An insight: What is the KIM Regulation?
A kitchen that plays all the pieces or a completely private garden - your dream home could look like this or something similar. But the questions that arise in between are less romantic: Can I afford it and can I even get a loan? In the jungle of property loans, you often stumble across the so-called KIM Regulation (KIM-V for short). It regulates the lending standards for financing residential property in Austria. But what are the regulations for home loans, how much equity is required and are there exceptions to the rule? Find out all the details about the KIM Regulation here.
What does the KIM Regulation mean?
The short form KIM stands for Kreditimmobilienmaßnahmen (credit property measures). The regulation of the same name defined the rules for the granting of home loans in Austria. At a time when property prices were exploding and interest rates on loans were at an all-time low, the KIM-V was therefore introduced as a brake to protect borrowers and banks.
In Glor-Text! The aim of the KIM Regulation is to protect borrowers from over-indebtedness and domestic banks from payment defaults. |
What are the procurement rules of the KIM Regulation?
Three key points define the lending rules for property loans in Austria:
1. Loan-to-value ratio or equity ratio: An equity ratio of 20 per cent is required for residential property loans. However, the maximum loan-to-value ratio may not exceed 90 per cent.
2. Term: Loans can be granted for a maximum term of 35 years.
3. Loan repayment: The monthly repayment instalment may not exceed 40 percent of the available net household income.
Based on these three key points, the KIM Regulation has been in force since 1 August 2022. Just a few months later, the financing regulation was amended for the first time with the relaxation of the lending rules.
Good to know! The KIM Regulation applies exclusively to Austrian banks. Banks in other countries, such as Germany, are not bound by this regulation and offer other options for property financing in Austria.
Let's talk about it! The Glorit advisory team and our independent financial advisors will support you in finding and evaluating customised financing solutions in Austria and abroad. |
Relaxation of the KIM-V and exceptional quotas
At the end of 2022, the Financial Market Stability Board (FMSB) held new discussions with representatives of the Ministry of Finance, the Fiscal Council, the Financial Market Authority (FMA) and the Austrian National Bank about developments on the financial market. The sharp decline in property transactions has not only alarmed the property sector. The question of whether and how people can still afford to buy their own home was at the centre of widespread discussions.
This led to a simplification of the procurement rules in two key areas:
1. Interim financing: Limited application of the KIM-V to interim financing up to a maximum value of 80 per cent of an existing property with a term of 2 years.
2. De minimis limit: Since 1 April 2023, the de minimis limit of EUR 50,000 also applies to spouses, registered partners and cohabiting partners, i.e. per borrower. This means that the low income limit can double to 100,000 euros.
In addition, banks have so-called exception quotas at their disposal to grant property loans at their own discretion and risk assessment within the otherwise strict KIM requirements. To facilitate the administration of these quotas, there are already calls to standardise these exemptions for all banks.
Good to know! If you fulfil two of the three criteria of the KIM regulation, it pays to have your individual creditworthiness and the possibility of an exemption based on existing quotas checked.
Independent financial advisors offer a comprehensive overview of the market and often better interest conditions - customised to your individual economic situation. In addition, they also have a direct line to various banks that regularly offer special contingents and conditions. |
Are you looking for new ways to finance your dream home? We will be happy to help you! Arrange a non-binding appointment with our Glorit team to evaluate further opportunities and possibilities.
