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Mortgage creditsEverything you need to know before going into debt to buy your house - La Nacion Propiedades
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www.lanacion.com.ar
June 18, 2024
By Carla Quiroga
As more banks join the mortgage loan offer, the questions of those interested multiply. The dream of owning a home seems to be closer and that excites many Argentines who, even with average incomes, cannot buy their own home. However, before getting into debt, it is key to understand various variables, especially in an economic context like the one Argentina is going through. On the other hand, the conditions of the different entities differ in the modalities and contracts, so it is essential to analyze the rates, amounts and terms in each case. From what monthly income can I qualify to request a loan? What does it depend on if the installments do not skyrocket? Should I wait or is it the right time to request financing? LA NACION prepared an interactive guide with all the answers to your questions.
The amounts are up to $250 million , although there are cases without a limit such as the Galicia, BBVA, Macro, Supervielle and Santander line. In general, they finance between 75 and 80% of the value of a property, although there is only one entity that lends 100%: the bank of Córdoba (Bancor), with a limit of $90 million. Macro finances 75% of properties up to $350,000,000, 60% of those over $350,000,000 and 90% if the person taking the loan is under 30 years old with parents who guarantee the loan and acquires their first home. In the case of the Nación, it is clarified that it is up to 75%, as long as the value of the property does not exceed 120 million pesos.
Regarding the amounts, it depends on each entity, but the key is that the fee committed by the policyholder represents between 20 and 30% of monthly income. There is a case in which this percentage can be extended to 35% if the person is a client of the entity (Banco de Neuquén).
There are cases in which the income of the couple or family group can be added and others that also allow non-cohabitants, such as Banco Nación.
In the case that, for example, it is a donation from parents, a document with a certain date is necessary. It must be taken into account that if it is undeclared money or the AFIP detects that the installments are not related to the person's legal income, it could increase the applicant's taxes.
“A Monotributista with an invoice of less than 1 million pesos per month will not be able to access the launched lines. He must be an employee in a dependent relationship, who is also a Monotributista or a couple of Monotributistas who add other income,” Domínguez details.
The difference owed will be transferred to the end of the loan and, once the payment schedule is finalized, the balance will be rescheduled, which can be paid with a personal loan or with an extension of the mortgage. This possibility would end up raising the rate from 4.5% to 6% per year. “This means, in a 30-year loan, almost 20% extra in the payment. In other words, to determine whether it is worth it or not, you have to take into account that it is at a high cost,” explains Federico González Rouco.
The line finances up to 75% (maximum $250 million) for 10, 15 and 20 years, and the fee must not represent more than 25% of the salary. For example, in relation to the amount of the monthly fee: every $10 million that is Apply for 20 years to acquire a home in the downtown area, the initial monthly payment is $58,149
"One way out could be for the Government to enable the purchase of the official dollar with the PAIS tax so that it is closer to the value of the MEP, another is to eliminate parking and a third option could be for the bank to sell the dollars at the time, charging a percentage due to the risk involved in absorbing the parking,” González Rouco proposes.
Looking ahead, the drop in inflation starting in April opens the possibility for real salaries to stop falling and to begin a recovery process, although from very low levels. The evolution of inflation is fundamental because it determines the increase in the rate, but another variable to observe is the ups and downs that citizens' real wages go through, which since December have fallen by 25% compared to inflation. "The key is that wages grow more than inflation," González Rouco emphasizes, and recognizes that today salaries are at a historic low, which is why, if the economy grows, they should recover.
In any case, they can be considered high, considering the purchasing power of citizens. “That is why I believe that this wave of loans will not be a boom in the short term, since for the situation to be different, salaries have to improve,” says González Rouco. Along the same lines, Iván Kerr, who was the Secretary of Housing of the Nation and president of ProCreAr, analyzes: “We are still a little high, but it is logical. Chile lends at a fixed annual rate of 3%, for 30 years, but it has not had inflation of more than 10 points per year for 50 years.”
However, there is criticism from broad sectors because, by adjusting for inflation, it can make the situation very difficult for the debtor, who is faced with having to pay very high installments that do not increase at the same rate as his salary.
The most optimistic specialists assure that for those who dream of being a property owner this is an ideal moment because salaries are at historic lows and should be restored, and the square meter is still low.
