The state contribution for young people from 1 July 2017 will get fewer people to the mortgage than they have done. The limit of maximum gross income for obtaining the state contribution decreases. So less people can use the youth mortgage since July.
What do you need to do to get a national youth benefit?
The Youth Contribution is governed by the Banking Act. Its use will bring you a reduction in interest by 3% pa over a period of 5 years. 2% is provided by the state and 1% is provided by the bank (I will write about it below).
Basic conditions for obtaining a state contribution for young people are defined in the Act on Banks. The amount of the state contribution is again mentioned in the Act on the State Budget. Conditions have been the same for a long time. Each quarter only changes the amount of maximum income to earn it.
To obtain a state contribution for young people from 1.7.2017 it is necessary to meet these 3 conditions:
- Do not exceed 35 years. You can submit your application on the day of your 35th birthday at the latest.
- Your gross income for the previous calendar year (2016) is a maximum of € 1,166.10 per month, and if you are two (partners, spouses), the threshold is € 2,332.20. This is valid from 1.7.2017.
- The purpose of the loan may be the purchase of property, the construction of a property or the reconstruction of a residential property (flat or house).
Why will be from 1.7. state contribution to the mortgage is less available
Every year, most people are entitled to receive a state contribution from 1 April to the end of June. This is due to the fact that the maximum gross income for the previous calendar year is 1.3 times the average nominal wage in the national economy for the second calendar quarter, the previous quarter of the loan application.
In the last quarter, many companies pay their employees’ salaries and increase their average wages. Otherwise, it was not even in the last quarter of last year. From 1.7. 2017 but enters into the calculation of the first quarter of 2017 and the gross income limit to receive state subsidy for young people decreased by € 121. So much less you had to earn last year if you want to get a government allowance for young people.
All banks do not provide a state contribution for young people
These banks provide state contribution:
- Československá obchodná banka, as
- OTP Banka Slovensko, the
- Prima banka Slovensko, as
- Sberbank Slovensko, as
- Slovenská sporiteľňa, as
- Tatra banka, as
- UniCredit Bank Czech Republic and Slovakia, as
- VUB, as
The benefit of a state contribution is not the same in every bank
The law says that with a state-subsidized mortgage for young people, you should have an interest rate advantage of 3% pa, but in most cases it is not realistic.
The state provides 2% and the bank provides another 1%. Many banks will raise your basic interest by 1% and then give you an advantage. In fact, they do not give any advantage.
Paradoxically, banks sometimes earn more for mortgages with state subsidies than for mortgages without state contributions. The reason? The law is somewhat leaky and does not regulate exactly how the bank is to bear the balance of the principal mortgage.
Some banks have used it to their advantage, and thanks to this, the state-subsidized mortgage will pay more than if it did not have a state contribution at all.
The difference in interest paid creates a difference in the main balance. At the same interest rate in 2 different banks with a € 50,000 mortgage, the difference in the main balance in the 5th mortgage repayment year may be more than € 2,800.
It is a real number from the last calculation I made for the client, where I was preparing an overview of mortgages for young people in all banks.