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The “fine print” of a mortgage loan: rates and taxes can add up to an extra cost of up to 5% - La Nación Propiedades
Source:
December 17, 2024
The average extra cost can be 2.26% and there are provinces where it reaches 5%; to this is added the delay time and the uncertainty generated in the process.
By Gabriela Origlia
FreePik
CORDOBA.- The reappearance of mortgage loans is an option for those who want to own a home in a country like Argentina, where it is estimated that the housing deficit affects some three million households , which translates into 20% of families. Since the first announcements this year, more financial entities have been adding proposals and there is competition to offer better rates and terms . Beyond the availability of resources, there are tax burdens that make the options more expensive. For example, for a property of 125 square meters valued at $150,000,000 , which the loan finances 75%, between rates and taxes a cost is added that on average reaches 2.26% and can reach up to 5% .
The data is derived from a study carried out by the Ieral of the Fundación Mediterránea on the provincial and municipal burdens that weigh on mortgage holders. The report underlines that the greater availability of savings to be mobilized from the financial system to the private sector is “ a necessary but not sufficient condition” to boost mortgage credit . It states that a key aspect is the “ procedures, regulations and impositions that must be fulfilled to formalize and register the purchase of a property” with a mortgage.
In order for a property to be transferred and act as collateral for a loan, it must pass a “ title study ,” which involves meeting a set of requirements that are verified through interactions with at least half a dozen offices. Once the transaction is complete, the transfer and the mortgage must be registered in the real estate property registry, for which another set of procedures must be completed .
These procedures, the study points out, require “exchange of documentation and information, processing time and payment of service fees and taxes . The complexity, delay and costs vary according to each province, but in general they are a significant barrier.” In most cases they are done manually; automation is “the exception.”
The average extra cost of taxes and fees on a mortgage is 2.26%. In Salta, for example, this level is close to 5%. Corrientes and La Pampa are just behind, while in Santa Fe, Chaco and San Luis they are around 4%. The opposite is true for Mendoza, Jujuy and Catamarca, which have the lowest incidence in the country.Daniel Basualdo
Regarding tax costs, they are made up of several tax rates, which in some provinces can be applied up to five, plus the stamp tax (on transfers and mortgages).
Although the average extra cost of taxes and fees on a mortgage is 2.26%, in Salta, for example, this level is close to 5%. Corrientes and La Pampa are just behind , while in Santa Fe, Chaco and San Luis they are around 4%. The opposite is true for Mendoza, Jujuy and Catamarca, which have the lowest incidence in the country.
“It is no exaggeration to say that the management weaknesses of the agencies involved in property registration are a barrier capable of preventing rapid progress in reducing the housing deficit,” says Osvaldo Giordano, director of Ieral, who believes that each province should prioritize the simplification and automation of procedures, in addition to eliminating impositions that make the operation more expensive. As an example, he points out that there are provinces where a fee is charged to verify that there is no debt or to check the cadastral or notarial report. “It is not only the economic cost but also the bureaucracy ,” he points out.
He believes that, “without compromising fiscal balance”, the stamp duty on the transfer of homes financed with mortgages and all the fees that the State charges to issue the different types of certificates can be eliminated. In addition, the economist highlights that the speed with which mortgages are issued affects the time it takes for banks to obtain funding.
With the announcement of the closure of, for example, the Ramos Mejía branch (La Matanza), the Nación filed several injunctions. The last one was in Córdoba, where federal judge Alejandro Sánchez Freytes, upheld the request to suspend the fees charged by the municipalities of the capital city and Jesús María. The entity has already obtained similar injunctions in General Deheza (also Córdoba), La Plata and Bariloche.
To set the overall context of credits and the weight of municipal taxes, it must be taken into account that those that weigh on the banking sector have an average of 4.6%, a figure that is four times above the average of those that fall on other sectors.
Another study by Ieral indicated that, on average, municipal taxes account for 16% of the profitability of a Banco Nación branch. Out of a universe of 86 municipal taxes surveyed, 27 different ways of calculating them were detected, ranging from a fixed monthly amount in pesos to an annual amount in pesos plus an additional 20%, including the number of tellers, the surface area of the branch, the total percentage of income including or excluding public securities.
The average effective municipal rate on the spread is 16% as of December 2023, although the record is 70% in San José de Feliciano, in Entre Ríos . Of 86 cities, 46 have a burden that exceeds that average. For example, in La Matanza (Buenos Aires) it is 65%; Posadas (Misiones) it reaches 59%; in Paraná (Entre Ríos), 49%, and in the city of Córdoba, 19%. It was also intended to make municipal rates “public” and that there would be a single way to liquidate and pay them. Although the diagnosis was correct, there was no progress.
www.buysellba.com
Source:
December 17, 2024
The average extra cost can be 2.26% and there are provinces where it reaches 5%; to this is added the delay time and the uncertainty generated in the process.
