Since last August, the state has been contributing through the State Housing Development Fund to young families for the acquisition of new housing or for its reconstruction, a favorable state mortgage. A loan from the Youth Program can be used to finance 80% of the price of the acquired real estate ; a maximum of 1.2 million dollars can be borrowed for the purchase of an apartment or 2 million for the purchase of a house. The state lends no more than 300 thousand dollars for the modernization of the apartment. The applicant must have 20% of the price of the property from its own resources.
The binding conditions of “advantageous” mortgages
The conditions for drawing a state loan for housing are considerably restrictive. The biggest barrier is the fact that the maximum amount offered does not correspond to the real prices of apartments and houses . In Prague, where real estate prices are highest, the price per m 2 of a new apartment is around USD 100,000. An apartment of 60 m 2 is thus 6 million dollars . Even assuming its own savings of 20% of the purchase price, the required loan amount would climb up to 5 million dollars. Thus, the loan loses its significance to practically all those interested in owning housing in larger cities , where property prices are significantly above the maximum possible state loan .
Conditions for obtaining a state loan for housing
Age requirement – the first rule is that the applicant must be under 36 years of age. Applicants may apply no later than the day before their 36th birthday. Once she exceeds this age, she will not receive the loan.
Marriage, partnership – spouses and registered partners, unmarried couples or single parents can apply for a loan. For spouses or registered partners, it is sufficient to provide a copy of the marriage certificate or registration for the application, for unmarried couples or single parents it is necessary to care for a child under 15 years of age.
Ownership condition – the applicant must not be the owner or co-owner of a residential property (not applicable to a modernization loan) or a tenant of a cooperative flat at the time of filing a home purchase loan, as his spouse or registered partner must not or a member of a housing cooperative and at the same time a tenant of a cooperative apartment.
Maturity of the loan – in the case of a state loan for the acquisition of housing, the maturity is a maximum of 20 years. In the case of a classic bank mortgage, the maturity can be set up to 30 years. A shorter maturity of state loans thus automatically means a higher monthly payment.
Is the interest rate still attractive?
The interest rate on the state loan is set at the basic European Union reference rate for the Czech Republic , but at least one percent. At the time of launching the program last August, the rate was 1.12%. Compared to market rates, this was a really unbeatable interest rate a year ago.
Today the situation is different. The rate has been 2.27% since August. The average mortgage interest rate has been declining for several months in a row, and the competitive struggle of banks and the Saversline Bank’s forecasts have not yet contributed to any significant increase in rates. According to Saversline Bank data, the interest rate on mortgage loans was 2.61% in August.
The advantage of the state loan – deduction for the child born
The main advantage of the state loan for young people is undoubtedly the deduction of 30,000 dollars from the principal for each child born or adopted during the duration of the credit relationship. This is a bonus that no bank on the domestic banking market will provide you with a mortgage loan.
Interest in government loans is declining
The above factors lead to the fact that the program of the State Housing Development Fund is not as interested as it was expected last August, when even queues of candidates were formed in front of some branches. This year a total of 950 million dollars are earmarked for housing support for young families. At the beginning of October, applications worth just over USD 400 million were granted . More than three fifths were intended for the construction of a family house, 18% for the purchase of a family house, 12% for the purchase of an apartment and 8% for the modernization of dwellings.
Need a mortgage?
Do you consider buying real estate or building a different house ? If you want to be sure that your funding will run smoothly and in order, contact the experts who will assist you in arranging your mortgage loan . Arrange a meeting with our mortgage broker and you will learn everything you need.