Real estate loan: what to know and traps

The income of the majority of the population of Argentina is not so high that they can buy a home without a mortgage or loan.
But mortgage conditions, interest rates and high initial installments limit the development of demand for home purchases.
Then, the developers decided to offer their installation conditions for housing, often more attractive than banking.
Chief editor of FinCor financial portal explains this topic.
Payment by parts: opinions are divided
The plan of quotas for the purchase of housing of the developer is a very popular product. This payment method already works at full capacity in the Argentina market; It has become an excellent alternative to mortgage bank loans. Today, in the main residential real estate market, around 50-60% of investors buy apartments in installment programs, both short and long term. Rental purchase programs of three to five years are the most requested.
The sale of apartments with builder fees is effective for the client, since it allows him to save money, because in the case of a bank loan, the borrower will have to transfer interest and commission payments to the bank, which can exceed several times The cost of real estate. In addition, the price of 1 place. m in the primary real estate market, according to a specialist, lower than in the secondary.
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Advantages in installments
From a financial point of view, buying an apartment in installments is more profitable than buying a house with a mortgage. Of course, if the installation has no interests.
The advantages of developer fees compared to a bank loan are that the developer does not require a statement of income and offers lower rates. The shorter, more profitable installments is compared to a bank loan. Installment payments can be paid earlier than expected without penalty.
Disadvantages of a real estate loan
Among the deficiencies, it is possible to point out that in installments, in case of price increases, the appreciation is reflected in the unpaid balance. After the construction is completed, the prices are generally fixed, and several developers set the price at the construction stage if 70-80% of the total cost is paid.
Disadvantages of paying in installments include:
As a general rule, the objective of delivery is not finished, which, in the first place, does not allow the buyer to immediately enter the apartment and, secondly, does not protect it from the risk of bankruptcy of the developer and freeze the construction ;
the apartment becomes the property of the buyer only after full payment of its cost;
a large down payment (50%, but recently there have been offers with 30% and even with a 10% fee) and a short delivery period (before the installation or 1-3 years of operation, but recently there were proposals for quotas of 5 and even 10 years);
A price increase of 1 square meter as the house becomes a finished object.
The existing quota plan of any developer not only allows the latter to increase the price of housing at any time, but it should also be taken into account that such increase will certainly occur, although the interest rate of the quotas will remain the same.