Home purchase loans for families: Fulfill your dream of owning a home with KfW funding?
Families who want to own their own home are supported by the federal government: The “Young Buys Old” program is intended to enable cheap loans. Who can benefit and how it works.
State funding for house purchases and renovations: “Young buys old” is the name of the Federal Building Ministry’s program. (symbol image)
Source: Photocase
The dream of owning your own four walls seems to be unattainable for many people because the financing costs are very high. But that could now change for some. At the beginning of September, the federal government launched a new funding program specifically for young families with children. Anyone who wants to buy an old house with a low energy standard and renovate it to make it more energy efficient should be supported.”Young buys old” the program is called the Federal Ministry of Housing, Urban Development and Construction (BMWSB). The ministry is focusing on existing houses or apartments. The renovation of existing buildings is generally more environmentally friendly and cheaper than building new ones and also relieves the strain on the housing market.
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FAQ
“Young buys old” funding program: Who is eligible?
Families with at least one minor child are eligible. Requirement: Your joint taxable annual gross income does not exceed 90,000 euros, plus 10,000 euros for each additional minor child in the household.
Families who apply for funding are also not allowed to own any other residential property at this time. Households in which spouses or life partners live who have already received funding for their own home, such as building child benefit, do not receive any funding.
Requirements for the funding program
- In order to receive funding, families must move into the house or apartment themselves.
- The rooms you use for your own use must have their own lockable access, at least one living room, a kitchen or kitchenette and a bathroom or toilet.
Renovating a building in order to then rent it out as a holiday apartment, for example, is not possible with the “Young Buys Old” program. In other words: There is no funding for properties that are not intended to be permanently inhabited.Can funding programs make your own four walls affordable again?04.09.2023 | 4:52 minutes
Loan conditions of the funding
Funding is provided with low-interest loans from KfW Bank. For example, the interest rate for a loan with the longest term of 35 years and a fixed interest rate of 10 years is currently around 1.5 percent.
The maximum loan amounts depend on the number of children. Families with one minor child receive a maximum of 100,000 euros, with two children it is 125,000 euros and with three or more children up to 150,000 euros.
Example calculation for funding:
A family with two underage children receives a loan of a maximum of 125,000 euros at an interest rate of 1.51 percent with a 35-year loan term and a 10-year fixed interest rate. According to BMWSB, the interest rate for “Young Buys Old” is around 2 percent below the current rate for comparable house bank loans. Accordingly, with a normal loan process, families would save around 18,000 euros compared to the loan from the house bank.
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Funding for properties with low energy efficiency
The funding program is only available for properties that are in poor energy condition so that the renovation can save CO2 emissions. In order to receive funding, the buildings must have a demonstrably low energy efficiency class of F, G or H.
Families supported by the program undertake to renovate the property to at least the level of a 70 EE efficiency house within four and a half years. This standard is achieved if the property would consume a maximum of 70 percent of the energy of a comparable new building according to current legal requirements. In addition, at least 65 percent of the building’s heat supply must come from renewable energies. Low-interest loans and grants from the Federal Fund for Efficient Buildings (BEG) can also be used for the renovation. One such subsidy would be, for example, the KfW heating subsidy.Since this year, the energy-saving renovation of your home can be financed with a Riester contract. Alexander Krolzik from the Hamburg consumer advice center talks about this.14.06.2024 | 4:26 minutes
Criticism of the “Young Buys Old” funding program
Due to the strict requirements for renovation, the support from “Young Buys Old” is too weak, says Matthias zu Eicken from the Haus & Grund owners’ association.
Young families will hardly be able to afford this construction and therefore financial outlay, even with the support.
Matthias zu Eicken, Owners Association Haus & Grund Germany
But the idea of wanting to support young families in the energetic modernization of an existing property is fundamentally correct, says Matthias Eicken.
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Source: ZDF
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