Dirty little CSOK trick: a crowd of poty passengers can move to the government’s new “housing loan”

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Recently, it often happens that due to insufficiently well-parameterized regulations, swindlers benefit from a financial policy measure of the government, for example in the field of retail lending

the government has maximized the late payment interest charged in case of failure to have children and divorce at 5%, instead of the current 38.75% and, according to the current situation, the 65% valid from January 1.

There is no question that the previous regulation, i.e. the default interest set at five times the basic interest rate valid at the beginning of the calendar semester, was excessive (it was valid for the largest amount, 10 million CSOK), especially for those who remain childless through no fault of their own. Not with a base interest rate of 1-2%, but in the current interest rate environment, yes. The retroactive change also remedies this for those who already have a CSOK.

However, with the 5% limit, the regulation was transferred to the far side of the horse. This interest rate is so low that it even intensifies the phenomenon of moral hazard: it makes taking out the 10 million CSOK a rational choice for those who have no intention of having children. In the case of CSOK for a smaller amount (which can be taken out for a used apartment or for a new construction with a maximum of two children), the phenomenon has existed until now (there was no five-fold multiplier, only late interest had to be paid according to the Civil Code, i.e. the basic interest rate at the beginning of the semester), but

  • on the one hand, the smaller subsidy amount,
  • on the other hand, commercial bank loans with low interest rates of 3-4%

because of this, there was no real advantage to this sloppy behavior. But now there is:

if we consider the CSOK 10 million to be repaid after 10 years as a loan, and the late interest of 5 million as the interest on the loan, we get a home loan with an interest rate of 4.1%, to be repaid only at the end of the term, which is much more favorable than the banks’ 8% for offers starting at

A little explanation:

  • the CSOK amount of 10 million does not have to be repaid for 10 years, even if there is only 1 or 3 more children until the number of children is reached, hence the 10-year term,
  • the loan interest is 4.1%, and not 5.0%, because the late interest must be calculated linearly, without compound interest, according to the Civil Code. according to the bank loan interest rate, we have to take into account compound interest, and out of 10 million HUF will be 15 million forints at 4.1% compound interest in 10 years,
  • this “loan structure” is really the closest to a home loan, since you have to move to another home, and the state acquires a mortgage on the property, in addition to a 10-year occupancy obligation,
  • therefore, there is no question that, as in the case of a baby loan, it is worthwhile to think about investing the amount directly, but it is worthwhile to save for future loan repayments (just as the monthly repayments also require this for home loans, but here to a much lesser extent due to the lower interest rate and the well-delayed repayment),
  • repayment of capital and interest at the end of the term is not typical in domestic banking practice, especially in retail lending (it is also typical for companies only in the case of capital repayment in the so-called bullet financing), so we are really talking about a unique “loan construction”.
  • the post-child CSOK agreed in advance does not count as self-sufficiency at the banks, but at the same time, it differs from a home loan in that the applicant couple is not expected to have self-sufficiency in addition,
  • the subsidy is provided by the state, and the amount of late interest is also due to it, but you can apply for it at the credit institutions,
  • even with the CSOK loan with an otherwise very favorable 3% interest rate, the late interest rate was limited to 5%, but it is not a rational behavior to “play tricks” here, because in the event of not having a child, due to the current yield environment and regulations, the condition is even worse than the market the subsidized loan,
  • in the case of 3 existing children, the trick is irrelevant, there is no need to have another child.

It is available for pre-adopted children, so-called advance CSOK can only be applied for by married couples where at least one member of the couple is under 40 years of age. In their case, therefore, the possibility of rogue behavior arises.

The 10 million CSOK is available to them if they have not used CSOK for a previous child, otherwise they can use the difference between the amount of 10 million and the support amount already taken.

The fact that the state is hardly able to check why the blessing of children was left behind helps the unruly behavior. Young married couples requesting CSOK in advance must “only” declare their childbearing in a private document with full evidentiary value at the same time as submitting the application for support, but failure to do so has no other sanction than late payment interest, which is now capped at 5%.

Of course, our goal should not be to encourage sleazy behavior, but it is worthwhile to be aware – especially for the regulators – that the new regulations may intensify this undesirable phenomenon, further narrowing the possibilities of real child entrepreneurs in the already limited market of newly built apartments.

Cover image: Getty Images

Source: Portfolio.hu – Bank by www.portfolio.hu.

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