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Portability of real estate financing

Portability of real estate financing

The Selic rate is at its lowest historical level, which reflects on the interest rates on real estate financing and could mean a great time to carry out the portability of the financing and take advantage of the low-interest rates. Let’s analyze the situation to understand it better.

Why does a low Selic rate mean low interest?

The Selic rate serves as a reference for the return of several investments, such as direct treasury investment, for example, which is nothing more than lending money to the government at an interest rate defined by the Selic rate.

This is a very safe investment modality, as the government will always have money to pay the loan, unlike the mortgage loan, in which the person who financed the property may experience financial difficulties and not be able to repay the loan. Therefore, interest on mortgages will practically always be higher than the Selic rate, as the bank will only agree to take a greater risk with the loan if the reward for it is also greater.

Thus, when the Selic rate drops, these super safe investments, such as the direct treasury, are no longer as profitable, and banks look for other forms of loan that can give them a greater return. One is the mortgage loan, and to attract more customers they lower the interest rate.

Real estate financing with interest rates linked to inflation

Another change is that, recently, some banks, such as Caixa, made available real estate financing with the interest rate linked to inflation, instead of the interest rate linked to the reference rate ( TR ), something that can also be used in the portability of the financing.

While it may seem like an attractive option in the short term, mortgages are long-term commitments. If yours is at the end it can be an interesting alternative, but otherwise, this change is not recommended, as several factors can influence inflation and you do not want to make the interest rate of your loan vulnerable in that way.

How to carry out the portability of real estate financing?

Just contact another financial institution and take out a new financed loan. The new bank will pay off your debt with the old bank and stipulate installments for you to pay off this new loan, under an updated interest rate regime.

When this negotiation takes place, the bank you want to finance with contacts the bank responsible for your current financing. At this point, it is likely that he will contact you to offer the best conditions for your financing, and it is up to you to decide which proposals you like best.

An important point is that the portability of financing can be carried out with properties that are already ready; in the case of properties in the plant or under construction, the bank may refuse to carry out the portability.

Is it worth it to make the portability of real estate financing?

This fact needs to be analyzed case by case. While refinancing will likely yield lower interest rates, there are other costs, such as documentation expenses and a revaluation of the property that will need to be carried out, so it is important to assess the total effective cost before making this transition.

If you have taken out the mortgage when the interest was around 10%, this is probably an advantageous option for you.

This strategy is also valid for those who want to increase their income by investing in Blue World City. When carrying out the portability of real estate financing, it is possible to negotiate a longer-term, with smaller installments, but paid for longer.