The Cabinet approved the Estia plan, a long-awaited loan relief program for ordinary citizens. This was stated by the Minister of Finance Haris Georgiadis. The scheme will be fully implemented by the end of this year.
The goal of the program is to help, support and protect those citizens who took out loans on the security of their only home. Estia will also help the banking system to reduce the amount of non-performing loans.
“We consider the Estia plan as a scheme that will help solve this old problem of non-performing loans, focusing on perhaps the most sensitive category of borrowers,” said the Minister of Finance. He added that his department would monitor the progress of the program. Parliament has already approved a budget plan, and banks and other asset management structures will join the scheme next month by signing a memorandum of understanding with the state. Debtors will be able to submit applications from September 2 to November 15, and the first payments must be made in December. State spending is estimated at about 32 million euros per year. It is expected that the program will operate for 25 years. According to preliminary estimates, the amount of loans that will be repaid in this way will amount to 3.4 billion euros.
The Estia Plan is subject to the following conditions. Firstly, it applies only to such loans that were classified as non-performing until September 30, 2017, but not later. Secondly, the market value of the mortgaged housing should not exceed 350 thousand euros. Thirdly, the mortgaged house should be the only real estate and place of residence. The total household income of the applicant should not exceed 60 thousand euros for a family with four dependents; 55 thousand euros for a family with three dependents; 50 thousand euros for a family with two dependents; 45 thousand euros with one dependent; 35 thousand euros for a couple without children and 20 thousand euros for one person.
The other net assets of the applicant in 2016, 2017 and 2018 should not exceed 80% of the market value of the main place of residence after its assessment and be no more than 250 thousand euros. Any cash or deposits in excess of 10 thousand euros or 20% of the rest of the applicant’s net assets, which are not used to secure any other loans, must be paid to the credit institution before the restructuring procedure.
Loans will be reduced to the market value of the main place of residence, after which the borrower will have to pay two thirds of the restructured loan every month, and the state will subsidize one third of the monthly installments.
The maturity of restructured debt will be from 5 to 25 years, depending on the age of the borrower (the younger it is, the longer the payments will be stretched). If the borrower repays his loan earlier, the state will continue to pay 1/3 of the installment in accordance with the established repayment period.
If the borrower defaults, government financial assistance will be terminated and returned to the budget, and the loan will return to its original size.
In the meantime, the Land Registry Office has estimated approximately 2 million properties across the island. Find out the cadastral value will be next week on the department website. The last time such an assessment was conducted in 2013.