Last Tuesday, the government announced new guarantees from the Official Credit Institute for mortgages. This initiative is aimed at rejuvenating the real estate market and creating a pathway for individuals who want to purchase a home to access financing more easily.
ICO mortgage guarantees fit into a broader package of government measures designed to secure a substantial portion of mortgage loans for first-time buyers. The goal is to lower barriers to homeownership and open doors for those who previously faced obstacles in acquiring property. The implementation of these guarantees is anticipated to positively influence the housing market by boosting demand and stimulating construction activity.
Young adults under 35 and families with dependents are among the groups eligible for these guarantees, provided they meet specific criteria. The state acts as guarantor for 20% of the mortgage (25% if the home has an energy efficiency rating of D or higher), easing the way for a typical buyer to secure a unit, which is often the main hurdle in becoming a homeowner.
Questions and answers about the ICO mortgage guarantees
Analyses on the ICO guarantees can often be found on social media channels with large following in legal and financial topics. One notable account with millions of followers discusses these guarantees, presenting the most common questions and providing expert insights. The account is run by a practicing attorney who covers current affairs in law and finance.
In one recent video focusing on ICO guarantees, the author compiled frequent questions and provided clear answers. The following points summarize the main findings:
1. What does it mean for the state to be your guarantor? It means the state is responsible for your debt if you miss a payment. It does not imply that the money is given for free.
2. What are the requirements to obtain this ICO guarantee? There are several criteria that must be met to access these aids:
Financial requirements
Income limits and asset thresholds guide eligibility:
- Individual gross income up to 37,800 euros per year
- If two people sign the mortgage, the limit rises to 75,000 euros
- Maximum net worth of 100,000 euros
Other eligibility requirements
- Youth up to 35 years old
- Families with dependent children
- Reside in the country for at least two years prior to applying for the loan
3. Must the home be the primary residence and habitual? Yes, but this may change over time as the program evolves, so continued eligibility is subject to policy details.
4. How long can the guarantee last? The guarantee spans 10 years, regardless of the loan amortization schedule. During this period, the home purchased should be the applicant’s primary and permanent dwelling. Afterward, the requirement may be lifted.
5. Does the aid incur any cost? No. The guarantee is free for both the applicant and the lending institution.
6. When can the guarantee be requested? The government aims to have the program ready between the end of February and early March. However, exact timelines had not been finalized, and there is skepticism about rapid deployment. Applications are expected to be accepted until December 31, 2025, with a potential two-year extension depending on demand, which is anticipated to be high.
7. How is the guarantee requested? Prospective beneficiaries would apply through participating banks.
8. What is the total government allocation for these guarantees? The program has a planned funding of 2.5 billion euros.