By Gabriela Origlia
FreePik
CORDOBA.- The reappearance of mortgage loans is an option for those who want to own a home in a country like Argentina, where it is estimated that the housing deficit affects some three million households , which translates into 20% of families. Since the first announcements this year, more financial entities have been adding proposals and there is competition to offer better rates and terms . Beyond the availability of resources, there are tax burdens that make the options more expensive. For example, for a property of 125 square meters valued at $150,000,000 , which the loan finances 75%, between rates and taxes a cost is added that on average reaches 2.26% and can reach up to 5% .
The data is derived from a study carried out by the Ieral of the Fundación Mediterránea on the provincial and municipal burdens that weigh on mortgage holders. The report underlines that the greater availability of savings to be mobilized from the financial system to the private sector is “ a necessary but not sufficient condition” to boost mortgage credit . It states that a key aspect is the “ procedures, regulations and impositions that must be fulfilled to formalize and register the purchase of a property” with a mortgage.
In order for a property to be transferred and act as collateral for a loan, it must pass a “ title study ,” which involves meeting a set of requirements that are verified through interactions with at least half a dozen offices. Once the transaction is complete, the transfer and the mortgage must be registered in the real estate property registry, for which another set of procedures must be completed .
These procedures, the study points out, require “exchange of documentation and information, processing time and payment of service fees and taxes . The complexity, delay and costs vary according to each province, but in general they are a significant barrier.” In most cases they are done manually; automation is “the exception.”
The average extra cost of taxes and fees on a mortgage is 2.26%. In Salta, for example, this level is close to 5%. Corrientes and La Pampa are just behind, while in Santa Fe, Chaco and San Luis they are around 4%. The opposite is true for Mendoza, Jujuy and Catamarca, which have the lowest incidence in the country.Daniel Basualdo
Regarding tax costs, they are made up of several tax rates, which in some provinces can be applied up to five, plus the stamp tax (on transfers and mortgages).
Although the average extra cost of taxes and fees on a mortgage is 2.26%, in Salta, for example, this level is close to 5%. Corrientes and La Pampa are just behind , while in Santa Fe, Chaco and San Luis they are around 4%. The opposite is true for Mendoza, Jujuy and Catamarca, which have the lowest incidence in the country.
“It is no exaggeration to say that the management weaknesses of the agencies involved in property registration are a barrier capable of preventing rapid progress in reducing the housing deficit,” says Osvaldo Giordano, director of Ieral, who believes that each province should prioritize the simplification and automation of procedures, in addition to eliminating impositions that make the operation more expensive. As an example, he points out that there are provinces where a fee is charged to verify that there is no debt or to check the cadastral or notarial report. “It is not only the economic cost but also the bureaucracy ,” he points out.
He believes that, “without compromising fiscal balance”, the stamp duty on the transfer of homes financed with mortgages and all the fees that the State charges to issue the different types of certificates can be eliminated. In addition, the economist highlights that the speed with which mortgages are issued affects the time it takes for banks to obtain funding.
Municipal rates
Two months ago, Economy Minister Luis Caputo announced that Banco Nación will close its branches in municipalities that “insist on abusing their neighbors through unjustified increases in municipal rates, which they also hide in national services.”With the announcement of the closure of, for example, the Ramos Mejía branch (La Matanza), the Nación filed several injunctions. The last one was in Córdoba, where federal judge Alejandro Sánchez Freytes, upheld the request to suspend the fees charged by the municipalities of the capital city and Jesús María. The entity has already obtained similar injunctions in General Deheza (also Córdoba), La Plata and Bariloche.
To set the overall context of credits and the weight of municipal taxes, it must be taken into account that those that weigh on the banking sector have an average of 4.6%, a figure that is four times above the average of those that fall on other sectors.
Another study by Ieral indicated that, on average, municipal taxes account for 16% of the profitability of a Banco Nación branch. Out of a universe of 86 municipal taxes surveyed, 27 different ways of calculating them were detected, ranging from a fixed monthly amount in pesos to an annual amount in pesos plus an additional 20%, including the number of tellers, the surface area of the branch, the total percentage of income including or excluding public securities.
The average effective municipal rate on the spread is 16% as of December 2023, although the record is 70% in San José de Feliciano, in Entre Ríos . Of 86 cities, 46 have a burden that exceeds that average. For example, in La Matanza (Buenos Aires) it is 65%; Posadas (Misiones) it reaches 59%; in Paraná (Entre Ríos), 49%, and in the city of Córdoba, 19%. It was also intended to make municipal rates “public” and that there would be a single way to liquidate and pay them. Although the diagnosis was correct, there was no progress.
www.buysellba.com
