Marriage loans from socialism return. How can newlyweds get one?

Not all newlyweds may obtain the loan since the budget has its limit.

Marriage loans, which were popular in socialism, have been reintroduced in July 2019. Marriage loans, which were popular in socialism, have been reintroduced in July 2019. (Source: SME)

Back in the seventies, loans for newly married couples experienced a boom. Flats, kitchens, and different household equipment were the things these couples most often bought for the loan obtained from the state.

Nonetheless, marriage loans, offered by the State Housing Development Fund (ŠFRB), returned on July 1 of this year after many years, as reported by the Sme daily.

Read also:Slovakia's central bank introduces stricter rules for loan takers Read more 

The Fund is to distribute €15 million to newlyweds, who can spend the money on renovation, construction and the purchase of a new home. The application deadline is set for October 31.

However, it is better to apply as soon as possible since the allocated sum may not be enough, said the financial analyst Marián Búlik of the OVB Allfinanz Slovensko firm.

Less strict loans

Marriage loans in socialism had a very low interest rate, and people had to wait months, or even years, to obtain it.

The planned loans will be more favourable than the ones from banks since interest rates will not change while repaying the loan. For example, the first €15,000 will have to be repaid in 15 years with a one-percent interest rate added.

If young married couples apply for more money, the loan maturity will be a maximum of 20 years with a two-percent interest rate.

“Banks can compete today with record-low interest rates,” said Búlik, as quoted by Sme. “Nonetheless, this will be temporarily valid since interest rates on the market will grow.”

Read also:Slovak households fall into debt fastest in the EU Read more 

Conditions

Unlike banks, the Fund can ask for more documents. For instance, couples will have to submit their income statements from the past year, building permits as well as legal proof of property ownership, to name a few.

Just like in the case of bank loans, the state loan is to be secured with collateral. This means the value of a property must be at least 1.3 times bigger than the solicited loan, said Maroš Ovčarik of the Finančný kompas website.

“In this regard, banks are more pro-client,” he added, as quoted by Sme.

As far as other conditions go, these include being under the age of 35 and the length of the marriage has to be at least 12 months upon submitting the application.

Moreover, if a child is born, the couple may be forgiven the installment of €2000. The conditions are very similar to socialism marriage loans.

Read also:Slovakia still among countries with fastest growing loans Read more 

First come, first serve

Couples can forward their applications to city councils in the district where they have bought or renovate the property. The council will then register the application and send it to the Fund.

“Applications are considered by the order,” said ŠFPB head Juraj Kurňava, as quoted by Sme.

Therefore, couples seriously considering a state loan are recommended to hurry up.

The decision may take longer than in the case of bank loans. The Fund has 110 days to decide, although applications are reviewed much faster in fact, Kurňava added.

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