The guarantee allows the institution to lend a higher amount than it would be able to for the same property appraisal if the LTV ratio set out in the Macroprudential Recommendation were to be observed. This increases the outstanding amount, and interest payable in each instalment is also higher.

For example, if you apply for a loan of €90,000.00 with a maturity of 40 years and a fixed interest rate of 4.85%, you have to pay a monthly instalment of €425.13 and bear an overall amount of interest of €114,063.95 over the lifetime of the agreement. However, if you choose to borrow a larger amount, e.g. €100,000.00, while keeping the terms of the previous loan, including the interest rate, you will have to pay a monthly instalment of €472.37 (an additional €47.24 per month) and will have paid €126,737.72 at the end of the agreement (an additional €12,673.77 in interest than in the previous situation).