New line of loans from Banco Ciudad for remodeling and extension of houses

After several years of lack of mortgage loans in Argentina, some banking groups have started to launch new lines of loans, responding to the growing demand from those who want to access their own home or to improve the position of the one they already have. One of the most recent proposals comes from the Council City Bankwhich has entered a line of personal loans for remodeling, extension and completion of one permanent homewith a declining tax scheme.

Information about the new loan from Banco Ciudad

Banco Ciudad presented this line of personal credits, which offers the highest level of $100 million and payment term up to 120 months. The novelty of this proposal is that it uses the German depreciation systemin which the capital component is constant in each share and the interests decrease over time, generating smaller shares in Grapes.

Among the main advantages of the German system are the a gradual reduction in the value of the quotasince the former is the highest and reduces the capital’s valuation. This structure is attractive to those who can afford a higher initial payment, as the payments decrease quickly over time.

Unlike the traditional mortgage loansthis credit does not require the applicant to mortgage their home, which provides access to money for those who are interested remodeling, extension or completion your home

Examples of interest rates and installments

The new credit line at Banco Ciudad offers two types of interest rates:

• 8.5% fixed: intended to generate jobs energy efficiencysuch as the installation of double or triple glazed windows, high efficiency air conditioning systems, or improvements in the building’s insulation.
• 9.5% fixed: for the rest of the projects that do not include improvements in energy efficiency.

Below are some examples to understand the cost of taxes:

• 8.5% rate: If you ask $10 million for remodeling that includes installing a high efficiency hot water tankwould be the first installment $164,000 (term of 120 months), and the necessary income should be at least $820,000.
• rate of 9.5%.: If the project does not include power improvements, the first installment for credit $10 million would be $173,000and the required income would be higher than $865,000.

A comparison of German and French depreciation systems

This new loan from Banco Ciudad is characterized by using the German depreciation systemwhich show significant differences compared to the French systemcommonly used in mortgage loans. Below is a comparison between the two schemes:

• German depreciation:
• The capital payable is fixed in each share.
• Interest decreases over time, so the installments decrease.
• He wants the applicant to be able to pay a higher down payment, but the fees go down quickly.
• the amortization of France:
• The proportions are fixed, although they are in the credits in Grapes They are adjusted for inflation.
• In the first installments, interest is mostly paid, and the capital that is paid increases gradually.
• Taxes can grow quickly if inflation is high.

Banco Ciudad credit requirements and conditions

Those interested in this new line of credit must meet certain requirements and conditions, which we explain below:

• Beneficiaries: natural persons over 18 years of age who verify their salary at Banco Ciudad.
• Funding destination: remodeling, extending and finishing a unique and permanent home.
• Maximum size: until $100 million.
• Term: until 120 months.
• Currency: Grapes (Purchase Value Unit).
• Funding: until 50% of the home value and until the 100% of the working budget presented.
• Interest rate:
• UVA + 8.5% fixed: for works that improve energy efficiency.
• UVA + 9.5% fixed: for the rest of the work.
• Income tax ratio: until 20% of the applicant’s net income.
• Amortization system: German.
• Commitment: the ability to add a guarantor to increase the loan amount.

This new proposal from Banco Ciudad appears as a more flexible and affordable alternative for those who want to improve their home without getting a mortgage on their property, with the advantage of offering installments less which will reduce the financial burden in the long run.