Romanian “First Home” Program Norms Came Into Force Tuesday

The Government decision approving the norms sets that a home bought through the "First Home" program will be subject to a first degree legal mortgage during the loan term, and the home may not be sold for five years.

According to the law, the settlement of a legal mortgage no longer requires the conclusion of a mortgage contract.

Also, under the decision, banks must observe the conditions regarding the level of the interest rate for the loan, zero early payback fee, the maximum term of the loan and lack of clauses enabling the contract unilateral amendment of the contract by the bank.

People who buy homes through state guaranteed loans will be compelled to insure the home against all risks and designate the state as insurance policy beneficiary during the loan term.

Only one home can be purchased through the program.

The government launched a program to grant up to EUR60,000 state guarantees for mortgage loans.

Buyers of homes via the “First House” program must pay a 5% downpayment of the purchase price for a home that costs EUR60,000 or less, or a downpayment of EUR3,000 plus the difference for a home that costs more than EUR60,000.

The guarantee will be granted to the people buying their first home and who did not previously benefit from a mortgage loan.

In July, the average price of old apartments in Bucharest stood at around EUR1,150 per square meter, according to Colliers.