faq
If families with underage children want to buy a house that needs renovation, they can now apply for a low-interest loan from the KfW Development Bank. What conditions must be met for this?
What is “Young buys old”?
“Young people buy old” is a federal government funding program that supports families with low and medium incomes in buying and renovating houses and apartments in need of renovation. It offers low-interest loans through the KfW development bank to make it easier to buy a home for personal use. This means that “families with medium and lower incomes can now also fulfill their dream of owning a single-family home,” said Construction Minister Klara Geywitz yesterday.
Who can take advantage of the funding program?
The program is aimed at families with at least one minor child and a maximum annual income of 90,000 euros. For each additional child, the income limit increases by 10,000 euros. Only the purchase of owner-occupied housing is subsidized.
What are the possible loans and interest rates?
A KfW loan is available for up to 100,000 euros for one child, up to 125,000 euros for two children and up to 150,000 euros for three or more children. The loan term can be seven to 35 years, and the interest rate can be fixed for ten or 20 years. For example, the current interest rate for a loan with a term of 35 years and a fixed interest rate of ten years is 1.51 percent effective.
What savings are possible with “Young Buys Old”?
According to Construction Minister Geywitz, a family with two children can save up to 18,000 euros through the low-interest loans compared to conventional bank loans. Eligible costs are the purchase price including land costs.
What conditions must the buildings meet?
The subsidized buildings must have the – poor – energy efficiency class F, G or H. These are buildings that have a particularly high energy requirement and therefore need to be renovated. In Germany, this is 45 percent of all residential buildings, according to the Ministry of Construction.
Within four and a half years (54 months) of purchase, the energy efficiency of the building must be improved to at least class 70 EE. This means that the building only consumes 70 percent of the energy required by a legally defined standard house.
How long must the subsidized property be inhabited?
The borrower must live in the subsidized house or apartment for at least five years. In total, the building must be used for residential purposes for at least ten years.
Can the program be combined with other funding?
Yes, low-interest loans and grants from the Federal Funding for Efficient Buildings (BEG) can also be used for the renovation, such as the KfW heating subsidy for the installation of a new, climate-friendly heating system or the BEG residential building loans from KfW.
Where does the money for the funding program come from?
The funds for the program come from the Climate Fund and were released by the Budget Committee of the German Bundestag at the beginning of August.
Is there any criticism of the program?
Yes, the German Environmental Aid (DUH) has criticized the program and argued that it does not make a significant contribution to solving the housing crisis: “Behind this lies the dangerous logic of easing the housing market by displacing people to the countryside.” Instead, the DUH is calling for the creation of affordable housing in the cities. The association also complained that, given the massive cuts in the climate fund, a funding program worth millions is irresponsible.
