One of the prerequisites for a no-interest loan for a baby loan starting July 1, 2019 is to have at least one child. If this is not the case, the interest subsidy shall be repaid. However, in some cases, a baby loan is more favorable than most personal loans. Let’s look at the details!
What happens if the child is not born?
- Penalty interest is payable
If the child is defective within five years of the date on which the loan was obtained, all interest payments received shall be repaid within 120 days, plus a lump sum .
What is the penalty interest?
The interest rate subsidy is calculated on the basis of 130% + 2% of the average yield on the 5-year government securities auction, which is currently slightly above 5%. Under current terms, when repaying the interest subsidy on the entire $ 10 million baby loan, this amount is approximately HUF 2.3 million .
- The market personal loan will be the remaining debt
The interest on the remaining principal is recalculated. The interest rate also depends on the average yield on government securities; would be 8% per annum. The new personal loan will have a fixed interest rate for the remainder of the term. The monthly installment is no longer subject to the $ 50,000 monthly limit.
The terms of a baby loan are much more favorable than personal loans on the market
- Long maturity . A baby loan can be taken for a term of up to 20 years . The average term of an average personal loan is 96 months (8 years).
- High credit . Few banks offer HUF 10 million personal loans, the average maximum loan amount is HUF 8 million.
- Low repayment . The total monthly installment cannot be more than $ 200 .
- It can be claimed on a low income . Due to the low monthly repayments, you can now fit into the 50% JTM with a verified monthly income of $ 100,000 .
Even repaying the interest rate subsidy can be more advantageous than a market-based personal loan
It is difficult to compare the two schemes because the maximum maturity of marketable personal loans in the market is 96 months (8 years) and they require a much higher monthly income. For an example, we looked at what the market has to offer.
What are the costs of not having a baby?
First, let’s figure out how much we’ll pay if at least one child is born.
- The treasury is required to pay a guarantee fee each month when repaying a baby loan. The amount is 0.5% of the outstanding principal at any one time. At $ 10 million for 5 years, that’s pretty much it 220 thousand Ft.
- In addition, a one-off interest subsidy of HUF 2.2 million must be repaid.
- The remaining approx. The debt of HUF 7,500,000 at today’s prices is approx. We will repay you at an annual rate of 8.28%.
- So in the end, a total of approx. HUF 18.135 million to be repaid if the kid does not undertake, and taken up to HUF 10 million in 20 years.