The long-awaited aid for home purchases in Spain was approved by the Government on February 13. A line of guarantees of 2,500 million euros through the Official Credit Institute (ICO). This measure, aimed at young people under 35 years of age and families with dependent minors, seeks to facilitate access to a mortgage for 100% of the value of the home.
Objective of the measure at the state level
Aimed at facilitating access to property ownership for more than 50,000 solvent individuals who have not been able to raise the necessary capital to purchase a home, this measure is presented as an opportunity to speed up the emancipation of thousands of young people. The initiative seeks to offer financing options that allow those with economic capacity, but without sufficient savings, to enter the real estate market, thus promoting residential independence.
Additionally, the measure has a positive impact on the rental market, especially in urban areas where rental costs often exceed the purchase price. This approach seeks to alleviate pressure in sectors with high rental demand by promoting housing acquisition and, at the same time, addressing the needs of rural areas to contribute to population fixation.
This instrument is part of the actions implemented by the Government to ensure that citizens do not have to spend more than 30% of their income to pay rents or mortgages, thus promoting housing affordability.
Will guarantee 20 % of the remaining loan
The measure has surprised by bringing forward its entry into force, initially planned for the end of February. The ICO will guarantee 20% of the loan, allowing the beneficiaries to obtain a mortgage for the total value of the property instead of 80%, which is what banks usually grant as a mortgage loan. But what are the requirements and limitations of this assistance?
Requirements to access the ICO guarantee
Persons interested in this measure must be under 35 years of age or be families with dependent minors, being applicants for the purchase of a primary residence for the first time. In addition, it is necessary to have legal residence in Spain during the two years prior to applying for the loan.
It is essential to bear in mind that ICO assistance is conditioned by income levels. Mainly aimed at those with an annual income of less than 37,800 euros, the limit is doubled to 75,600 euros if there are two applicants. For single-parent families, the income ceiling can be increased to 70%, i.e., to €64,000. Each dependent child increases the limit by 2,520 euros per year. The limit of the guaranteed party’s assets shall be a maximum of 100,000 euros.
Real benefits of the ICO guarantee
Banks traditionally do not grant mortgage loans for 100% of the price of the property, limiting them to 80%. The ICO guarantee covers 20% of the principal amount of the loan, increasing by an additional five points if the home has an energy rating of type D or higher. Despite the aid, the buyer must have funds to cover the costs of the sale, approximately 10% of the value of the apartment, which includes notary fees, registration fees and taxes.
The application for the ICO guarantee will be available until December 31, 2025, with the possibility of extension for two more years. It is expected to benefit 50,000 people nationwide, according to estimates by the Minister of Housing and Urban Agenda, Isabel Rodriguez. The application can be made at collaborating financial institutions, with a maximum term of 10 years, regardless of the loan repayment term.
Conditions and limitations of aid
During the period, the home must be the beneficiary’s habitual residence, limiting its rental to specific circumstances such as marriage, separation, job transfer or obtaining a more advantageous job. The ICO guarantee has no costs for the beneficiary, since the State shares up to 20% of the principal risk of each mortgage with the credit institution on equal terms.
Who cannot benefit from the ICO guarantee?
This aid is not available to those who already own another home, regardless of the form of acquisition. It is allowed to access the guarantee if one owns *an aliquot part of the housing obtained by inheritance or transmission mortis causa without testament.
In addition, those who have a home, but can prove their unavailability due to separation, divorce, disability or inaccessibility, can also apply for the ICO guarantee.
* Aliquot share: if three siblings are equal owners of a house, each of them has an aliquot share of the apartment, i.e. one third of the house.
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