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Pay the mortgage loan installment or continue renting: The response to tenants in concrete examples - La Nacion Propiedades
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Pagar la cuota del crédito hipotecario o seguir alquilando: la respuesta a los inquilinos en ejemplos concretos
Tanto los créditos hipotecarios como los alquileres tienen sus ventajas y desventajas, y la elección entre uno u otro dependerá de las circunstancias individuales de cada solicitante
www.lanacion.com.ar
April 29, 2024
Both mortgage loans and rentals have their advantages and disadvantages, and the choice between one or the other will depend on the individual circumstances of each applicant.
By Candela Contreras
Pay a loan installment or continue paying rent?
In the complex labyrinth of financial decisions , where the dream and opportunities of owning one's own home seemed very difficult to achieve, new actors entered the universe of mortgage loans, offering opportunities for the acquisition, construction, renovation, improvement and expansion of homes.
This week, the real estate market was surprised by the launch of mortgage loans , after five years of their almost non-existence, by Banco Hipotecario , Banco Ciudad and Supervielle . “This news is a very good sign that no one wants to be left out of the market and that the banks are betting heavily on the normalization of the economy,” analyzes Federico González Rouco, an economist on the Empiria team , Hernán Lacunza's consulting firm, who recently launched the book The dream of one 's own home .
Furthermore, the economist adds that the inclusion of a private bank , such as Supervielle, in this movement means that financial entities will begin to compete to offer the best rates , which will translate into more accessible installments for those who want to buy a department. Competition between banks could mean not only lower rates, but also greater choice and flexibility for potential buyers.
Three banks launched mortgage credit lines in a few days
The Banco Ciudad loan reaches financing of up to $250 million for a term of up to 20 years and 75% is financed in UVAs plus an interest rate of 5.5% TNA (Annual Nominal Rate) with a rate benefit at 3.5% for those who buy housing in the downtown area , and can be requested starting this Monday, April 29, by clients who credit their salaries into bank accounts.
While on the Mortgage side , it is also a line of credit in UVAs with a rate of 8.5%. While for those who are clients of the bank and have assets there, there is a benefit of 50% of the fee during the first year, that is, 4.25% for 12 months. This credit is for up to $250 million with financing of 80% of the total value of the property (the remaining 20% must be paid by whoever takes out the credit) for 30 years . It is officially launched on the market during the month of May , with a date yet to be confirmed.
Supervielle also announced that it is adding its own line of mortgage loans and in the first days of May it will announce the conditions and requirements to request it through its website.
Now, in the midst of this panorama, the eternal question arises: should I pay a loan installment or continue paying rent? Which of the two will be taller?
The loan fee vs. renting an apartment in CABA
The data shows that, in many cases, monthly mortgage loan payments can be higher, comparable or even lower than rental costs , especially if the possibility of obtaining preferential rates as a bank customer is considered.If we take the case of the credit granted by Banco Hipotecario , which offers two types of installments to pay in the first year, one with a rate of 8.5% for the open market and another preferential rate of 4.25% for clients. with credit of assets in the bank only for the first 12 months, an example would be like this: for an apartment that costs US$125,000 (around $125,000,000) the loan required would be $100,000,000 for 30 years. Those who are clients and credit their salary there will pay a fee of $505,000 (rate 4.25%) , while those who are not will pay $782,000 per month (rate 8.5%).
Example of quota vs. rent with Banco Hipotecario
For US$125,000 (around $125,000,000) with a fee of $505,000 or $782,000, as the case may be, you can buy:- An apartment with a 44 m² room, renovated to new in Riobamba at 4400, in the Balvanera neighborhood . While one with similar characteristics a few meters away, at Junín 600, is rented for $270,000.
- A 40 m² two-room apartment in Arévalo at 1700, in Palermo Hollywood with a balcony that is 10 years old. For its part, in relation to rent, a similar unit is rented for $400,000 in Arévalo at 2100.
