Public guarantee ends when young people pay the first 15% of the loan

The minister spoke at the end of the extraordinary Council of Ministers

The public guarantee of up to 15% of the purchase value of properties by young people up to the age of 35 will expire when the first 15% of the loan is paid, said this Monday, May 27th, the Minister of the Presidency António Leitão Amaro.

The minister was speaking at the end of the extraordinary Council of Ministers held yesterday and in which several measures were approved within the scope of the new housing strategy approved by the Government at the beginning of May.

Asked about the extent of this guarantee and what happens in case of default, Leitão Amaro began by explaining that «the guarantee exists until the young person pays the first 15% [of the loan] to the bank», specifying that when this 15% is, paid «the State leaves the equation».

Therefore, he said, the State will only be called upon to pay some amount if there is a default on payment of the loan, stressing, however, that this amount will have to be paid to the State – in the same way that default with the bank does not exempt the customer's responsibilities.

«The State is only called in if the young person fails to comply and [in this case] the State acts in the role of guarantor, creating an obligation between the parties», he said.

Leitão Amaro highlighted, however, that the levels of default on housing loans are low.

The public guarantee, of up to 15%, applies to houses worth up to 450 thousand euros and aims to create conditions for young people to be able to access a loan of up to 100% of the house's value.

The rules currently in force determine that the credit cannot exceed 90% of the value of the house (being, for this purpose, considered the lowest value between the acquisition value and the appraisal value) of own and permanent housing.

The measure, which the Government wants to come into force on August 1st, is aimed at young people between 18 and 35 years old, with income up to the 8th step of the IRS, that is, 81.199 euros of annual taxable income.