Newcomer Mortgages? Possible?

[LainaINK]

Hello everyone,

Any idea about the current mortgage situation in BSAs? Would a couple with citizenship and non peso set income have any chances or has it turned into a “forget about it” situation?

Many thanks

 

[RinderHerts]

The mortgages that acquaintances have secured here are typically short-term, lasting five years or less. They come with variable interest rates tied to the government peso and require collateral equal to or exceeding the loan amount. Essentially, they bear resemblance to what's commonly known as a bridge loan in the United States. It's worth noting that the majority, approximately 95%, of property transactions in Argentina are conducted in cash. It's advisable to approach the prospect of obtaining a mortgage with cautious expectations.

 

[earlyretirement]

Ha. No, it won't happen. Cash is king. If you don't have enough savings you're not going to be able to. But keep in mind if you're in the USA and a few other countries, you can cash in your 401K or IRA and you can "self-direct" it and buy real estate. I've done this many times with my investors. They all did incredibly well and their ROI was much higher than the other things they were investing in.

Consult your financial professional in your home country to inquire about this.

But if you don't have enough savings, FORGET about it. You're NOT getting a mortgage in Argentina but also most foreign countries. I've owned in Mexico, Uruguay, Brazil, Colombia, Argentina and it's always been 100% cash.

 

[CariDei]

Certainly! There are mortgage options in Argentina that can extend for 180-360 months. These mortgages are denominated in UVAs (Unidad de Valor Adquisitivo), and as of now, 1 UVA is equivalent to 328.75 ARS, a rate set by the government BNA. Borrowers should demonstrate that their income or salary will increase at a rate similar to inflation, which is often tied to the USD exchange rate.

Despite the seemingly high variable interest rate, currently around 116%, when considered against the USD, it becomes more reasonable. The fixed interest rate is applied to the number of UVAs in the amortization table. The amortization structure follows the standard table used in other countries.

As an example, if someone took a loan of $50,000 USD on June 5th, 2017, when 1 UVA was 19 ARS and 1 USD was 16.0305 ARS, the calculation would be as follows:UVA amount=Loan amount×USD rateUVA rateUVA amount=UVA rateLoan amount×USD rateIn this case, it would be 50,000×16.030519=42,185.521950,000×16.0305=42,185.52 UVAs.

The fixed interest rate for that day for a 180-month credit was:

• TNA: 4.90%
• TEA: 5.01%
• TEM: 0.40%
• CFT Nominal Anual con IVA: 4.91%
• CFT Nominal Anual sin IVA: 4.91%

It's essential to note that this explanation may not cover all the intricacies, and individual loan details can vary. Prospective borrowers are advised to consult specific banks or financial institutions for comprehensive information on UVA-denominated mortgages.

 

[earlyretirement]

Certainly! There are mortgage options in Argentina that can extend for 180-360 months. These mortgages are denominated in UVAs (Unidad de Valor Adquisitivo), and as of now, 1 UVA is equivalent to 328.75 ARS, a rate set by the government BNA. Borrowers should demonstrate that their income or salary will increase at a rate similar to inflation, which is often tied to the USD exchange rate.

Despite the seemingly high variable interest rate, currently around 116%, when considered against the USD, it becomes more reasonable. The fixed interest rate is applied to the number of UVAs in the amortization table. The amortization structure follows the standard table used in other countries.

As an example, if someone took a loan of $50,000 USD on June 5th, 2017, when 1 UVA was 19 ARS and 1 USD was 16.0305 ARS, the calculation would be as follows:UVA amount=Loan amount×USD rateUVA rateUVA amount=UVA rateLoan amount×USD rateIn this case, it would be 50,000×16.030519=42,185.521950,000×16.0305=42,185.52 UVAs.

The fixed interest rate for that day for a 180-month credit was:

• TNA: 4.90%
• TEA: 5.01%
• TEM: 0.40%
• CFT Nominal Anual con IVA: 4.91%
• CFT Nominal Anual sin IVA: 4.91%

It's essential to note that this explanation may not cover all the intricacies, and individual loan details can vary. Prospective borrowers are advised to consult specific banks or financial institutions for comprehensive information on UVA-denominated mortgages.

But these are NOT available for foreigners. And even for locals it's almost impossible. Yes. there were a few but for all intent and purposes they really don't exist. Almost all property purchases/sales are CASH.

 

[LainaINK]

Certainly! There are mortgage options in Argentina that can extend for 180-360 months. These mortgages are denominated in UVAs (Unidad de Valor Adquisitivo), and as of now, 1 UVA is equivalent to 328.75 ARS, a rate set by the government BNA. Borrowers should demonstrate that their income or salary will increase at a rate similar to inflation, which is often tied to the USD exchange rate.

Despite the seemingly high variable interest rate, currently around 116%, when considered against the USD, it becomes more reasonable. The fixed interest rate is applied to the number of UVAs in the amortization table. The amortization structure follows the standard table used in other countries.