In this context, González Rouco makes a distinction: a 50-year-old person who is already at the peak of his career is not the same as a young professional with potential growth and chances of improving his income. In this case, the credit installment will represent an increasingly smaller percentage of his salary because his income will rise above inflation, which is the indicator by which the UVA credit is updated. However, the choice between buying and renting also depends on other factors such as job stability, whether the person has the necessary initial amount and the long-term projection (20 or 30 years) of what he wants to acquire as a home.
What must be taken into account is that new rental contracts usually close adjustments for inflation every three months and also do not have the impact of the annual rate. While banks adjust for inflation every month.
“The drop in the volume of discounted ads is one of the factors that explain the increase in the price registered since July 2023,” analyzes Leandro Molina, director of Zonaprop. Looking to the future and regardless of the credit effect, Martín Boquete, director of Toribio Achával, estimates an increase of 10% until the end of the year and up to 25% by the middle of next year. “It will be key for inflation to be stabilized and to be able to operate in dollars,” he concludes.
On the other hand, and taking into account the publication values that Zonaprop takes as a reference, a 40 square meter studio apartment located in the city of Buenos Aires has a publication price of US$ 98,109 for sale, while a two-room apartment of 50 square meters is worth 117,474 dollars and a two-bedrooms apartment of 70 square meters, 161,697 dollars. Outside the Federal Capital, the options become more accessible. A one-bedroom apartment of 50 square meters in the north zone is published at 108,752 dollars while a two-bedrooms apartment of 70 square meters is at 161,203 dollars. In the south zone, the average price of a one-bedroom apartment of 50 square meters is 79,026 dollars while a two-bedrooms apartment of 70 square meters has an average value of 116,171 dollars.
www.buysellba.com
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Créditos hipotecarios. Banco por banco, cuánto prestan, desde que sueldo podés calificar y pros y contras de sacar uno
Créditos hipotecarios. Banco por banco, cuánto prestan, desde que sueldo podés calificar y pros y contras de sacar uno
www.lanacion.com.ar
June 18, 2024
By Carla Quiroga
As more banks join the mortgage loan offer, the questions of those interested multiply. The dream of owning a home seems to be closer and that excites many Argentines who, even with average incomes, cannot buy their own home. However, before getting into debt, it is key to understand various variables, especially in an economic context like the one Argentina is going through. On the other hand, the conditions of the different entities differ in the modalities and contracts, so it is essential to analyze the rates, amounts and terms in each case. From what monthly income can I qualify to request a loan? What does it depend on if the installments do not skyrocket? Should I wait or is it the right time to request financing? LA NACION prepared an interactive guide with all the answers to your questions.
1
Which banks offer loans and in what amounts?
So far there are 12 banks that have announced mortgage loans: Nación, BBVA, Ciudad, Galicia, Hipotecario, Macro, ICBC, Supervielle, Santander and the provincial Córdoba, Neuquén and Corrientes.The amounts are up to $250 million , although there are cases without a limit such as the Galicia, BBVA, Macro, Supervielle and Santander line. In general, they finance between 75 and 80% of the value of a property, although there is only one entity that lends 100%: the bank of Córdoba (Bancor), with a limit of $90 million. Macro finances 75% of properties up to $350,000,000, 60% of those over $350,000,000 and 90% if the person taking the loan is under 30 years old with parents who guarantee the loan and acquires their first home. In the case of the Nación, it is clarified that it is up to 75%, as long as the value of the property does not exceed 120 million pesos.
2
What are the payment terms and fees?
Financing terms range between 5 and 30 years and annual rates vary between 3.5 and 9.5%. On a month-to-month basis, fees are adjusted for inflation.Regarding the amounts, it depends on each entity, but the key is that the fee committed by the policyholder represents between 20 and 30% of monthly income. There is a case in which this percentage can be extended to 35% if the person is a client of the entity (Banco de Neuquén).
3
From what monthly income can I qualify?
The first key point is that it is net income. Although there are banks that detail that those who earn from $850,000 per month can qualify, this income enables an amount that is not enough to buy a property. The economist specialized in the sector Federico González Rouco makes a real analysis and details that to access $50 million - to buy a studio apartment - in a UVA line with a rate of 4.5%, the fee would be $250,000 and the policyholder must collect $1 million per month.There are cases in which the income of the couple or family group can be added and others that also allow non-cohabitants, such as Banco Nación.
4
Do I have to collect my salary from the bank that grants the loan?
