Are you considering applying for a state guarantee on a mortgage? What is a Home Guarantee for a Mortgage? In that case, keep reading. Below we answer the 6 most common questions about a state home loan guarantee and how to apply for it.
What does a Home Loan Guarantee mean?
A State guarantee is a guarantee provided by a State for a loan. The amount of the state guarantee depends on the type of loan: For example, it guarantees the student loan in full, but only part of the mortgage.
In practice, a state guarantee means that if a borrower who has received a government guarantee runs into default and is unable to repay his loan, the state reimburses the lender for part of the value of the loan by paying an agreed amount of the state guarantee .
What is required for a mortgage government guarantee?
- At least 50% of the apartment must be bought
- The apartment to be purchased must be secured by a loan
- The amount of the mortgage loan is up to 85% of the value of the home (90% of the ASP loan)
- The loan period is up to 25 years
- The property becomes the permanent residence of the buyer or his family
- Homeowner for construction or purchase of a detached house
How Much Government Guarantee Can I Get on a Mortgage?
The State guarantee on the mortgage covers up to 20% of the home mortgage and the guarantee cannot exceed € 50,000 per apartment.
The ASP loan has a government guarantee of up to 25% of the loan, but within the same limit of € 50,000.
How Much Does a Mortgage Guarantee Cost?
The State guarantee on the mortgage costs 2.5% of the total amount of the guarantee. The guarantee is paid to the State in the form of a guarantee payment when the loan is drawn up. The guarantee fee does not apply to the ASP interest rate subsidy loan or the municipal housing loan subsidy loan. For example, if the amount of the state guarantee were $ 20,000, a guarantee fee of $ 500 would be charged.
Example: Government Mortgage Guarantee in Practice
Cost of the apartment: 200 000 €
Mortgage 85% of the price: € 170,000
State guarantee 20% of the mortgage: € 34,000
Guarantee fee 2.5% of the guarantee amount: 850 €
It should be noted that the state guarantee is calculated on the mortgage and not on the price of the home. On the other hand, if a mortgage loan was granted for more than 85% of the price of the home, no state guarantee could be granted.
When should I apply for a state guarantee?
Simply asking for a state guarantee is when your own money or collateral is not enough to grant a mortgage. The state mortgage guarantee is well suited, for example, to young first time home buyers who do not already have enough wealth or other assets to obtain a mortgage.
Sometimes a bank may grant a mortgage despite the lack of collateral, so invest enough in the mortgage negotiation!
Applying for a State Mortgage Guarantee
You can apply for a mortgage government guarantee when applying for a mortgage. It is simply agreed with the bank officer that the state guarantee will be attached to the mortgage. Therefore, there is no need to apply for a state guarantee separately, as the bank grants it when applying for a mortgage.