As an example, if someone took a loan of $50,000 USD on June 5th, 2017, when 1 UVA was 19 ARS and 1 USD was 16.0305 ARS, the calculation would be as follows:UVA amount=Loan amount×USD rateUVA rateUVA amount=UVA rateLoan amount×USD rateIn this case, it would be 50,000×16.030519=42,185.521950,000×16.0305=42,185.52 UVAs.

The fixed interest rate for that day for a 180-month credit was:

• TNA: 4.90%
• TEA: 5.01%
• TEM: 0.40%
• CFT Nominal Anual con IVA: 4.91%
• CFT Nominal Anual sin IVA: 4.91%

It's essential to note that this explanation may not cover all the intricacies, and individual loan details can vary. Prospective borrowers are advised to consult specific banks or financial institutions for comprehensive information on UVA-denominated mortgages.

Many thanks for the great info!

 

[LainaINK]

But these are NOT available for foreigners. And even for locals it's almost impossible. Yes. there were a few but for all intent and purposes they really don't exist. Almost all property purchases/sales are CASH.

I know at least 10 people who have mortgages. It’s not always cash

 

[earlyretirement]

I know at least 10 people who have mortgages. It’s not always cash

Yes but find out when they got them. Some people that made a lot got them but even those you had to have a HUGE down payment. But those now mostly don't exist like before. Hopefully they come back but I'm not holding my breath and I think the expectation would be not getting a mortgage. Ask your friends the terms (how much house, how much down payment, how much payments? ). That's great they are one of the few that got one.

 

[LainaINK]

Yes but find out when they got them. Some people that made a lot got them but even those you had to have a HUGE down payment. But those now mostly don't exist like before. Hopefully they come back but I'm not holding my breath and I think the expectation would be not getting a mortgage. Ask your friends the terms (how much house, how much down payment, how much payments? ). That's great they are one of the few that got one.

Priced in UVAs. 20% deposit. One did 10 months ago. UVA explains it all.

 

[KurtCoue]

My account rep at Galicia told me they don't exist beyond a page advertising they do, the risk isn't worth the reward.

 

[earlyretirement]

My account rep at Galicia told me they don't exist beyond a page advertising they do, the risk isn't worth the reward.

Ha, ha. Exactly. Take a look at the % of these compared with the total market. It's like a fairytale dream. It might exist but it's very rare. Even bankers will tell you the same thing. However, if anyone can quality and find them, go ahead and take them. But in 20+ years I've never seen a foreigner (even with a DNI) get one.

 

[UnTops]

My daughter and son-in-law secured a conventional mortgage back in 2018 to purchase an apartment, utilizing a specific program introduced during the Macri administration. Although the program was terminated with the change in administration, their existing mortgage remains valid.

Aside from this case, I haven't come across many instances where individuals didn't opt for cash transactions when acquiring real estate. Of course, exceptions might include squatters, thieves, and certain politicians, to name a few (apologies for the redundancy).

 

[earlyretirement]

My daughter and son-in-law secured a conventional mortgage back in 2018 to purchase an apartment, utilizing a specific program introduced during the Macri administration. Although the program was terminated with the change in administration, their existing mortgage remains valid.

Aside from this case, I haven't come across many instances where individuals didn't opt for cash transactions when acquiring real estate. Of course, exceptions might include squatters, thieves, and certain politicians, to name a few (apologies for the redundancy).

Yes, these were extremely rare, lasted a short while and not many people got them. GREAT for the very few that did but it wasn't a lot. Do the due diligence and see the # and it was tiny. You can go on websites like https://www.reporteinmobiliario.com/. You will have to pay a subscription but in pesos it's very cheap. All the data is there. I've been reading for years.

I heard a rumor that a website is translating all those articles to English and will be posting free.

Squatters I could write a book on! I know some clients that bought buildings in San Telmo and they thought they were getting a good deal. It took them 4 YEARS to get them out and they had to get a court order and took the Argentine Army to get them out. 200 people living in his building.

 

[MarcosTos]

The lack of credit makes you wonder how banks earn money in Argentina. In Argentina banks take your money and earn interest by depositing it at the central bank. This way, the central bank has more funds and the government can spend more, it has all been "cleverly" engineered.

 

[KurtCoue]

Just saw this while browsing the news:

Short terms and specific purposes. With mortgage loans verging on extinction, what loans exist and what the fine print hides

 

[earlyretirement]

Just saw this while browsing the news:

Short terms and specific purposes. With mortgage loans verging on extinction, what loans exist and what the fine print hides

LOL. Yes, this is what most of us have been saying for a while now. Yes, SOME people got them but they are rare. Not sure why people want to try to argue around this fact.

The lack of credit makes you wonder how banks earn money in Argentina. In Argentina banks take your money and earn interest by depositing it at the central bank. This way, the central bank has more funds and the government can spend more, it has all been "cleverly" engineered.

Well, you have to remember the banking system in Argentina is essentially broken. I'm not sure if it's the same % and fees. But remember in Argentina for corporations it's illegally to do a certain amount paying more than $X in cash. Now it's probably shifted more towards wire and electronic transfers but it used to be the bank charged you something like 0.6% EVERY time you wrote a check or sent a wire and EVERY time you deposited a check or got funds 0.6%. But I assume they are still charging this scam tax to corporations for every transaction. So that means they are making 1.2% on every transaction! And I believe it's essentially illegal to take payments outside of Argentina (although many, many do).

