Public guarantee can make borrowing easier
The public guarantee allows banks, in certain circumstances, to finance up to 100% of the purchase value of a first permanent home. The aim is to reduce one of the main obstacles faced by those looking to buy a home: raising the money needed for the initial deposit.
However, this measure does not mean that the State provides the mortgage loan. The loan is still granted by the bank, which assesses the buyer's income, employment stability, debt-to-income ratio, credit history and other financial commitments.
Therefore, even with a public guarantee, buyers must demonstrate that they can afford the repayments throughout the loan term.
Tax exemption reduces initial costs
In addition to the financing guarantee, there are tax benefits for young people buying their first permanent home.
Provided they meet the applicable requirements, buyers may benefit from an exemption from IMT and Stamp Duty on the purchase of the property. The latter is equivalent to 0.8% of the purchase price.
However, the exemption does not cover all taxes associated with the transaction. Stamp Duty on bank financing, corresponding to 0.6% of the amount financed, is still payable, as are other costs related to the purchase.
How much can a young buyer save?
Imagine buying a home for €220,000. Without these support measures, a 90% mortgage would generally require around €22,000 for the deposit, in addition to taxes and other costs associated with the deed.
With the public guarantee, and provided the applicable conditions are met, the buyer may be able to obtain financing of up to 100%, significantly reducing the amount of their own capital required.
The possible
exemption from IMT and Stamp Duty on the purchase can further reduce the initial costs. However, there are still costs associated with the financing and completing the purchase.
Support does not eliminate borrowing costs
Despite the assistance available, buying a home remains a long-term financial commitment. Monthly repayments, insurance associated with the mortgage loan and other costs should be taken into account before proceeding.
The maximum amount the bank is willing to finance does not necessarily mean that it is the most suitable amount for the household budget. A lower monthly payment can provide greater financial flexibility for unexpected expenses and savings.
The support measures can therefore make it easier for young people to access their first home, but it is important to carefully assess the financing conditions and the ability to cover the costs over the years.
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