Citadele Bank

Demand for mortgages with Altum guarantees grew by 53% in march

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Citadele Bank officials noted an increased interest in mortgages with a state guarantee this March. Throughout March, almost every other application for a home purchase loan included an ALTUM guarantee. A particular increase in interest was demonstrated by families with children.

Until the 1st of March of this year, only families with dependent children up to 23 years old could receive an ALTUM guarantee to buy a home. As of March 1st, the range of recipients for the home guarantee programme has grown; young specialists, namely those who have completed higher or professional secondary education and who are no older than 35, can also receive state support to buy a home.

Recipients of the home guarantee programme are characterised by Citadele Board Member Vladislavs Mironovs: “According to Citadele statistics, home guarantees have been in high demand from younger people in March. If the average mortgage applicant without a state guarantee is 39 years old, then representatives of families with children who apply for a mortgage with a state guarantee are an average of 36 years old, and young specialists - 29 years old. Both men and women are equally active in applying for credit.”

“There is also a difference in what types of home are in demand with various types of mortgage. In general, standard mortgages are most often used to buy older, Soviet-era apartments (37% of credit applications), followed by apartments in new projects (225). A slightly different picture is painted by loan applications with an ALTUM guarantee, which show an equal interest towards new and Soviet-era apartments (35%), as well as a growing interest in private houses (27% of mortgage applications). The biggest interest in mortgages is from Riga residents - applications from  other Latvian cities and regions form 42% of total applications,” concludes V. Mironovs.

“An ALTUM guarantee is a good solution in situations when there is a stable income, which allows for the taking on of the credit obligations in purchasing an apartment, but not enough savings for a deposit,” says ALTUM Board Member Inese Zīle. Financing of up to 95% of the property value can thereby be received. Inese Zīle also emphasizes other benefits of the programme, namely the fact that the mechanism for receiving the guarantee is convenient for the recipient because it can be received within a few days at their bank. People who wish to buy a home should visit their bank, the bank evaluates their mortgage application, and, if necessary, comes to ALTUM for a guarantee.

About the ALTUM mortgage programme: People can apply for a loan with state support if the goal of the loan is purchasing or building a home; the client has not used a state support programme for purchasing a home before; they have at least one child under the age of 24 as a dependent who lives with them, or the client qualifies as a young specialist, namely someone having gained higher or secondary professional education whose age is not more than 35 years.

Why use an ALTUM guarantee for a home purchase loan

1) Families with children can receive a loan with a reduced deposit. A person with one dependent child can receive an ALTUM guarantee of 10% of the loan amount (maximum amount 10,000 Euro), with two children - 15% (up to 15,000 Euro), with three or more children - 20% (up to 20,000 Euro). Families with children who buy an apartment with an ALTUM-guaranteed loan can get a discount on land registry fees for registering their property and collateral - the state fee for changing property ownership is reduced from 2% to 0.5%, and the state fee for registering a mortgage/collateral does not have to be paid.

2) Young specialists can receive a guarantee towards purchasing property of 20% of the loan amount, with the guarantee amount not exceeding 50,000 Euro; therefore, young specialists can receive a loan with a reduced deposit. For example, if a young specialist wants to buy a home for 70,000 Euro, the bank could require a deposit of 15%, or 10,500 Euro. Using an ALTUM guarantee of 10% (7,000 Euro), the young specialist can purchase a home with a 5% deposit (3,500 Euro), an amount which is easier to attain through savings.

Learn more about mortgage loans here.

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