The stated purpose of Estia is to assist, support and protect vulnerable households who have mortgaged their primary residences houses for their loans and at the same time reduce the high number of bad debts.
“We consider Estia a scheme that adds to the toolbox for tackling this old residue, the serious problem of non-performing loans by focusing on what is perhaps the most sensitive category of borrowers, those who have their primary residence as collateral,” the minister said.
“We will monitor how it will be implemented, remaining optimistic that it will be a scheme that will substantively help households first and foremost, borrowers who found themselves in difficult position, and management of the problem.”
Parliament has already approved the budget, and banks and other asset management entities will enter the Estia scheme next month. Eligible borrowers will apply in September and the first payments are expected to be made in December, the minister said.
It applies to loans (mortgages) that were classed as non-performing at 30th September 2017. Loans designated as non-performing after that date are not eligible. The primary residence which is mortgaged must have a maximum market value of up to €350,000.
The Estia scheme applies to the first mortgage on a residence, and covers loans or credit facilities regardless of currency.
Total household income of the applicant must not exceed the following: €60,000 for a family with at least four dependents; €55,000 for a family with three dependents; €50,000 for a family with two dependents; €45,000 with one dependent; €35,000 for a couple with no children, and €20,000 for a single-member household.
The Estia criteria will also apply to single-parent families.
An applicant’s other net assets in 2016, 2017, and 2018, must not exceed 80 per cent of the market value of the main residence after its evaluation. In any case they should not exceed €250,000.
Any cash or deposits exceeding €10,000, or 20 per cent of the rest of the applicant’s net assets, whichever is higher, and which are not used to secure any other loans, must be paid towards the non-performing facility before the restructuring procedure.
Other terms and conditions also apply.
The loans will be written down to the market value of the primary residence and then the borrower will have to pay two-thirds of the rescheduled loan every month and the taxpayer (the state) is going to subsidise one-third of the monthly instalments on that rescheduled loan.