Acquiring a home is increasingly difficult for young people in Spain, particularly in the Canary Islands.
With incomes and salaries lower than other age groups, Canary citizens between 16 and 29 years old have an emancipation rate of 19.1%, according to the latest report from the Emancipation Observatory of the Youth Council.
Given the difficulty of gathering 20% of the price of a house, which is usually the amount required by banks to grant a mortgage for the remaining 80%, the Government approved a line of guarantees from the Official Credit Institute (ICO) for young people up to 35 years old and for families with children in their care and low incomes.
Thus, the amount of the mortgage loan granted by the credit institution can match the appraisal value or the acquisition price of the property, instead of just 80%.
What other requirements must be met to obtain one of these guarantees?
To be able to apply for one of these guarantees, it is necessary to have lived uninterruptedly in Spain for the two years prior to the application. The house for which the mortgage is requested must be the first home and must be lived in.
Economically, individual incomes cannot exceed 37,800 euros gross per year (4.5 times the IPREM). If the purchase is made between two people, the income limit will be doubled.
For families with children, the limit is increased by 0.3 times the IPREM (2,520 euros gross per year) for each dependent child. If the family is single-parent, the limit is increased by an additional 70%.
In which banking entities can the loan be requested?
To date, the banks Santander, BBVA, Ibercaja, Abanca, Arquia Bank, Banco Cooperativo Español, and Evo Banco have joined the initiative. Among the savings banks, Cajasiete is also present. Access the complete list.
What documentation needs to be presented?
The credit institution with which the operation is formalized will be responsible for informing about the necessary documentation and will provide the models of declarations that must be signed.
Among other documents, DNI and registration certificate must be provided to prove legal residence in Spain uninterruptedly during the two previous years.
To prove the family situation and the number of dependent children, the family book or document proving registration as a de facto couple if applicable, or equivalent in the country of origin if not available, or birth certificate of the children will be necessary.
To demonstrate that none of the acquirers of the property owns another property, a negative cadastral certificate or simple note from the property registry index service will suffice.
In addition, the energy certificate, the appraisal report of the financed property, and proof of compliance with the income limits must be presented.
What are the financial conditions of the loan?
The financing is granted by the credit institution with its resources, so it will agree with its client on the amount and the type of interest rate (fixed, variable, or mixed modalities).
The entity may agree with its client on the contracting of products and services in accordance with its usual procedures and practices for housing financing.
Can the loan be amortized in advance?
Yes, the bank and the acquirer will establish the conditions for early amortization. The total amortization of the loan will result in the cancellation of the guarantee.
