Hungarian banks introduce the subsidised rural home renovation loan

The non-refundable subsidy is an ex-post subsidy, but many families do not have enough money to finance the works, for them the subsidized loan starting from February 1, which provides funds for families to prefinance the renovation at a reduced interest rate, can be of help. According to the Bankmonitor's weekend announcement, for the time being, interested parties can choose between financial institutions: according to the published announcements,

the subsidized loan can be applied for at K&H Bank and OTP Bank.

The interest rate is set by law, 4.66% for K&H Bank and 4.65% for OTP Bank (presumably due to rounding).The interest rate on the loan is not a fixed 3%, as the interest subsidy rate for this loan is 3%, not the customer interest rate. Regardless, this interest rate is 2-2.5 percentage points lower than a market-rate home loan.

Who is eligible for the soft loan?

• Single people, civil partners and married couples can also apply (the latter two together)
• The family must be raising at least one child; a 12-week foetus is considered an existing child (However, this subsidised loan cannot be taken out for a future child.)
• Applicants and their children must jointly own at least 50% of the property.
• The applicant must have at least one year of social insurance (in the case of couples, it is sufficient if one of the partners fulfils this requirement).
• The applicant must have no criminal record and no public debts or tax debts exceeding HUF 5,000.

The loan is intended to pre-finance the works covered by the non-reimbursable home renovation grant. If the family does not eventually receive the grant, or if the grant is received but is less than a quarter of the loan amount, the family will also lose the interest subsidy on the loan.

Of course, being a bank loan, the specific requirements of each financial institution must also be met, i.e. the applicant must have a suitable employment record and income. In addition, the property must be accepted as collateral by the bank. According to Bankmonitor's experts, the list of banks offering the loans in question could be extended even further, even in the coming working days.

Cover photo (for illustration purposes only): Getty Images