Not necessarily, it depends on each entity. But, in general, taking out credit at the bank where the salary is collected allows access to better conditions: in some cases from the requirement of lower monthly income required to lower rates. We must not forget that these lines are an opportunity for entities to retain customers in the long term.5
How much down payment on the value of the property is required to access financing?
Most lines finance between 70 and 80% of the value of the property to be acquired. Considering that, according to the Zonaprop index, a 40-square-meter studio apartment located in the city of Buenos Aires has a listing price of 98,109 dollars for sale, the borrower must have at least US$20,000 as a down payment. This example applies to loans that finance 80% of the value of the property.6
Can my parents be guarantors of the loan?
There is only one option: the Macro bank has a special line for those under 30 years of age that allows 90% financing if the parents are guarantors, which would reduce the advance payment requirement to US$10,000 in the case of purchasing a studio apartment published in the US. $98,109.7
What happens if I need to borrow money? Do I need to justify the source?
The bank requires attendance at the signing of the deed with the advance, but will not investigate the origin of the funds unless it has been previously deposited in the bank account. In that case, the usual controls are carried out to prevent money laundering. The applicant can borrow from a relative and even take out a loan. “Depending on the amount of the transaction, the notary involved in the transaction could require a certification of the origin of the funds,” explains tax specialist Sebastián Domínguez.In the case that, for example, it is a donation from parents, a document with a certain date is necessary. It must be taken into account that if it is undeclared money or the AFIP detects that the installments are not related to the person's legal income, it could increase the applicant's taxes.
8
What happens if I am a monotributista?
In general, only those who are registered in the highest categories of the Monotributo (who invoice around $12 million per year) qualify. In addition, some banks may require a certain seniority in that category.“A Monotributista with an invoice of less than 1 million pesos per month will not be able to access the launched lines. He must be an employee in a dependent relationship, who is also a Monotributista or a couple of Monotributistas who add other income,” Domínguez details.
9
Am I required to move into the property I purchase?
Depends. The most aggressive lines of credit require that it be a family home, unique and permanently occupied. But there are also others that enable the purchase of a second home. That is, anyone who already has another property in their name can buy. In any case, in the interpretation of what is considered sole ownership, some gray areas arise that the acceptance committee of each bank will evaluate to analyze on a case-by-case basis. For example: Is the owner who shares ownership in a small percentage of an inherited property? Is the owner of a property of which another person has usufruct?10
Are there loans with an anti-inflation limit?
Banco Nación implemented a system that works as a “cap” on the monthly payments of its credit lines to prevent sudden jumps in inflation: from the seventh month, the borrower who receives his salary through Banco Nación and buys a single, permanent home can pay a premium of 1.5% per year to have the bank calculate two payments – one adjusted for inflation and the other for salaries – and choose which one he wants to pay.The difference owed will be transferred to the end of the loan and, once the payment schedule is finalized, the balance will be rescheduled, which can be paid with a personal loan or with an extension of the mortgage. This possibility would end up raising the rate from 4.5% to 6% per year. “This means, in a 30-year loan, almost 20% extra in the payment. In other words, to determine whether it is worth it or not, you have to take into account that it is at a high cost,” explains Federico González Rouco.
11
What is the most accessible credit?
The line with the lowest rate is from Banco Ciudad and is 3.5%, but can only be accessed by those who buy a family home, single and permanently occupied, which must be located in the microcenter, that is, within the perimeter contemplated by the Sustainable Urban Development Fund (Fodus) program, which includes San Juan, Entre Ríos, Callao, Santa Fe, Leandro N. Alem and Paseo Colón avenues. Two specific examples: a 26 square meter unit located at 800 Viamonte that is offered for US$37,500 and another in Suipacha and Corrientes of 21 square meters for US$42,000. With these values, whoever has US$9,375 in savings for the first case or US$10,500 for the second (25% of the value of the property), and a monthly salary of just over $1 million, can access a line of $20 million by committing a monthly fee of almost $116,300.The line finances up to 75% (maximum $250 million) for 10, 15 and 20 years, and the fee must not represent more than 25% of the salary. For example, in relation to the amount of the monthly fee: every $10 million that is Apply for 20 years to acquire a home in the downtown area, the initial monthly payment is $58,149
12
If the credit is in pesos, how are the dollars obtained at the time of writing?