While, if analyzed in terms of rent, for the value of the installments offered by the credit to be an owner, a tenant can obtain the following in the market:
- With a fee of $505,000 (clients who credit their assets at Banco Ciudad) a three-room, 70 m² property is rented in Rivadavia at 6100, in the Buenos Aires neighborhood of Caballito .
- With the value of the fee of $782,000 (clients without salaries), a brand new four-room apartment of 75 m² is rented in Ayacucho at 900, Recoleta .
Example of quota vs. rent with Banco Ciudad
On the other hand, the loan from Banco Ciudad , which provides financing for 75% of the value of the property, in the case of an apartment of $133 million (around US$133,000) to be paid in 20 years with a rate of 5.5%, and of 3.5% as a benefit for those who buy a home in downtown Buenos Aires, a loan of $100 million will be provided. Here the monthly fee will be $690,000 (AMBA, Mendoza, Córdoba, Salta and Tucumán) and $582,000 for the microcenter . In this case, for US$133,000 you can buy:- A 40 m² studio apartment in Agüero at 1900, in Barrio Norte, seven years old and the building has amenities such as laundry, gym, swimming pool and solarium. In this case, one with similar characteristics at Pacheco de Melo 2734 is rented for $450,000 .
- A two-room apartment of 47 m² in Villa Urquiza , in Valdenegro at 3000, seven years old and with a balcony in front. The rental value of an apartment with similar characteristics is published around $490,000.
- As for the downtown area, there is a three-room apartment located in Córdoba at 400, 65 m² and 70 years old , with a recycled kitchen and bathroom. On the other hand, a rental in that area of a similar property, at Viamonte 400, is sold for $400,000.
When analyzing what type of apartments can be rented for the value of the Banco Ciudad credit installments , the following publications are presented:
- With the value of the monthly payment of $690,000: a four-room apartment of 100 m² recycled to new in Azcuénaga at 1400, Recoleta.
- With a value of $582,000, in the downtown area: a four-room unit with a balcony in front and 80 m², in Moreno at 800.
For its part, when analyzing the average price by neighborhood, taking the monthly rental value of a two-bedroom, in March it was around $422,502 in CABA, according to the latest Zonaprop report . In this case, the most expensive amounts in the city are located in Palermo, Núñez and Belgrano, with costs around $497,645, 476,741, 471,623, respectively. While on the opposite side, La Boca is the most accessible area with an average value of $321,253 per month.
Rent or buy? The dilemma of those who rent and want to have their home
However, the choice between buying and renting also depends on other factors such as: job stability, the initial amount needed (20% or 25% in each bank) and the long-term projection (20 or 30 years) of what is want to acquire as a home: what weighs more when making the decision and what is resigned .
What will happen to the rental market with credit competition
Sources consulted by LA NACION clarify that if the previous rental law had been maintained, the effect would have been immediate but today with greater freedom to establish the conditions of the contracts and an improvement in annual profitability that today is between 4% and 5% – in the pandemic it was 2% -, the owners will not make the decision to sell the property they offer for rent: “they will think about it.” “The rent/price ratio stands at 4.67% annually and fell in the last month due to the slowdown in the increase in rental prices. Today it takes 21.4 years of rental to recover the investment, 4.2% less than what was required a year ago,” explains Leandro Molina, director of Zonaprop. Balvanera and Paternal remain the best neighborhoods for investors seeking income, with an average return of 5.7%, 5.6%, respectively. While Palermo (4%) and Belgrano (4.1%) are the ones that generate the least profitability.Ultimately, the decision to migrate from rent to sale will depend on each case and whether the owner has the “need to get rid of the property” with an advantageous price for the buyer . “There may be specific situations, but in a country with three million people who rent and only 100,000 mortgage loans generated at the time of the biggest boom in the last 25 years, which was 2017-2018, I don't think it will move the compass,” concludes Rouco.
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