The answer is short - smooth funding. In year 2020 it will be a bit more difficult to obtain a loan or mortgage. The National Bank of Slovakia has announced a significant tightening of mortgage loans.

The goal is to prevent this, for people to take out too many loans for their income, which could jeopardize the stability of the entire financial sector if economic developments deteriorate.

What will change for mortgages from 1.1.2020?

The loan repayment amount will be able to reach the maximum 60% net income of the applicant, even after deducting the subsistence level. Currently, the limit is set at 80%. This regulation applies not only to mortgage companies, but also on consumer loans. This measure will be implemented gradually. From 1.1.2020 will be able to 15% Newly granted loans exceed the limit 60%, however, up to a maximum of 80%. From 1.4.2020 will no longer be able to be granted only 5% loans with a maximum repayment amount 70% net income after deducting the subsistence minimum. However, this exemption only applies to applicants until 35 years.

Who will be affected the most?

According to the National Bank, it should be about ¼ applicants. You will feel the most significant changes, who plan to finance the property with a mortgage and a consumer loan. They do not mean new changes, that these clients will not receive a mortgage or loan at all, however, it can happen, that a lower loan amount will be approved.

What it will look like in practice?

•  Applicant 's net income: 1 000 eur
• Living wage: 210,20 eur
• Income after deducting the subsistence minimum: 789,8 eur (1 000 eur – 210,20 eur)
• Mandatory income reserve: 315,92 eur (40 % from 789.8 eur )
• Maximum installment amount: 473,88 eur (789,8 eur – 315,92 eur)
• The result: An applicant with a net income of € 1,000 will be able to obtain a loan with a maximum installment 473,88 eur. However, this installment is still overstated, whereas this is a theoretical loan repayment with an interest rate of 2 % higher than the real rate on the loan. This is another methodology for calculations, which banks are obliged to comply with.

How to respond to changes in mortgages since 2020?

If you already know, that you will not meet the new conditions from next year and you are planning to buy real estate, try to apply for a mortgage by the end of March 2020, while there is still the possibility of an exception.