The Brazilian is hiring more real estate financing. This statement is from the Brazilian Association of Real Estate Credit and Savings Entities (Abecip), which points to an increase of 74.4% in financed properties in August 2020, compared to the same month last year.
And considering the numbers, with the Selic rate still low, this percentage tends to increase. With the offer of credit with more affordable interest, this movement in the real estate market was to be expected.
For people who dream of owning their own home, it is a good opportunity to get the plan off the paper.
But when this decision is made, it is very common to have doubts about this type of loan. And that’s what we’re going to talk about in this post. Check out!
1. What are the types of real estate financing that exist today?
There are two main real estate financing systems, the Housing Finance System (SFH) and the Real Estate Finance System (SFI).
They are used for the acquisition, construction, renovation, expansion, production of real estate and purchase of construction material.
The main difference between the SFH and the SFI is that the first establishes some conditions for real estate financing, such as a limit on the appraised value of the property and the interest rate, for example.
In the second case, these conditions are not pre-established, allowing free negotiation between customers and financial institutions.
2. How does the Housing Finance System (SFH) work?
An SFH financing must have the following characteristics:
• Financing can reach a maximum of 80% of the property’s value;
• The maximum appraised value of the property cannot exceed the price of R$1.5 million (Central Bank);
• The installment cannot commit more than 30% of the contractor’s monthly gross income;
• The debt repayment term can reach up to 35 years (420 months);
• The purchase must be made exclusively by an individual;
• The resource base comes from deposits in savings accounts and the Severance Pay Fund (FGTS);
• The interest rate can be a maximum of 12% per year, plus the Referential Rate (TR);
• The property must be residential and urban.
3. What are the financing costs by the Housing Finance System (SFH)?
For the contracting, there are expenses with the evaluation of the property, issuing the contract and, after signing, the transfer tax ( ITBI ) and notary public services for registration of the contract, which may represent up to 5% of the property’s value.
The monthly charges include the installment (amortization and interest), the administration fee and the two insurances (one covers death or permanent disability and the other physical damage to the property).
In 2020, the average interest rate charged by financial institutions that operate in real estate investments within the scope of the SFH is between 7% and 8% per year, with a downward trend due to the gradual reduction in the basic interest rate (Selic).
Understand how the Selic rate influences real estate financing
4. How does the Real Estate Financing System (SFI) work?
This modality encompasses all loans that do not comply with the rules established for the SFH.
Here, the operations are not subject to the limitations of interest rates, property value, type of property (can be residential and urban, as well as commercial and rural) and other conditions such as in the SFH, varying according to the policy of credit and autonomy of each financial institution.
5. Can anyone get a mortgage?
At first yes, but it is necessary to fulfill some minimum criteria. Generally, financial institutions assess whether the client’s income is sufficient to pay monthly installments and take into account the commitment of income with other financial obligations previously assumed, as well as the expenses necessary to meet their existential minimum.
According to the Central Bank, banks adopt as a parameter the commitment of a maximum monthly income of 30%.
In addition to these criteria, banks can carry out other analyzes to grant or not the loan.
Caixa, for example, lists the following conditions in its mortgage loan booklet:
• Be a native or naturalized Brazilian;
• If a foreigner, hold a permanent visa in the country;
• Registration without restrictions. They are consulted at: Serasa, SPC, BACEN and Federal Revenue.
• Economic-financial capacity to pay the monthly installment;
• Civil capacity or emancipated minor with 16 full years.
6. How is the value of the benefits calculated?
In general, the installment is calculated according to the repayment installments, interest and accessories (insurance and administration fees).
Understand the amortization systems: SAC and Price Table System.
7. What is the installment limit for a mortgage?
The National Monetary Council and the Central Bank of Brazil do not establish a maximum term for operations carried out by the Real Estate Financing System (SFI).
As for the Housing Finance System (SFH), the debt settlement period can reach up to 35 years.
8. What is the best way to finance a property?
For those who do not have a financial reserve, the best option is to analyze the family budget and the amount of the installments following the formula: to finance 80% of the property, the installment amount must not exceed 15% of your monthly income. If you go over, it’s better to finance a smaller amount.
9. What is the lowest mortgage rate?
The Selic rate dropped to levels of 2% a year in 2020, and financial institutions announced a drop in interest rates on real estate credit lines.
According to a survey carried out by the mortgage lender MelhorTaxa and disclosed by Valor Investe , the average rate in the market is 7.16% per year, plus the correction of the Referential Rate (TR), which is currently at zero.
Check out the minimum rates announced by banks in financing linked to TR in the SFH:
From 6.5% per year + TR.
From 6.9% per year + TR.
From 6.99% per year + TR.
Bank of Brazil
Between 7.99% + TR up to 8.45% + TR depending on the financing term.
From 7.3% per year + TR.
Remember that financing is customized for each client. The rates posted by banks on their websites are widespread.
10. When is it possible to use the Employment Compensation Fund (FGTS) in financing?
According to Caixa, to use the funds from the FGTS escrow account in the acquisition of the property, it is necessary to:
– Have a minimum of three years, considering all periods of work, consecutive or not, under the FGTS regime;
– Not being the holder of active real estate financing, granted under the SFH, in any part of the National Territory;