Real estate financing: know the options

Which Brazilian doesn’t dream of conquering a house of his own for his family and never having to worry about rent again? For this, real estate financing is one of the options to fulfill this desire, since the high value of real estate often does not allow a purchase with cash values.

So, since the very high cash investments make this acquisition an almost impossible mission, real estate financing is the best condition for the large payment amount to be paid in the long term.

Therefore, in today’s post, whether you are a real estate agent or a consumer, you will learn about different types of home or apartment financing that can speed up the purchase of your own home, in addition to knowing the main characteristics of each one of them. Check out!

How to calculate real estate financing?

When a person thinks about buying a property, they can often be following the guidelines of a real estate consultant , who will tell if the market conditions for the acquisition of a property are good or not.

After deciding to buy, usually the consumer leaves for research and visits to real estate with the help of a self-employed broker  or affiliated with a real estate, who will start to model this dream in his mind.

Many times, before deciding to buy, many consumers also think of several perspectives, such as buying a property on the floor plan, which will guarantee lower values, but still have to deal with the deadline for the completion of the project; or even decide for a used property, which is ready for housing.

In addition to these options, it is also possible to start looking for a letter of credit, before searching for the property, which will provide the total value of the type of property to be purchased.

In either case, if the person does not have the full value of the property on hand, they will need a mortgage to accomplish this objective.

Therefore, those who work as a real estate broker must have this information to make the client more secure and with more chances of closing the deal.

Real estate financing simulator: option to find out conditions

When the consumer decides to buy, this time also begins another sequence of surveys, to calculate the financing. A very practical resource to know if the installments will fit in the monthly household budget is the financing simulator.

Each bank will offer its attractions, and at this time, it is worth using simulate real estate financing in several of them. Every broker needs to know how to deal with these tools, to present solutions to their customers and help them to have a better shopping experience.

Calculating financing will take into account many issues, such as the value of the property, time to pay, income and age of the lender, and various other circumstances. But whether it is a Caixa real estate financing, Itaú real estate financing or BB (Banco do Brasil) real estate financing, it is necessary to pay attention to requirements, real estate financing rates and, especially, long-term interest.

In the real estate financing simulator, the calculation of installments will be carried out based on the type of financing provided by the bank.

What is the best table for real estate financing?

Currently, after the end of FGTS resources, at Caixa real estate financing and Banco do Brasil real estate financing, resources for the pro-shareholder line were suspended, which was aimed at used units.

This line provided financing for the purchase of properties with interest from 7.85% to 9.01% per annum and a period of 60 to 360 months for repayment.

Now, one option is to choose the lines that use FGTS resources, for new units, or other possibilities with lower mortgage interest rates, available through the Housing Finance System (SFH).

For higher value properties, there are also the SFI (Real Estate Financing System) programs, also by Caixa with interest from 10% to 11.25% per year. Within this program, there is also an option at Itaú Financing Imobiliário, which operates at 9% per year plus TR.

For the SFI, Santander real estate financing rates are 9.49% per year, plus TR.

But the other banks should continue to offer a pro-quota line next year. In this segment, there are Santander real estate financing and Bradesco real estate financing.

Therefore, when someone asks how to reduce the value of installments in a real estate loan, it is good to know that, many times, this feature is already offered within the type of loan offered by the bank and chosen by the client.

Types of real estate financing

1. SAC

The Constant Amortization System (SAC) is one of the most popular among Brazilians because it allows the first payment installments to be larger, so that the debtor deals with less and less expenses over time.

This is a good option for those who have already managed to save enough money to bring down the property and do not want to see their budget compromised, as amortization will make the amounts to be paid more affordable.

Roughly speaking, this promotes more security for the buyer, who is safe from possible unforeseen events and future uncertainties.

In addition to the decreasing interest rate, the monthly correction also takes place through the Reference Rate (TR), which is calculated from the Basic Financial Rate (an average of the applications of Bank Deposit Certificates and Receipts issued by financial institutions of the Brazil).

The rates on these investments — which are nothing more than debt securities used to raise funds by banks — tend to follow the evolution of the main interest rate in Brazil: the Selic. Therefore, the growth of one also affects the elevation of the other.

And both the interest rates and the TR are the same for all the modalities presented here, with the exception of “Minha Casa Minha Vida”. Although both impact the price of the property, few buyers pay attention to their fluctuations when signing the contract .

