Decree-Law No. 44/2024, approved last July, introduced the State Personal Guarantee as a measure to support young people in purchasing their first home. This government initiative is aimed at individuals up to the age of 35 (inclusive) and seeks to facilitate access to bank financing for home acquisition.
Now, with the publication of Ordinance No. 236-A/2024/1 on September 27, the necessary regulation for implementing this measure is finally defined. Let’s explore what the State Personal Guarantee entails and how it works.
What is the State Personal Guarantee?
The State Personal Guarantee is a surety provided by the Portuguese government, through the Directorate-General of the Treasury and Finance (DGTF), designed to support the granting of credit by financial institutions. The goal is to ensure that young people have access to more favorable financing conditions when purchasing their first permanent home.
Requirements to Benefit from the Personal Guarantee
To be eligible for this guarantee, applicants must meet several criteria, both regarding their personal and financial situation, and the property they intend to purchase. The main conditions are:
- Age and residency: The individual must be between 18 and 35 years old and have tax residence in Portugal.
- Income: The borrower’s income must not exceed the 8th IRS (income tax) bracket.
- Property: The property must be intended for personal and permanent use, and the individual must not own any other residential urban property.
- Transaction value: The maximum property value must not exceed €450,000.
- Guarantee percentage: The State guarantee covers up to 15% of the transaction value, provided that the credit granted covers at least 85% of the property’s value.
Additionally, the borrower’s tax and social security situation must be regularized.
How Does the State Personal Guarantee Work?
The guarantee acts as a surety provided by the State, valid for a maximum period of 10 years. During this time, the State assumes part of the credit risk, making financing more accessible for young people who might otherwise struggle to secure a loan for home purchase.
It is important to note that this measure excludes financing for construction or renovation projects, as well as financial leasing contracts.
Covered Institutions and Timeframe
The State Personal Guarantee is only applicable to credit agreements with financial institutions headquartered or with branches in Portugal, which have entered into agreements with the State. The regulation has been in effect since September 28 and applies to all contracts signed until December 31, 2026. At the end of this period, an evaluation of the measure’s impact will be conducted, and it may be extended.
With this measure, the government aims to boost young people’s access to homeownership by helping them overcome financing difficulties. The State Personal Guarantee could be a decisive factor for many who might otherwise be unable to enter the real estate market.
For further clarification on the State Personal Guarantee or any other real estate-related matter, please do not hesitate to contact us – we are here to help!
