In the absence of the last fringes, the Government and banks have closed a catalog of measures to help families that are affected by the rise in the Euribor. The objective is that one million households can benefit from the new aid. For it the current code of good practices is reinforced, and aid is extended to the ‘middle class’. This is intended to prevent families at risk of entering a situation of vulnerability that cannot pay their mortgages.

Specifically, they will be able to access this new helps all those mortgaged whose income does not exceed 3.5 times the IPREM. That is, 29,400 euros per year. Of course, the mortgage will have to be signed before December 31, 2022. Not only that. The mortgage burden must be greater than 30% of your income and have increased by at least 20%.

For all these cases, financial institutions must offer the possibility of freeze for 12 months of the quotaa lower interest rate on the deferred principal and an extension of the loan term of up to 7 years, without it being able to exceed 40 years in duration.

[El BdE pide una definición de hipotecado vulnerable adecuada para reducir riesgos de estabilidad financiera]

Along with the mortgage moratorium, the two parties have also agreed to extend the Code of Good Practices of mortgage debtors most vulnerable which was already in force and which was supported by financial institutions and the Ministry of Economy in 2012.

In this way, vulnerable debtors will have the possibility of restructuring the mortgage loan with a lower interest rate during the 5-year principal grace period (Euribor minus 0.1% compared to the current Euribor plus 0.25%).

Expansion of aid

Likewise, the term to request the dation in payment of the house is extended to 2 years and the possibility of a second restructuring is contemplated, if necessary.

The help of this code is extended to all families that they earn 25,200 euros per year and that they dedicate 50% of their income to paying the mortgage. In this case, they may benefit from a two-year grace period, a lower rate during the grace period and an extension of the term of up to seven years.

The Ministry of Economy says that the measure is necessary for those families that, as a consequence of the rise in interest rates, reach excessive levels of mortgage effort that force them to reduce basic expenses and jeopardize the mortgage payment .

The application of these measures will allow vulnerable mortgagors to see their financial burden eased Immediately. For example, a family with a typical mortgage of 120,000 euros and a monthly installment of 524 euros after the interest rate review, will see their installment reduced by more than 50% during the five-year grace period, up to 246 euros.

In addition, the Government’s idea is to further reduce expenses and commissions to facilitate the change from variable to fixed rate. Commissions for early repayment and change of mortgage from variable to fixed rate will be eliminated during 2023.

financial education

Measures for the promotion of financial education will also be included and monitoring of the application of both codes will be strengthened.

The two Codes of Good Practices will be voluntarily adhered to by financial institutions and mandatory once signed. Banking entities must guarantee the protection of this catalog of measures in the event of credit transmission to a third party.

The goal is that the adopted set of measures is available as of January 1, 2023.

All these measures will be approved this Tuesday by the Council of Ministers, and it is hoped that in the next few hours there may be a definitive agreement with the financial institutions. Specifically, with the employers’ associations AEB and CECA.

Source: Elespanol

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J. A. Allen

Author, blogger, freelance writer. Hater of spiders. Drinker of wine. Mother of hellions.

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