This is one of the main problems to solve. The bank grants pesos and the buyer needs to buy the MEP dollar - they cannot purchase official ones through the stocks - to pay for the property. This process requires 24 hours of parking, which would imply that on the day of the deed, the seller of the property will not be able to immediately access the dollars. Today, with this process, no one would agree to sign a sale without the dollars in hand, which is why the market expects some solution."One way out could be for the Government to enable the purchase of the official dollar with the PAIS tax so that it is closer to the value of the MEP, another is to eliminate parking and a third option could be for the bank to sell the dollars at the time, charging a percentage due to the risk involved in absorbing the parking,” González Rouco proposes.
13
What does it depend on if the monthly payments do not skyrocket?
Since these are UVA credits, the monthly increase in installments will be determined by the evolution of inflation. In any case, the impact on the purchasing power of the person who took it will be conditioned by the update of his or her salary. In numbers, although the gap is shortened, salaries continue to lag behind inflation. In March they had a general increase of 10.3%, which placed them just below the 11% shown by the consumer price index (CPI). In the quarterly evolution they were also close, with an increase of 45%, versus 51.6%, respectively, but in the interannual measurement the gap is wide (208% versus 287.9%). These figures arise from the Salary Index published by the National Institute of Statistics and Census (Indec).Looking ahead, the drop in inflation starting in April opens the possibility for real salaries to stop falling and to begin a recovery process, although from very low levels. The evolution of inflation is fundamental because it determines the increase in the rate, but another variable to observe is the ups and downs that citizens' real wages go through, which since December have fallen by 25% compared to inflation. "The key is that wages grow more than inflation," González Rouco emphasizes, and recognizes that today salaries are at a historic low, which is why, if the economy grows, they should recover.
14
What determines that one loan is “cheaper” than another?
As they are UVA lines, the fee is made up of the nominal annual rate plus the monthly adjustment for inflation. This means that the “lower the rate, the cheaper the credit.”15
Are the rates of the loans launched high or low for the macroeconomic context of Argentina?
In order to analyze the interest rates proposed by the banks, it is important to compare them with countries that offer loans in indexed units of value, such as Chile, Uruguay and Colombia, which have an average rate of 4.75% and 7.5%, something not so far from what is currently being offered in Argentina with more unstable macroeconomic conditions.In any case, they can be considered high, considering the purchasing power of citizens. “That is why I believe that this wave of loans will not be a boom in the short term, since for the situation to be different, salaries have to improve,” says González Rouco. Along the same lines, Iván Kerr, who was the Secretary of Housing of the Nation and president of ProCreAr, analyzes: “We are still a little high, but it is logical. Chile lends at a fixed annual rate of 3%, for 30 years, but it has not had inflation of more than 10 points per year for 50 years.”
16
If the bank where I took out the loan launches another line with a lower rate, can it lower my rate?
No. A loan is a contract and the bank cannot change the rate of a current loan, but the client can request a refinancing of the loan. That is, the entity cancels the loan and exchanges it for another with better conditions with a lower rate, which ends up benefiting the borrower because they owe the same capital with a lower financial cost.17
Is it better to wait? Could lines with lower rates emerge?
Specialists consider that an average of 6% annually is a “logical” value for the country's current economic context.18
What are the advantages and disadvantages of taking a UVA credit?
UVA credit, as it is adjusted month by month for inflation, allows the initial payment to not be as high (as is the case with fixed-rate credits). In addition, it is not necessary to have a high average income to apply for it. This measure, with specific variations in their contexts, was taken by several countries, such as Mexico, Colombia and Chile more than 60 years ago, when they were also going through periods of inflation. That is, for a country like Argentina, with an interannual inflation of almost 290%, without an indexed unit, there would be no credit.However, there is criticism from broad sectors because, by adjusting for inflation, it can make the situation very difficult for the debtor, who is faced with having to pay very high installments that do not increase at the same rate as his salary.
19
What were the interest rates like when UVA credits were launched in 2016?
Current loan rates are similar to those during the mortgage boom of 2016 and 2018, but the difference with that time is that the average salary in dollars was much higher. Kerr explains that the fall in UVA mortgage loans in 2019 was not due to the model or the interest rates, but due to inflation. The former official points out that the families who took out the UVA loan in those years were not homeowners and could have been. “Inflation was out of control and they had to make an effort that hurt them. In any case, in dollars, they maintained their value and with the devaluation they liquidated the capital they owe to the bank,” he analyzes.20
Why are there no fixed-rate loans in Argentina?
A country with an interannual inflation of almost 290% prevents launching a line without an indexed unit of value that adjusts for inflation. “A fixed rate loan should be above 100%, which implies paying a very high fee, which few can access,” Kerr summarizes.21
How would a devaluation impact the rate?
