Real Estate Sales Mortgage loans: the “hidden cost” you need to know between the rate and the total financial cost - La Nacion Propiedades

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Mortgage loans: the “hidden cost” you need to know between the rate and the total financial cost - La Nacion Propiedades






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Créditos hipotecarios: el “costo oculto” que hay que conocer entre la tasa y el costo financiero total

Es fundamental conocer todos los factores de un préstamo UVA para tomar decisiones informadas al momento de comprar una propiedad

www.lanacion.com.ar

February 28, 2025



It is essential to know all the factors of a UVA loan to make informed decisions when purchasing a property.



By Candela Contreras

Mortgage Loans: Buying a home is one of the most important financial transactions for most people. Freepik



The new UVA (Purchasing Value Unit) mortgage loans, which returned to the market at the end of April 2024 through 24 current banks—public and private—provide a solution to the quest to achieve the dream of owning a home .

Buying a property is one of the most important financial decisions a person makes in their life, so when thinking about taking out a mortgage loan it is essential to analyze the various variables that come into play , such as: the value of the property , the income of the applicant(s) , knowing the Annual Nominal Rate (ANR) offered by the bank, the installment-income ratio and the term ; however, we must not forget the Total Financial Cost (CFT) .



When analyzing which loan to take out , analysts agree that it 's key to look at the APR , since the rate is explicit in all current lines , but what's less clear are the costs associated with the transaction; this will determine whether one loan is cheaper than another .

In Argentina, the Central Bank requires banks to report their CFT (Taxpayer Identification Number) to ensure transparency, but many people are still unaware of this. Key questions to consider are clarified below:

1) Rate vs. Total Financial Cost: What's the difference?​

The CFT is a mandatory variable imposed by the BCRA , as the regulatory body, and includes all fees associated with the transaction . It is a more accurate measure of the actual cost of a loan. The APR corresponds to the interest rate applied to the principal to calculate the interest payment in a year. Therefore, the CFT includes the APR in addition to other expenses, such as:

• Fire and life insurance
• Opening and credit evaluation fees , although they are usually discounted
• Taxes: VAT (21%) on interest
• Expenses and taxes related to obtaining the loan (notary fees for the mortgage deed or stamp duty, depending on the province)

The CFT includes the TNA, in addition to other expensesArchive

2) How much can the TNA differ from the CFT?​

“The gap between the annual interest rate (AER) and the annual percentage rate (CFT) varies by bank and by additional components, but for mortgage loans, it's typically 0.5% to 3% ,” says Alan Daitch, CEO and founder of Tasa Tasa. For example, at Banco Ciudad , the difference is just 0.24% (AER 6.9% vs. CFT 7.14%).

3) The main factors that widen the gap​

According to Daitch, CFT may differ from TNA more broadly due to several factors , such as:

• Longer terms (such as 30 years), where accumulated insurance makes the CFT more expensive
• Location of the property in areas considered high risk , which raise the cost of fire insurance.

4) Why is it key to look at the CFT?​

While the annual interest rate (APR) is the main factor determining the cost of credit , changes in the annual interest rate (AER) can significantly influence the monthly payment . Analysts recommend always asking for the total APR, as credit calculators use this variable, not just the annual interest rate (AER).

Federico González Rouco, an economist specializing in housing, warns that " the rate generally represents between 90% and 95% of the CFT , because almost all banks have similar insurance and administrative costs." However, communication about the CFT remains a challenge, as "the rate is an easy concept to quickly understand, but the CFT is a more accurate measure of the real cost of credit ."

5) Are there banks that, despite having the same APR, differ in the CFT?​

"It would be strange if the difference were so large, since the additional costs are similar for different banks," explains the CEO of Tasa Tasa.

6) How did the rate hikes of some entities influence the CFT?​

Starting in November, it became known that 12 banks had adjusted their terms , primarily increasing the Annual Nominal Rate (ANR) and, in some cases, shortening terms or modifying loan amounts . With these increases, rates are now on average 7.4%, up from 5.5% . "This means a 20% increase in the down payment (and required income) on a 25-year loan," explains González Rouco.

