Quick Answers. Subsidized interest on home loans: what you need to know?

The Government approved this Thursday, March 15, in the Council of Ministers, the implementation of a subsidized interest rate for credits contracted until this Wednesday. This measure came into force in June with retroactive effect in January and aims to help families with housing expenses.

Who can benefit from this measure?

Families with loans for permanent home ownership, contracted until Wednesday, at a variable interest rate with an initially contracted debt amount equal to or less than 250 thousand euros and regularized installments.

Thus, families with income up to the sixth step of the IRS (38,632 euros of annual taxable income) are eligible, or who, being above the sixth step in the last IRS declaration, have an income drop of more than 20% of the income that the place at or below the sixth step; with financial assets of less than 62 IAS (29,786.7 euros); who have an effort rate with a significant aggravation or a significant effort rate, when the effort rate with a significant aggravation: an effort rate equal to or greater than 35% and a current index (Euribor) equal to or greater than three percentage points of Euribor at the time of hiring; significant effort rate: effort rate equal to or greater than 50%.

How does this support work?

This support will vary depending on household income. Families with incomes up to and including the fourth scale will receive 75% support. Families who are in the fifth and sixth step will have 50% support. “As we all know, throughout this year, the Euribor index has risen very sharply. Whenever there is a change in the index existing on the date of conclusion of the contract, there has been an increase of more than 3%. And it is this differential that will be reimbursed at 75% and 50%”, explained António Costa.

How is this subsidized interest given?

This support is directly operationalized by the banks and has retroactive effect to January 1, 2023 and runs until December 31, 2023, subject to renewal, depending on whether or not interest rates increase.

What do you need to do to get this support?

The family submits, by physical or electronic means, the request for access to the bonus to the respective institution. The institutions inform the borrower, within 10 working days of receipt of the complete application, whether it meets the eligibility requirements for access to the subsidy, with the subsidy being applied to the installment immediately following this communication.

How is this support calculated?

For a family that has an income up to the third step of the IRS and that has signed a contract with Euribor at 0.25% and currently has that rate at 3.7%, the monthly support you will receive is 61 euros a month.

A family that has an income of up to the sixth step of the IRS and has signed a contract with Euribor at 0% and currently has that rate at 4.5%, will receive a monthly support of 88 euros.

What did Fernando Medina say?

Regarding the interest subsidy, the Minister of Finance, Fernando Medina, guaranteed that “the operation will be carried out by financial institutions which, based on the elements provided, will calculate the subsidy, which will then be credited to the taxpayers’ account. It will be an automatic process”, he guarantees.

The Minister of Finance assured that the terms between the State and financial institutions will be regulated by protocol in the next two weeks.