.png){kind=small}
It seems that young people face an insurmountable barrier when it comes to buying a home due to high property prices and rising interest rates. In order to stimulate the development of the housing construction industry, the Ministry of Development and Technology recently presented preliminary assumptions for a program of subsidies for housing loans. The purpose of today's blog post is to explain the requirements and amounts necessary to apply for funding under this program, what amount will be available to you, and what impact the program will have on the real estate market.
Can anyone benefit from the 'Safe Loan' program with a 2% interest rate?
A number of sources indicate that the loan subsidy program is intended for individuals who do not own a house or apartment, or who have never owned such a property, nor have ever been entitled to the cooperative ownership right to a housing unit. As stated on the Ministry of Development and Technology's website, the program is aimed at individuals who have never owned a flat or a single-family house. Exceptionally, those who are co-owners of 50% of a property or a cooperative property or who have inherited such a property but do not live there may be eligible to participate in the program. There is a requirement that must be met in order to apply for funding, which is that the maximum age at which an individual can apply for a loan is no more than 45 years. If you are a spouse or parent of at least one child, at least one of you must meet this requirement.
What type of properties can be acquired under the program?
The new program enables obtaining a loan for the purchase of a primary or additional residence in the public or private sector. This is a significant change compared to previous forms of assistance, which only covered developer properties. In addition to the possibility of purchasing land for the construction of a single-family house, funds from the subsidized loan could also be used to cover costs associated with the investment.
How much support will you need?
Loans with a fixed or periodically fixed interest rate are the only type of loans that will qualify for this program. In exchange for support, participating banks will provide a subsidy to loan installments corresponding to the difference between the average interest rate offered by participating banks and the 2% interest rate. The borrower cannot receive assistance for more than ten years in total.
Unlike previous support programs, what sets this program apart is that the maximum value per square meter is not limited in terms of funding. An upper limit on the value of loans is to be introduced. This amount is to reach 500,000 PLN. If you are single, the loan will be 500,000 PLN. If you are married or have children, it will be 600,000 PLN. The program allows the participant to combine the loan granted under this program with a loan granted on commercial terms, which is important.
What is the maximum amount of difference that can be contributed to the loan instalment?
There are certain loans that will be offered in the second half of the year with an interest rate of around 2% plus the bank's margin. In other words, if the average interest rate for loans offered by participating banks is 5%, the subsidy amount will be 3% if the average interest rate is 5%. Therefore, the borrower will only have to repay 2% plus the principal and interest installment.
It should be understood that if one person decides to take out a loan of PLN 500,000 with a fixed interest rate of 5% and a margin of 5% for a period of 25 years, for which no subsidies are available, the bank will charge the single person PLN 3,370.4 per month, which is not covered by the subsidy. Under the government aid program, the instalment will be PLN 2.50.
It is estimated that a married couple will have to pay PLN 40,524 per month to the bank if they take out a loan of PLN 600,000 for 30 years at an interest rate of 5% plus a margin of 1.5%. For example, if the same couple took out a loan with a subsidy, the monthly installment would be only PLN 3,007.
How will the 2% savings incentive affect the housing market?
In recent years, there has been a slowdown in the real estate market due to high interest rates and the introduction of new regulations on creditworthiness, which have limited the ability to borrow money. Therefore, the launch of cheap financing is good news for the industry.
Several experts from the otodom.pl portal said that 39% of apartments in one city or metropolis will be covered by the loan, although there was speculation about the value of the loan being too low. However, according to information from the Ministry of Development and Technology, the loan taken out under the program can be combined with another loan that has been granted on commercial terms. This will also apply to more expensive properties.