EC Approves ‘ESTIA’ Scheme

The European Commission has approved under EU State aid rules the Cypriot “ESTIA” scheme to support private households and micro-companies that have encountered difficulties in repaying mortgage loans and risk losing their primary residence. The scheme, which has an annual budget of around € 33 million, sets strict eligibility criteria in terms of the value of the primary residence and income of the borrower to ensure it is targeted at those in need. Eligible borrowers will receive a grant equivalent to one third of their monthly loan payment, provided that (i) their loans are secured against their primary residence; and (ii) they resume paying the other two thirds of their monthly payment. If the borrower stops servicing its loan, it is foreseen that the bank initiates the foreclosure of the property.