conditions of the public guarantee for the purchase of a house for young people.
Young people can now resort to 100% financing in housing credit, through public guarantee to buy a house.
The Government has published the Ordinance formalizing the conditions for the implementation of the new measure, with the Banks now have 90 days to request adherence and put it into practice.
The regulation establishes the requirement conditions: aimed at young people between 18 and 35 years old, with a tax address in Portugal, incomes up to the 8th IRS bracket, not owners of another residential property, and for properties up to 450 thousand euros.
Remember that the state's public guarantee will focus on 15% of the transaction value, allowing banks to finance the entire property value.
The guarantee will be provided by the General Directorate 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 - and then have 60 days after joining to implement the procedures provided for.
Young people who join the guarantee can benefit from it for 10 years , starting from the celebration of the credit contract , extinguishing the borrower's obligations if they are met before that period. Note that if the credit is partially or totally repaid, the guarantee is also reduced in the same proportion.
In other words, 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 circumventing the macro-prudential measure of the Bank of Portugal regarding the maximum limit of 90% financing for the acquisition of permanent own housing (the lowest between the acquisition value or evaluation), 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 sum of credit installments must not exceed 50% of the borrower's net income, except for exceptions.
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