But the banks are a scam essentially charging companies for every time they deposit or send. THAT is how they make money. They make doing business in cash illegal and forcing you to use a bank and they charge nosebleed prices for it. A totally inefficient and inefficient system and society.

To outsiders or even ex-pats that never have to see this or pay this they don't understand how things work. You just read articles online and think you're an expert and know or understand how Argentina works. But you don't.

Can you imagine what people in the USA would do if they tried taxing you to deposit money???!!! They would pull a "Milei" and blow the place up! Like literally.

The system is horribly complex there. I had my company and had to have 7 in-house accountants. We were managing the properties and taxes for hundreds and hundreds of foreigners and the saving grace was we never had issues as they basically wrote the laws on these things. It was comical them teaching AFIP the laws.

 

[CariDei]

Just saw this while browsing the news:

Short terms and specific purposes. With mortgage loans verging on extinction, what loans exist and what the fine print hides

This type of information is invaluable as it provides concrete data and thorough research. While anecdotal information and personal experiences are interesting, I find mainstream media reports, such as the one from La Nación in July, to be more reliable. According to the report, mortgage loans in Argentina are currently at historically low levels.

translated via Google:

“After the failure of UVA credits, today these credits are almost non-existent. “The macroeconomic situation does not favor access to new financing and restricts the supply of private banks,” said Guillermo Barbero, partner at First Capital Group. Some entities, however, offer options. Banco Provincia is one of them. It lends up to US$250,000 at the official exchange rate ($365.50), which today would be equivalent to $91 million. The money can be used for the purchase, renovation, expansion, construction or completion of homes and the applicant has a period of 20 years to return it. Today, the financial cost is 136.17% annually. However, to access that amount, you must face an initial fee of $6,749,106 (fee plus interest).There is a similar credit for the purchase of land, premises and garages, but the financial cost amounts to 161.44%. At Banco Hipotecario, UVA credits are still valid (adjusted for inflation, plus a financial cost of between 14.6% and 17.01% annually). Up to $20 million are offered for the acquisition or construction of a house (US$54,720 to the official) and $10 million for expansion and completion (US$27,360). The money is delivered in pesos, but by resolution of the Central Bank, beneficiaries can access the official dollar without taxes, at $365.50. The term is 30 years.”

 

[earlyretirement]

This type of information is invaluable as it provides concrete data and thorough research. While anecdotal information and personal experiences are interesting, I find mainstream media reports, such as the one from La Nación in July, to be more reliable. According to the report, mortgage loans in Argentina are currently at historically low levels.

translated via Google:

“After the failure of UVA credits, today these credits are almost non-existent. “The macroeconomic situation does not favor access to new financing and restricts the supply of private banks,” said Guillermo Barbero, partner at First Capital Group. Some entities, however, offer options. Banco Provincia is one of them. It lends up to US$250,000 at the official exchange rate ($365.50), which today would be equivalent to $91 million. The money can be used for the purchase, renovation, expansion, construction or completion of homes and the applicant has a period of 20 years to return it. Today, the financial cost is 136.17% annually. However, to access that amount, you must face an initial fee of $6,749,106 (fee plus interest).There is a similar credit for the purchase of land, premises and garages, but the financial cost amounts to 161.44%. At Banco Hipotecario, UVA credits are still valid (adjusted for inflation, plus a financial cost of between 14.6% and 17.01% annually). Up to $20 million are offered for the acquisition or construction of a house (US$54,720 to the official) and $10 million for expansion and completion (US$27,360). The money is delivered in pesos, but by resolution of the Central Bank, beneficiaries can access the official dollar without taxes, at $365.50. The term is 30 years.”

I like the "almost non-existant" part of it. That's pretty much what some of us said several posts ago. Much of what some of us are posting isn't "heard on the street". It's because we live it, it's our craft, our industry and our passion. Our friends all work in banks, we have contacts with the political system in Buenos Aires.

Some people on this board aren't just posting to post but they are trying to educate and help the masses.

 

[CariDei]

I like the "almost non-existant" part of it. That's pretty much what some of us said several posts ago. Much of what some of us are posting isn't "heard on the street". It's because we live it, it's our craft, our industry and our passion. Our friends all work in banks, we have contacts with the political system in Buenos Aires.

Some people on this board aren't just posting to post but they are trying to educate and help the masses.

Yes it has been several days since I agreed with your points and posted news articles to correspond to your statements. I appreciate you sharing experience, though I also need to search out real numbers from news sources. When they matched your statements, I posted to help others who may be wondering the same.

 

[earlyretirement]

Yes, thanks so much for posting all of those supporting articles. Sometimes even online they will say "available" but my point is they are NOT. Like the other posters mentioned, if you go talk to a bank they laugh and say no way or they haven't been offered for a while. Such is life in Argentina where the right hand doesn't know what the left hand is doing. Thanks for the valuable contribution to this website. This is what OUR community is all about and why it's the best source of Ex-pat news in Buenos Aires in the world.

Have a great day.