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‘Estia’ scheme loan repayment time between 5-25 years

June 27, 2019 at 9:30am
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The younger the borrower eligible for the government’s ‘Estia’ scheme the longer the repayment period of his/her loan with the maximum duration of 25 years and the minimum of five.

‘Estia’ scheme which aims to assist borrowers with non-performing loans collateralised with primary residences to repay their loans was approved by Cabinet on Wednesday.

Specifically:

  • a borrower aged between 18 and 50 has a repayment period of up to 25 years
  • a borrower aged between 51 and 55 years has a repayment period of up to 20 years
  • a borrower aged between 56 and 60 has a repayment period of up to 15 years
  • a borrower aged between 61 and 65 has a repayment period of up to 10 years
  • a borrower over 65 has a repayment period that cannot exceed five years

Under the scheme, the state will cover one third of the eligible borrowers’ repayment plan, while the banks will reduce the eligible loans’ outstanding amount to the value of the primary residence.

Eligible loans are those collateralised with a primary residence with a market value of €350,000 that were on September 30, 2017 classified as non-performing. Furthermore, income and household wealth criteria apply.

When an ‘Estia’ beneficiary’s loan is restructured by a bank, a 5% of the lowest amount between the non-performing loan and the assessment of the market value of the main residence remains frozen. And it only becomes payable after the applicant’s restructured loan obligations are met.

If the borrower pays his/her loan earlier, then the state will continue to pay 1/3 of the instalment based on the scheme’s defined repayment period.

In addition, if a borrower fails to fulfil his/her obligations, the government subsidy will be terminated and returned to the state Agency managing ‘Estia’. At the same time, the loan goes back to its initial amount and foreclosure procedures resume.

In the meantime, all the data that borrowers submit will be thoroughly scrutinised with banking discretion of both the applicant and of his/her family removed.

Wednesday’s scheme approval paves the way for the application process to begin. Specifically, as of September 2 applications can be submitted at banks which are obliged to send all received data to the Agency – that is the Ministry of Labour.

Banks have up to December 16 to carry out restructuring of loans of eligible ‘Estia’ borrowers, while payments by the state should take place between December and April.

The Scheme, which involves state aid, was approved by the European Commission’s DG Competition last December.

By Eleftheria Peizanou

 

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Constant supervision for ‘Estia’ scheme beneficiaries