“The increase in interest rates has an immediate effect on the CFT,” Daitch explains. The increase in the rate means that the interest a person pays on the loan increases, and since interest is one of the main components of the CFT, “the complement ends up increasing.” In other words, if there is an increase in the APR, the CFT will increase accordingly .

"Regarding other expenses such as insurance and commissions, they tend to remain fixed because they don't depend on the interest rate, thus increasing the weight of interest within the CFT and narrowing the gap between the two," adds the platform's founder.

7) Which bank has the lowest APR on the market?​

The lowest APR currently belongs to Banco Municipal de Rosario , with 3.04% for customers who deposit their paychecks with the bank. The highest, according to information reported to the BCRA, is held by Brubank, with 14%.

The lowest CFT today is 3.04%.Daenin - Shutterstock

8) The CFT bank by bank​

According to the survey conducted by Tasa Tasa , based on data from the BCRA, while the differences in the CFT depend on the financial institution and the credit conditions:

Entities with the lowest CFT​

​

Municipal Bank of Rosario:​

• 3.04% (3% APR) for clients with payroll accounts
• 4.28% (4.2% APR) without payroll account

Bank of the Province of Neuquén:​

• 3.56% (3.5% APR) with payroll account and 4.59% (4.5% APR) without payroll account, up to $50 million
• 8.84% (8.5% APR) with payroll account and 9.93% (9.5% APR) without payroll account, up to $100 million

Bank of Chubut:​

• 3.56% (3.5% APR) with salary account
• 8.3% (8% TNA) without payroll account

City Bank:​

• 3.59% (3.5% TNA) for the downtown area and southern area of CABA
• 7.15% (TNA of 6.9%) for the general market

Entities with intermediate CFT​

​

Banco Nación:​

• 4.7% (4.5% APR) with salary account
• 8.41% (8% APR) without payroll account

Bank of Corrientes:​

• 5.27% (APR 5%) with salary account
• 6.57% (APR of 5%) without payroll account

Patagonia Bank:​

• 5.54% (APR 5.4%) with salary account
• 8.19% (7.9% APR) without payroll account

Credicoop Bank:​

• 5.77% (APR 5.5%) with salary account
• 6.83% (6.5% APR) without payroll account

Bank of Santa Fe / Bank of Entre Ríos / Bank of Santa Cruz:​

• 5.93% (APR 5.5%) with salary account
• 8.03% (7.5% APR) without payroll account
• Banco de Santa Cruz : 9.46% (7.5% APR) without payroll account

Bank of San Juan:​

• 6.66% (APR 5.5%) with salary account
• 8.03% (7.5% APR) without payroll account

Dino Bank:​

• 6.66% (6.5% APR) with salary account
• 7.89% (7.7% APR) without payroll account

Comafi Bank:​

• 6.66% (APR 5.5%) with salary account
• 7.76% (7.5% APR) without payroll account

BBVA:​

• 6.79% (6.5% APR) with salary account
• 10.02% (9.5% APR) without payroll account

Macro Bank:​

• 6.86% (6.5% APR) with salary account
• 8.47% (8% APR) without payroll account

ICBC:​

• 7.12% (6.9% APR) with salary account
• 9.27% (8.9% APR) without payroll account

BANCOR (Bank of Córdoba):​

• 7.24% (6.9% APR) with salary account
• 9.35% (8.9% APR) without payroll account

Banco Santander:​

• 7.47% (7% fixed APR)

Banco Galicia:​

• 8.7% (7% TNA) with salary account
• 10.25% (9% APR) without payroll account

Entities with the highest CFT​

​

Supervielle Bank:​

• 8.92% (TNA of 8.5%)

Bank of the Sun:​

• 9.14% (9% APR) with salary account

Brubank:​

• 9% for salary account
• 14% without payroll account

Mortgage:​

• 10.26% (overall TNA of 9.5%)

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