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About Programme

 

The planned volume of the housing guarantees within this programme have been achieved. Presently no new guarantees are provided.

The programme seeks to improve the housing lending system by providing support by the state (as a guarantee) to expand credit availability to specific categories of population for dwelling procurement and stimulating renovation of apartment houses.

Who may apply?

The following groups may apply for support under this programme:

1.      tenants of denationalized houses;

2.      families with children;

3.      inhabitants of apartment houses (primarily - owners of privatized apartments).

What are the activities that support may be sought for?

Tenants of denationalized houses and families with children may receive guarantees for procurement or construction of dwelling, whereas inhabitants of apartment houses – for reconstruction and repairs of their apartment houses (for instance, roof repairs, replacement of heating system, heat insulation of walls, replacement of windows, etc.).

What are the benefits of borrowers?

Borrowers, especially new families, very often have sufficient income for loan repayment, though lack the money for down payment (banks usually finance 75% of the housing value). Guarantees on such occasions act as the down payment, and the new family may receive a loan and obtain a dwelling.

In the case of apartment house loans that are required for repairs or improvement of apartment house sections of common use, the borrowers usually have no pledge to offer the bank – public use areas, for instance, staircases, roofs may not serve as object for pledge, but owners would be unwilling to mortgage their apartments to receive a common loan. Lack of the pledge object is one of the reasons why there are but a few banks in Latvia offering apartment house loans. On such occasions, housing guarantees increase the ability of inhabitants to receive apartment house loans.

What is the operation mechanism of the programme?

ALTUM provides guarantees to commercial banks involved in the programme, if they have granted a loan to a client of the programme’s target group.

What are the benefits of lenders (commercial banks)?

Housing loan conditions of commercial banks due to competition are becoming more beneficial to borrowers lately, and lending volumes are rapidly increasing, which indicates that the necessity for additional support on the state’s part is decreasing. It should be noted though, that with lending volumes on the rise, availability of loans to various groups of inhabitants is growing at a different pace. Therefore, commercial banks may use housing guarantees to expand their circle of clients – loan recipients. Moreover, regardless of the limited volumes of guarantees programme, participation into national social programme positively reflects of the reputation of commercial banks.

In the case of individual housing (target groups 1 and 2), the amount of guarantees is 25% of the value of dwelling to be purchased (constructed), but not exceeding 15 thsd lats.

Whereas the volume of guarantees for apartment housing loans (target group 3) is 50% of the loan amount, but not exceeding 1000 lats per apartment and not exceeding 50 thsd lats in total per one apartment house.

Where to apply for support?

One may apply for support under this programme in those commercial banks, which the Mortgage bank has signed respective cooperation agreements with. At the present moment, cooperation agreements have been signed with Nordea bank and DnB NORD Bank.