When it comes to buying property, many questions arise, especially about what real estate credit is and how it works.
First of all, it is important to understand that credit and financing are both lines of credit, but they have different processes and purposes. In financing, money is needed to purchase a certain good and credit can be used to pay for unexpected expenses in any case.
What is real estate credit?
Real estate credit occurs when a person decides to purchase a property, whether used or new, and intends to finance it. So, the bank enters into the negotiation to carry out this financing, and the total amount between the buyer and the owner is paid in full.
As agreed, the buyer will have to pay the bank, which has already paid for the property. Therefore, the payment can be made in installments over the number of months agreed between the buyer and the bank. During this period, the property will remain in the name of the person who purchased it, but it cannot be sold until the debt to the bank is paid.
What are the forms of real estate financing?
Currently, there are two systems that determine real estate credit: the SFI (Real Estate Financing System) and the SFH (Housing Finance System), which allows the FGTS (Guarantee Fund for Length of Service) to be used in financing.
SFI (Real Estate Financing System)
The SFI is the Real Estate Financing System. It works with all financing that is not established in the SFH law. Therefore, properties that have a value that exceeds the limit determined by the housing system can be established by the SFI.
It is used mostly by those who wish to buy their own property, and it is also aimed at construction companies and real estate investors, after all, they have very significant assets to invest in financing. Fixed income funds and pension funds are also some of the most used resources in the SFI.
In this type of operation, FGTS funds cannot be used to purchase the property, even if it is a new property or it may already be ready. In the SFI, a continuous amortization system is also applied to those who purchase properties, so it is possible to settle any debts in advance.
SFH (Housing Finance System)
The SFH was validated by law nº 4.380, back in the 90s. Conducting a large part of real estate financing, the savings account funds are included in the purchase and/or construction of properties.
The Housing Finance System was created precisely to help those who wish to buy their own home. The SFH establishes that the best real estate financing reaches 80% of the total value of the property. It also determines that the CEM (Maximum Effective Cost) of the financing contractor never exceeds 12% annually.
What are the financing conditions?
The conditions begin from the moment the type of financing is defined. Banks offer several different types, including differences in financing between public and private banks, since public banks can offer different conditions due to government programs, which have houses for sale in Jardim Social at affordable prices for those on low incomes.
In general, the differences in financing conditions are in the payment method, interest rates, contract period and the price at which the property will be negotiated, which is directly related to the amount each person earns and the amount they can pay as a down payment on the property purchase. After choosing the bank and the financing method, the next step is to present the necessary documentation.
Required documentation
- Birth or marriage certificate;
- ID;
- CPF;
- Proof of income
- Couple's income tax return (if requested, depending on the situation).
After submitting all necessary documentation, a credit analysis will be performed to approve or reject the credit requested by the contractor. If everything is in order, both on the part of the owner and the buyer, a contract will be drawn up for both parties to sign, assuming the agreement. It is worth noting that the contract must be registered at a notary's office and sent to the bank. After this process, the credit will be released.
What happens if the contractor does not pay the mortgage?
If this occurs, the financial institution will file a lawsuit to assert its rights, with the aim of keeping the property purchased by the contractor. If the buyer wins, the property will be auctioned. The amount received will be deducted from the legal fees and the rest may be returned to the buyer.
Is it worth taking out a loan?
Even though you are financing a property that will be yours and that will be your chance to stop renting, you need to be very careful, especially when it comes to installments. For this reason, it is necessary to do simulations and evaluate whether the installment amount will not exceed your budget.
Therefore, it is recommended that you make a financial plan so that you do not accumulate debts. It is worth remembering that, depending on the mortgage, your budget may be affected for several years. Try to make a good down payment on the property. This will reduce the amount of the loan and, therefore, also reduce the term of the loan.
Did you like this article? Share it on your social networks so that more people know how real estate credit works!
