The Citadele Bank and the Latvian developmental financial institution ALTUM signed a partnership agreement today on a national support programme to help families with children to purchase a home. Families will be able to receive mortgage loans on easier terms in terms of down payments from the Citadele Bank as part of the programme.
Citadele is now the first commercial bank in Latvia to offer such mortgage loans to families with children, thus removing the main obstacle against their ability to purchase their home.
Economics Minister Dana Reizniece-Ozola: “Housing is a fundamental need for people, but purchases of homes have been financially difficult or even impossible for many people. I am delighted that we are starting this support programme at the beginning of the new year, and we have reserved EUR 332,678 to help families with children to purchase their homes. It goes without saying that this programme is very important to deal with demographic issues and to ensure growth in the country.”
The Economics Ministry’s support programme will offer guarantees for the purchase or construction of homes for families with children. The sum of the guarantee will depend on the number of children in the family – 10% for families with one juvenile child, but no more than EUR 10,000, up to 15% for families with two juvenile children, but no more than EUR 15,000, and up to 20% for families with three or more children, but no more than EUR 20,000.
“Families with children will be able to pay a much lower down payment as part of the mortgage lending programme, with the bank financing up to 95% of the value of the relevant property,” says the director of the Citadele Retail Lending Division, Baiba Tētiņa. The current offer in the market speaks to down payments of at least 25% of the value of the property, which means that a family that wants to purchase a home worth EUR 60,000 must have at least EUR 15,000 for that purpose. The purchasing power of families with children in Latvia is not high enough to afford a substantial down payment while also covering rental costs for existing domiciles.”
The EUR 332,678 that has been set aside for the programme mean guarantee obligations at a level of EUR 1.33 million. ALTUM board chairman Rolands Paņko is proud of the bank’s readiness to become involved in the programme: “The operations of ALTUM as a developmental financial institution is focused on dealing with market shortcomings in the context of available finances. The state aid programme will, with the help of commercial banks reduce the influence of market shortcomings in terms of finances for families with children. Clients who wish to receive a guaranteed loan must approach the bank, which will evaluate the application and seek guarantees from ALTUM when necessary. ALTUM will evaluate the application and provide an answer to the bank in one week’s time.”
Applications for mortgage loans for families with children will be accepted as of January 15 at all Citadele Bank branches or on the bank’s homepage, www.citadele.lv.