2. Price system

In the Price Table, mortgage payments are fixed and amortizations are increasing. Thus, the buyer starts to pay monthly installments that are lower than the SAC, for example, but goes on disbursing money over time for future installments, which become higher.

This means that, in the first few months, most of the installment amount is linked to the payment of interest, together with the amount of a small amortization. In the rest of the installments, the amount referring to interest is already smaller, as the outstanding balance decreases with the payment before.

In Brazil, the value of installments can vary according to inflation, as the TR is usually fixed after the closing of the real estate financing contract. The maximum period for finalizing the payment is 20 years, and only 25% of family income can be compromised.

In general, this is not a very interesting option for professionals who do not have their salary readjusted in the same proportion as their debt. After all, the installments can compromise your budget in the future.

3. SACRE

Recently, the Crescent Amortization System (SACRE) has been widely explored by Caixa Econômica Federal. It is a real estate financing with decreasing interest rates, constant installments and increasing amortization.

This option is somewhat similar to SAC, but instead of decreasing, monthly quotas remain relatively stable while amortization increases. And, over time, the value of the installments also tends to fall.

SACRE can be a good choice for those who do not have a very high purchasing power, since the value of the first installments is lower, compared to SAC, and the financing time has a higher limit than that offered by the Price System.

The maximum period for repaying the debt is 25 years, and the value of the installments can compromise up to 30% of the property’s consumer income .

But there is some controversy regarding this option. Recently, the Federal Regional Court of the 3rd. São Paulo region condemned Caixa for using the system.

Anyone using the Caixa real estate financing simulator will verify that the system applies interest on interest. But the bank denies that interest is capitalized on the financing.

4. My Home My Life

Created by the Federal Government in 2009, the “Minha Casa Minha Vida” program is a principle of social inclusion that aims to facilitate access to housing for low-income families.

By the way, for those who want the best mortgage rate, know that this is precisely the “Minha Casa Minha Vida” loan, which lends at much lower interest rates, with a salary cap of R$ 9,000 per month.

For this, the option offers real estate financing with less bureaucracy as well. The program is divided into tracks:

Families that earn up to R$1,800 per month

These people can receive a financing option for up to 100% of the total value of the property, and with reduced interest. In this case, the minimum value of each installment would be R$25, with a maximum term of ten years to pay off the debt. In this range interest is 5.11% per year.

Families that earn up to R$ 2,600

This is the 1.5 range, in which the government subsidy is R$45 thousand, with rates of R$5.11% as well.

Income of up to R$4,000

This is tier 2 in which the program’s interest for real estate financing is 6% per year.

Families that receive up to R$ 9,000 per month

With this income, the government will not subsidize the value of the house, but the interest continues at a value below what is practiced in the market, normally around 8%. In this modality, the debt can be paid in up to 30 years.

Families that do not benefit from this initiative will certainly have difficulties in finding options to finance properties that are so advantageous in the real estate market. Currently, around 10.5 million Brazilians are contemplated with this opportunity.

Finally, it is worth mentioning that “Minha Casa Minha Vida” has its own rules, which all banks must follow. Therefore, there is not much difference in the characteristics of financing in different institutions – although the bank that receives the most requests for this program is Caixa Econômica Federal.

Credit letter

Another modality of Caixa’s real estate financing is the FGTS Letter of Credit, for new and used properties, construction on its own land and renovations.

With an interest rate of up to 8.47% per year, this loan is intended for people earning up to R$ 9,000, and a payment period of 360 months.

In this case, Caixa requires a minimum of 30% for an entry.

If you still have questions, check the Caixa real estate financing simulator, click on products, and then on Housing.

What is the deadline for approval of real estate financing at the bank?

According to the Brazilian Association of Real Estate Credit Entities (Abecip), the average time to release a real estate loan is 40 days.

But some banks may have longer or shorter terms, because approval is based on careful analysis. But to speed up this process, have the necessary documents in hand in advance.

And now that you know the options, in fact, you can see that mortgages can be one of the most serious commitments a buyer will have to make over a lifetime, as you’re about to deal with monthly payments for a long time.

So, if you are his broker, be sure to inform everything and tell your client to carefully analyze all the options in the market, and choose the one that offers the best conditions in terms of interest rates and debt repayment time.

And remember: the client should only sign the contract after thinking hard — it’s even worth consulting a lawyer if you feel the need.