Buying a property is a big step in anyone’s life, whether because of what owning a home means, or because of the high value involved. Speaking of this last item, it is very difficult for the buyer to have the entire value of the property already saved in the bank account (or under the mattress) and therefore, a financing is necessary. However, real estate financing is something that still scares a lot of people. Let’s unravel all the mysteries of this seven-headed beast so you can understand, once and for all, how real estate financing works.

What is real estate financing?

First of all, financing is borrowing money from a bank to buy a property and paying that debt in installments and with interest. In general, the buyer pays a down payment for the property (and for the seller) and borrows the rest from the bank, which will be paid in installments plus interest in up to 35 years.

During this period, the property is linked to the buyer, but cannot be negotiated. There are also several types of contracts that can be entered into in a financing, but the most common is the term purchase and sale contract with an adjective fiduciary sale agreement. The name is frightening, but the meaning is simple: the right to the financed property belongs to the bank until the buyer pays off all the debt. In other words, your property comes as collateral, if you do not honor the commitment to pay the debt, it remains with the bank. We talk more about this in the article on public deed.

What are the financing conditions?

Financing can be carried out in several banks. What changes are the payment terms, the interest rates, the duration of the contracts and how much of the property can be financed.

The first step is to check the conditions at each bank and go to a branch to talk to the manager.

You don’t need to be a bank customer, but be aware that, if you are, the bank can gather more information about your profile and offer better rates and approve credit faster.

Caixa Econômica Federal is usually the first option when it comes to real estate financing, because its interest rates are more attractive. However, given the bank’s difficulty in allocating resources, credit approval may take some time. So, whoever is in a hurry, can look for other institutions.

In addition, the maximum percentage of property financing by Caixa is only 70% of the value for used properties, while in other institutions it can exceed 75%. Therefore, it is also important to consider how much you have to give down to the property.

Bank of Brazil

Modality: PF Acquisition – SFH

Maximum percentage of financing (new property): 80%

Effective interest (aa): 10.44%

Maximum term: 420 months

Itaú

Modality: SFH

Maximum percentage of financing (new property): 75%

Effective interest (aa): 10.50%

Deadline: 420 Months

Santander

Modality: SFH

Maximum percentage of financing (new property): 80%

Effective interest (aa): 11%

Maximum term: 420 months

Bradesco

Modality: SFH

Maximum percentage of financing (new property): 80%

Effective interest (aa): 10.50%

Maximum term: 420 months

These values ​​consider the counter rate, when the customer does not have a previous relationship with the bank.

Earlier this year, the Pró-Cotista program was reactivated, which is the cheapest option for those who do not qualify for the Minha Casa Minha Vida program, with interest rates of 9% per year. This line is intended for the purchase of new properties, with a value of up to R$1.5 million, and used with a ceiling of R$950 thousand by workers holding an account linked to the FGTS. Be sure to check this option too.

How to apply for financing?

At first, it will be necessary to present originals and copies of RG and CPF (of the couple, when applicable), proof of marital status and income (pays slips, bank statements and income tax declaration).

Self-employed persons can prove their income by presenting the service provision contract, income tax statement, receipt for work performed or proof of receipt of income (Decore) made by the accountant.

The buyer’s proof of income indicates their ability to pay the installments, as their value cannot compromise more than 30% of the monthly family income. The bank also carries out a registration analysis to verify the name in the delinquent registers (such as Serasa) and other sources of consultation.

As for the property, it is necessary to present the updated certificate of the respective registration at the Real Estate Registry Office. The house or apartment must be free of encumbrances, without debt to the city hall and regularized in the seller’s name. There can also be no property tax or condominium debt.

If there is no problem, the credit is approved with a validity period at the bank’s discretion.

If that’s your case, be aware that it’s possible to apply for a loan at the bank before you even find the property. The procedure is the same, except for the documentation on the property, which in this case does not exist. If your application is approved, the financial institution will provide you with a letter of credit guaranteeing the money you need to close the deal. This document is valid for at least three months and, in general, it is granted within five business days after delivery of the paperwork and forms required by the bank.

After analyzing the buyer’s profile and approving the credit, the bank, through a company, engineer or architect, carries out an appraisal of the property to be financed to confirm its value.

From there, finally, the bank draws up the contract and asks the buyer and seller to sign the document. In this, the credit is released, the seller is paid, and the buyer starts to pay the installments of its financing. Usually, the first installment is due 30 days after signing the contract.

How to finance directly with the construction company?

Financing for the purchase of a property can be carried out using resources from the Government Severance Indemnity Fund (FGTS) or the Brazilian System of Savings and Loans (SBPE). And they enter the modality of the Housing Finance System (SFH) or the modality of the Real Estate Financing System (SFI), depending on the value of the property. Learn about the types of real estate financing.

But in addition to these options, it is possible to finance directly with the construction company in the case of new properties. In general, this negotiation offers greater flexibility. There are no limits imposed on the amounts financed or on income or interest rates. However, the risks may be greater for the buyer.

Companies can finance the construction of the house or apartment with a bank. In this case, the property purchased is mortgaged to this bank, which means that, if the company goes bankrupt and leaves any debt with this financial institution, the buyer could lose the property. In some cases, the buyer pays off the debt, but the asset remains mortgaged. Therefore, it is important to require the builder to take the property out of the mortgage. For this, the buyer cannot forget to ask for the certificate of real liens at any registry office. This document is the owner’s guarantee that the property is no longer mortgaged. If the company goes bankrupt and the bank wants the apartment as payment, the certificate is what protects the buyer.

Also, the construction company can go bankrupt before the end of the work and leave the client without the property. Therefore, visiting other projects of this company and checking its name in court is essential to not have a headache later.

The best option are construction companies that offer direct financing with the bank. Many companies partner with banks and get very attractive rates and the entire transaction is done directly with the bank.