Government Measures and Aid for Mortgage Borrowers Amidst Rising Variable Rates

Royal Decree-Law 6/2012, of March 9, on urgent measures for the protection of mortgage debtors without resourcescreated the Code of Good Practicesin it which include proposals to facilitate the payment of loans. More of 50 financial and credit institutions They have joined voluntarily.

The Government considers vulnerable people in it exclusion threshold those that meet the following scales: when the income of the family unit are not superior to 29,400 euros per year and his mortgage burden it has increased more than 20% o supone 30% of net income of the family.

Another option is thatThe income of the members of the family unit does not exceed the limit of three times the Multiple Effects Public Income Indicator (IPREM) annual payment of fourteen payments. In 2023 it is 8,400 euros per year, so the maximum income in this case must be 25.200 euros. Additionally, the monthly mortgage payment must have increased by minimum of 50% in the last four years.

The Government also sets the aid according to the mortgage conditions: the loan must be for the habitual residence and must not exceed 300,000 euros at origin. Another requirement is that the entity with which the credit has been signed is among those that have joined the Code of Good Practices.

Entities adhering to the Code of Good Practices offer three phases of action, depending on each case. For debtors in vulnerable situations, the first includes from a lack of capital amortization until the expansion of total repayment period (up to 40 years)as well as a interest rate reduction for five years.

Secondly, if the previous restructuring is not sufficient, the entities can offer a removes all of your debt. Finally, if neither of the two previous measures manages to reduce the affordable mortgage effort for the financial viabilitydebtors may request the Settlement as a definitive means of debt relief and the entities must accept it.

In the latter case, families may stay in your home for a period of two years, satisfying an acceptable income.

In the case of aid to family units with gross income less than 29,400 euros per yearwith a load greater than 30% and with a loan that has increased by a minimum of 20%, the aid is as follows:

They may materialize freezing the monthly loan payment for one year, leaving it at the amount paid in June 2022. They will also be able to benefit from a interest rate reduction during those same 12 months and expand up to seven years repayment period of the loan without exceeding the total of 40 years.

Since May 2023, the Government grants ICO guarantees of the 20% of the mortgage to young people under 35 years old and families with minors in their care without age limit. The Executive qualifies this group as those who “they have solvency and financial capacity to be able to buy a home, but They do not have the savings necessary for entry“.

In addition to the age or minor dependent child requirements, each applicant must earn less than 37,800 euros per year, 4.5 times the IPREM. If there are two people, this limit is multiplied by two.

The guarantee can reach 25% if the home, which must be the habitual residence of the interested person, has a minimum energy rating D. Interested parties can request this help directly through the financial institution with which they take out a mortgage.