PROPERTY SEARCH
PROPERTY SEARCH
Spanish government promises mortgage relief of 300 euros per month
The financial aid would extend to all families earning an average annual income in Spain
Spanish President Pedro Sánchez continues to table enticing schemes to guarantee votes in the upcoming general election and the latest initiative promises mortgage relief of 300 euros per month to households earning up to 37,800 a year, the average income of a two-adult home without children.
This measure, aimed at complementing the existing aid package for lower earners, will only come into force in the existing PSOE government is re-elected on July 23, a prospect which seems increasingly unlikely.
Earlier this year President Sánchez passed a law allowing families earning up to 29,400 to freeze their mortgage repayments for one year and to extend the life of their loans by seven years in order to make the monthly bills more manageable.
However, far from the million households finance minister Nadia Calviño expected the measure to benefit, fewer than 12,000 people have requested the aid from their banks.
This is likely because the measure, just like Sánchez’s latest proposal, is a double-edged sword. Even if the loan instalments are frozen for a year, the bank does not forgive that money. Once that period has elapsed, there is a surcharge on the monthly payment. To mitigate this effect, there is the possibility of extending the years of the loan so that the instalments are lower, as they are spread over more time. However, extending the life of the mortgage lengthens the time interest is being paid, so the final mortgage ends up more expensive.
Hand in hand with this policy is the government’s rather bold commitment to achieving “full employment” in Spain over the next four years.
On the other side of the fence the new left-wing Sumar party with current labour minister Yolanda Díaz at the helm is also raising eyebrows. Díaz, who comes from a communist party background, has vowed to implement a ‘universal inheritance’ policy if she gets into office which would give every 18 year old in Spain 20,000 euros to spend on study, training or setting up a business.
The 10 billion needed to fund this would come from taxing all those who earn more than 3 million euros a year and would guarantee “equality of opportunity” regardless of income or background, according to Díaz.
Image: Freepik
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