Romanians Must Guarantee “First Home” Loan With Current Account

Romanians who will take out loans within the “First Home” program must guarantee their loan with their current account and can file currency swap requests, according to the explanatory note to a Government decision which amends the norms implementing the program.

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People who contract "First Home" loans can also file requests to change the way payments are spread out provided the program's eligibility conditions are observed and the value of guarantees first granted to beneficiaries are not changed.

The draft acts states that, if a beneficiary owns parts of a home bought through the program and wants to purchase the entire home, he/she can take ownership of the entire property by taking over the entire loan.

Another amendment concerns the documents needed by tenants of homes built by the National Housing Agency who want to purchase the respective property through the First Home program.

The draft act also eliminates the provision which states associations of seven beneficiaries are required in order to construct residential complexes. According to the new norms, associates will appoint a representative to get the authorization to build a residential complex in which each beneficiary will own a single home. At least one of the associates must be the owner of the land on which the homes will be built.

Prime Minister Emil Boc said last week the "First Home" program, which offers loan incentives to first-time home owners, will continue in 2011 with a guarantee ceiling of at least EUR200 million.

The second stage of the "First Home" program, launched in early 2010, saw the state guarantee loans for the purchase of a new home up to EUR60,000, in the case of older buildings or buildings under construction, and EUR70,000, in the case of planned buildings. Buyers organized into associations were eligible for state guarantees of up to EUR75,000.

"First Home" loans in local currency have an interest rate calculated as three-month ROBOR plus up to 2.5 points, while those in euro use EURIBOR as reference, plus up to 4% per year.

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