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The dream of your own home, they usually talk about him but not how much that dream costs. When applying for a loan to buy a home, what is the offer of local banks? How much do I have to “pay” for it? What term of financing do they reach? All that and more in this Pocket Finance.
The largest bank (it is almost half of the system in deposits and credits), Banco República (BROU) stopped offering mortgage loans in 2017, on the grounds that the operation was already being attended to at the State level by Banco Hipotecario (BHU).
Bank to bank this is a summary of what a mortgage loan costs, after a survey by El País.
BBVA
Whether for the purchase of a used or new home, individual construction or reform (which may include the purchase of land), the interest rate in Indexed Units (UI) is 5.25% effective per year, up to a 25-year term. Only terms greater than 20 years are required to collect assets in the bank to obtain that rate, otherwise for terms greater than 20 years it is 5.75%. There is an option of loans in dollars with a Libor rate 1a + 4 points (with collection of assets) or +5.5 points (without collection of assets) for people who have income in dollars. For payroll with income greater than $ 150,000 liquid monthly, the rate in UI is reduced to 4.95%.
What other costs do you have? The appraisal (which varies depending on the location), although if the client receives a salary at BBVA, he does not pay this cost. Life insurance is charged on the capital balance month by month, fire insurance, granting expenses, mortgage controller, financial system regulatory control taxes and complementary social benefits.
BHU
It charges interest rates in UI from 5.25% to 6.9% depending on 4 variables: term (up to 25 years depending on the product, the shorter the term the lower the rate), being or not a saver (cheaper for a saver), level of guarantee coverage (the lower the amount in relation to the value of the property, the lower the rate), if the fee is withheld from the salary the rate is lower. Depending on the product, the credit granted can mean 100% of the good.
In addition, the bank charges administrative expenses, basically intended to cover the cost of the appraisal. The value of the life insurance issued by the Banco de Seguros del Estado is added to the amount to be lent. In case of having coverage from other insurance companies, the client can raise the case.
How much installment payment on a credit of US $ 100,000 for example? In the event that the loan meant between 80% and 90% of the asset, within a 25-year term and did not include life insurance, the fee would be 6,063 UI ($ 29,347 today).
HSBC
In addition to loans for home purchase, they can be for office or other destination, construction or reform. Interest rates today stand at 5.25% in UI. A loan for the purchase of the first home can have a term of up to 20 years in UI and up to 15 years in dollars, covering up to 80% of the value of the property. If the client meets the requirements for the Mortgage Credit Guarantee Fund, up to 90% of the property can be financed. The other costs are optional life insurance on debit balance, property fire insurance, payment for the period of the credit and assigned in favor of the bank, property appraisal.
If a loan for US $ 100,000 was requested on the value of a home of US $ 150,000, the value of the installment would be 6,742 UI ($ 32,634), corresponding to a term of 20 years.
Itaú
It has mortgage loans in UI up to 20 years of term and with an interest rate of 5.25% effective per year and in dollars at 106 months of term and with a rate of 7% effective per year. In both cases, the credit is granted for up to 80% of the property’s appraised market value. Includes free appraisal for the applicant. The other costs are the life insurance included in the fee to be paid, the notary’s expenses, administrative expenses, fire insurance, as well as the financial system control fee and the supplementary benefit fee.
How much does a loan cost for the equivalent of US $ 100,000? In 20-year UI the installment would be 6,534 UI per month (equivalent to $ 31,627 at the current price). Notary fees are US $ 500 + VAT and administrative expenses US $ 500 + VAT, which are paid at the time the loan is granted.
Santander
The reference rate for mortgage loans in UI, in which 99% of applications are operated, is 5.25% effective per year. The term of the loan can be up to 25 years, where the rate is fixed regardless of it. The other costs refer to life insurance, property appraisal and fire insurance, which is charged once at the beginning of the loan and can then be financed during the life of the loan. Another administrative cost is the notarial controller of the mortgage that is going to be generated.
How much do I get a loan of US $ 100,000? For a 20-year loan, with a property value of US $ 200,000, the fee would be 6,629 UI ($ 32,087), without the home insurance coverage being accounted for. The total loan to be granted, under these conditions, is US $ 103,745.
Scotiabank
The interest rate in UI ranges from 5.25% effective per year for clients who receive their salary through Scotia and up to 25 years for this segment. For clients who do not collect their salary with the bank, the rate rises to more than 6% but the usual thing is that they begin to do so to benefit from the lower rate. The other costs are the administration fee, life insurance, fire insurance, appraisal, and notary fees.
How much do you pay for a loan of US $ 100,000? Assuming a 20-year loan, the 6,631 UI fee (equivalent to $ 32,096 today).
How is the interest rate on a mortgage loan determined?
The reference, the competition and the avidity of risk
According to market sources, the rate is formed depending on different variables, among which the market reference rate, competition to avoid being “out of date” and the desire for growth prevail. “In some moments you want to grow and in others you prefer to be more careful“Said a bank executive.
On the other hand, the general manager of the BHU, Álvaro Carella, pointed out that “in our country there are regulations that establish limits for the interest rate, in all their orders. To determine the rates to apply, the institution, like any other financial institution, takes into account the funding rate for the term in question, in our case similar to the cost of government financing, an estimate of the implicit credit risk in operations in the same segment, hence there is no single interest rate, other risks involved in the activity and operating costs. The first two components, that is, the replacement cost of the funds in the market for the same term and the implicit credit risk are the components with the greatest incidence ”.
Regarding the fall in UI rates to fund banks versus that of mortgage loans that remains, industry sources said that “it is very difficult to download them”. Other bank sources argued that, for these loans, trends are studied where they should be positioned from 20 years onwards.
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What amount of mortgage loans were given in 2020?
What happened to mortgage loans in the year of the coronavirus pandemic? Bank to bank these are the numbers. In the case of Itaú, it granted US $ 40 million in mortgage loans for home purchases, 30% more than in 2019. 75% of the mortgage loans were granted in Indexed Units (UI) with terms that were mostly between 15 and 20 years, the remaining 25% being in dollars through the 106-month credit line format. The BHU granted 751 loans for approximately US $ 48 million. In the case of BBVA, some US $ 40 million were placed in new mortgage loans in 2020. Santander bank gave about 900 mortgage loans that exceed US $ 80 million.
Why are the vast majority of credits granted by banks in UI? That’s because a “very high proportion of the population has income in pesos, adjustable with some type of indexer that is not the variation of the exchange rate, so long-term loans in dollars to those who do not have income in that currency, entails an exchange risk implicit in the credit risk, a lesson that banks The Uruguayan learned a long time in (the crisis of) 2001/2002 ”, explained the general manager of the BHU, Álvaro Carella.
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