The impact of a rise in the exchange rate -pass through- on prices could become a problem because it generates inflation. As a consequence, the installments will increase, but the debt will represent a smaller percentage of the value of the house, says González Rouco. For his part, Carlos Spina, partner of Argencons, the developer that created the Quartier brand, believes that we should not focus so much on the dollar, but on the relationship with salaries.22
If the exchange rate remains flat and inflation continues to decline, will dollar debt increase?
Yes, but the interpretation of the businessmen in the sector is that in this scenario salaries will have greater purchasing power, that is, people will have an increase in their income and, in addition, the properties that are at historically low sales values will increase.23
Should I continue renting or take out a loan?
It depends on each case. A concrete example: to buy a property worth US$125,000 –which could be a two-room apartment-, the monthly payment for a loan for US$100,000 (around $100,000,000), with a rate of 4.25%, is $505,000, while the average rent for a two-room apartment in Capital is around 430,322 pesos per month, according to data from Zonaprop, although there are listings for three-room apartments of 70 square meters, for example, in Caballito, which are rented at the same price as the payment ($505,000). The analysis is very relative: perhaps a person prefers to give up square meters or location and buy a property in a less developed neighborhood through a loan with a monthly payment that represents the same value as what they paid to rent a unit in an established area.The most optimistic specialists assure that for those who dream of being a property owner this is an ideal moment because salaries are at historic lows and should be restored, and the square meter is still low.
In this context, González Rouco makes a distinction: a 50-year-old person who is already at the peak of his career is not the same as a young professional with potential growth and chances of improving his income. In this case, the credit installment will represent an increasingly smaller percentage of his salary because his income will rise above inflation, which is the indicator by which the UVA credit is updated. However, the choice between buying and renting also depends on other factors such as job stability, whether the person has the necessary initial amount and the long-term projection (20 or 30 years) of what he wants to acquire as a home.
What must be taken into account is that new rental contracts usually close adjustments for inflation every three months and also do not have the impact of the annual rate. While banks adjust for inflation every month.
24
Is it a good time to buy a property?
Yes, because the properties are still at low prices compared to those of 2018, the height of the UVA credit boom. In any case, since the middle of last year, the real estate market began a process of rising sales values that could be accelerated by the reactivation that credit will generate in demand. Today the publication prices of properties located in the city of Buenos Aires is US$2,219/m², 0.8% more than the previous month, registering its largest monthly increase since April 2018, according to the latest Zonaprop survey. The same report details that in the first four months of the year, it accumulated an increase of 1.9%, and since July 2023, when the trend change occurred, the publication values accumulated an increase of 3.1%. In addition, the volume of apartments for sale discounted stopped decreasing in the last six months and remains stable at 18% in the first quarter of 2024.“The drop in the volume of discounted ads is one of the factors that explain the increase in the price registered since July 2023,” analyzes Leandro Molina, director of Zonaprop. Looking to the future and regardless of the credit effect, Martín Boquete, director of Toribio Achával, estimates an increase of 10% until the end of the year and up to 25% by the middle of next year. “It will be key for inflation to be stabilized and to be able to operate in dollars,” he concludes.
25
What property can I buy taking into account the maximum amounts granted by banks?
Although there are banks that do not have a limit, if we consider the maximum amount that some entities grant - up to $250 million - the applicant could buy up to a four-room apartment that is currently advertised for US$200,000 in the neighborhoods of the Federal Capital. It is important to clarify that, in all the announced loans, the borrower must have 20 or 30 percent of the value of the unit that he will buy. Therefore, if he requests $250 million, he will be able to acquire a unit of up to US$300,000, but he must have at least $50 million in advance.On the other hand, and taking into account the publication values that Zonaprop takes as a reference, a 40 square meter studio apartment located in the city of Buenos Aires has a publication price of US$ 98,109 for sale, while a two-room apartment of 50 square meters is worth 117,474 dollars and a two-bedrooms apartment of 70 square meters, 161,697 dollars. Outside the Federal Capital, the options become more accessible. A one-bedroom apartment of 50 square meters in the north zone is published at 108,752 dollars while a two-bedrooms apartment of 70 square meters is at 161,203 dollars. In the south zone, the average price of a one-bedroom apartment of 50 square meters is 79,026 dollars while a two-bedrooms apartment of 70 square meters has an average value of 116,171 dollars.
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