With “Young people buy old”, the federal government has launched a funding program that aims to make it possible for young families to realize their dream of home ownership through cheap loans. In this article, we take a closer look at what the policy is trying to achieve, who the KfW funding is really worth it for, and whether a new build might not be a better option.
Sea wdr.de There are almost two million empty buildings in Germany that are in need of renovation. This must be counteracted, which is why the Bundestag’s budget committee has pledged 350 million euros for a new funding program called “Young people buy old.”
On the one hand, this will enable young families to obtain cheap loans. On the other hand, it is also about revitalizing the empty buildings and making them more energy efficient through renovation. A supposed win-win situation for families and politicians.
What is the “Young Buys Old” funding program all about?
The funds for the funding program come from the Climate Fund. They were released by the Budget Committee of the German Bundestag at the beginning of August.
The aim is to create an opportunity for families with lower incomes to own their own home. This will be achieved with a low-cost KfW loan that will make financing easier.
The interest rate on the KfW low-interest loan is 1.51 percent with a fixed interest rate period of ten years.
What are the requirements for the “Young Buys Old” funding?
The aim is to support families with lower and middle incomes. In addition to having a minor child, one of the basic requirements for funding is that the family buys a building in need of renovation. This can be either an apartment or a house.
Further requirements for family support are that the families…
- do not yet have their own home,
- earn less than 90,000 euros gross,
- have lived in the apartment or house for at least five years,
- have not received child benefit for building a home in the past or
- purchase a building with a poor energy efficiency class (F, G or H).
Note: For each additional child, the income limit increases by 10,000 euros, so that the limit for a family with two children is 100,000 euros, for three children it is 110,000 euros, and so on.
Family
with a child
Maximum income: 90,000 euros
Funded loan amount: 100,000 euros
Family
with two children
Maximum income: 100,000 euros
Funded loan amount: 125,000 euros
Family
with three children
Maximum income: 110,000 euros
Funded loan amount: 150,000 euros
The funding program also has a catch
Did you know that approximately 45 percent of all residential buildings in Germany are in need of renovation (source: tagesschau.de)? Statistics that make it clear that there is an urgent need for action and that many residential properties need to be brought up to scratch.
But is the “Young Buys Old” program really the solution to this problem?
Yes and no, because young families can not only look forward to the low-interest loan from KfW, but also have to do a lot to get it. Within four and a half years, the purchased apartment or house must be modernized to a high energy efficiency standard, namely at least class 70 EE.
To explain: The energy efficiency standard 70 EE for residential buildings states that the building only requires 70 percent of the primary energy demand of a reference building and obtains a fixed proportion of energy from renewable sources.
Of course, there are other subsidies for the renovation and modernization of your future home that will help you on your way to owning your own home. Examples include the KfW heating subsidy or the BEG residential building loans.
Why is it better in some cases to build a house rather than renovate it?
The “Young Buys Old” funding program is a good opportunity for young families with low to medium incomes to acquire home ownership with the help of a favorable interest rate. The number of vacant residential buildings will also certainly decrease in the future if the KfW program is accepted.
Funding only applies to families
However, older couples with grown-up children, childless couples or singles do not meet the requirements for KfW funding. Therefore, only a small proportion are eligible for the actually very lucrative home ownership funding (provided they meet all the requirements).
It is important that you think carefully about buying the building that needs renovation. Is the funding really worth it for you and can you meet all the conditions? Before you buy, consult a building expert who can help you with any questions you may have.
That’s why new construction can be worthwhile
Don’t forget that there are also good subsidies for new construction. For example, have you ever heard of the home ownership subsidy for families? This might even enable you to build your own home. This would certainly have plenty of advantages:
- Freedom of planning and individual design: tailor-made house according to your wishes.
- State-of-the-art energy efficiency standards: optimal energy efficiency right from the start.
- Lower maintenance and repair costs: Less maintenance, everything new.
- Financial planning: calculable costs.
- Longer lifespan and value retention: New buildings last longer and retain their value.
- Construction quality and modern technology: Latest construction methods and technologies.
- Health aspects: No pollutants, optimal indoor climate.
In any case, we wish you every success on your way to owning your own home. Let us know in the comments what you think of the “Young Buys Old” funding. Perhaps you are currently in the process of filling out the funding application.
