Government-supported mortgage

Government-supported mortgage is a type of Latvian mortgage, in which the government acts as a guarantor, thus potentially increasing the likelihood that the loan will be granted. This type of mortgage is governed by the ‘Rules on the government support for buying or building residential premises’ (in Latvian: Noteikumi par valsts palīdzību dzīvojamās telpas iegādei vai būvniecībai).

In order to be eligible for this support, several requirements have to be met:

• the mortgage is granted by a credit institution that is either registered in Latvia or has the right to issue credits in Latvia and has made a cooperation agreement with the guarantor
• the issuing institution confirms in writing one of the following:
  • the loan applicant lives with and is in custody of at least one child, and the loan does not exceed 200 000 EUR
  • the loan applicant has received a vocational or higher education, and is 35 years old or younger

If a person is applying for this mortgage on the basis of having at least one child, the guarantee extends to the following:

• 10% of the sum, but no more than 10 000 EUR, in case of one child
• 15% of the sum, but no more than 15 000 EUR, in case of two children
• 20% of the sum, but no more than 20 000 EUR, in case of three children

If a person is applying for this mortgage on the basis of having a specific education, the guarantee extends to 20% of the sum, but no more than 50 000 EUR.

In any case, the guarantee does not exceed 10 years, and covers only the base sum of the loan. This means, that it does not extend to the interest, fees or any other related payments.

Additionally, in order to receive a guarantee, a fee must be paid to the government. The fee may be paid by either the applicant or the credit institution

• a one-time fee of 2.5% of the guarantee sum for mortgage based on have children
• a one-time fee of 4.8% of the guarantee sum for mortgage based on having education, as well as a yearly fee of 4.8% of the remaining guarantee

Documents

Persons who wish to apply for the government-supported mortgage must prove their eligibility by presenting several documents:

• documents indicating the declared place of residence in Latvia
• a copy of an identification document
• documents proving the aplicant’s status:
  • child’s or children’s ID, if applying for mortgage on the basis of having children
  • documents certifying the respective education, if applying for mortgage on the basis of having a specific education

Annulment

The guarantee is annulled (either not granted or revoked) in the following cases:

• the guarantor (government) has not received the aforementioned fee
• the credit institution transfers its right to demand the credit (i.e. when the loan taker now owns to another credit institution) to another person without the permission of the guarantor (in writing)
• the mortgage is repaid
• the mortgage is not used for buying or building a real property
• collateral for the mortgage is the property of a third party, not the mortgage applicant