MonthJune 2019

Did Fundamental reinvent the annuity loan?

Unfortunately, the original idea of ​​housing collections in Hungary has ended. The abolition of state aid in the case of new contracts (from 17.8.2018) meant that several players in the market bounced back. Only with the active commercial banking background, but with a wealthy sales network, Fundamental found some old-new solution. My first thought was that Fundamental invented the annuity loan again because he had to say something. Let’s see if I’m right…

What is Fundamental Caring for a Housing Account?

What is Fundamental Caring for a Housing Account?

The Caring Housing Account consists of two parts: total savings and home loans. This can be familiar to everyone with the idea of ​​an original homeowner. The Fundamental pays a deposit interest of 0.1% on the savings part, and the customer can receive a one-time, 5% annual interest bonus on the deposit amount placed on the account in that year.

The amount of the monthly deposit per contract is between 5,000 and 40,000, while the maturity is 5 years 11 months and 9 years 4 months.

The housing loan is provided by Fundamental with a very low, fixed interest rate (after a more stringent credit assessment by commercial banks, with a 2.9% interest rate. However, a loan not only consists of interest but also other costs that the APR is supposed to represent. The advantage of Fundamental is that the APR is 4.93% based on the information on their website.

The real money is not going to be for them yet, but for the bridging loan, which we can achieve with 5.24% interest if we meet the conditions, which in the housing loan phase (in Hungarian, as soon as the savings phase expired) – changes to 2.9% – interest rate loan. In this design, the APR is 7.24% , which is already high in a market where, besides 10-year fixed interest rate, in addition to a better-than-average financial situation, we can achieve a THM of around 2%.

A contractor can enter into more contracts

What Fundamental’s offer could be a great deal, is exactly the advantage of leaving state aid. Since there is no state aid, no tax number is required. A contractor can enter into multiple contracts to multiply the available contract amount.

It is very important to emphasize that the Fundamental home loan is the same mortgage as any other bank. Here you also have to comply with the borrowing rules!

 

Is the cost higher than the bonus?

Is the cost higher than the bonus?

The new Local Lakásvoó runs already at the expense of housing savings. A 150 HUF monthly account management fee and 1% of the contract amount will be paid immediately at the beginning!

Examples:

Contract amount of HUF 11 million: account opening fee HUF 110,000 + 112 (9 years 4 months) x 150 HUF = 16,800 HUF account management fee.

In this case, the 5% interest bonus is paid after HUF 480,000 a year, ie HUF 24,000 x 9 = HUF 216,000 + 8,000 (for the last 4 months) = HUF 224,000 per year.

So in this example, the interest bonus is net worth 224,000 to 110,000 = 114,000 forints. In English, the real “interest bonus” is around 2.5%. However, this is not to be confused with the amount of interest available for interest, since this bonus actually applies to the payment of the given year and not to the total capital each year. EBKM 0.51% in this case. That is, an investment where you would receive 1% interest per annum on your entire capital would bring you twice as much money as you get in this case.

The Fundamental’s new house block lost its investment character. Simply in today’s well-known interest environment (see Government Securities, Investment Funds), it is simply not suitable for investing our money in the form that it was with state support.

 

By building loan brokers to obtain cheaper mortgage lending

Many builders and homebuyers still prefer to close their real estate financing directly with the banks. This is not very surprising, because why should one go the detour via a financial intermediary, if one can finance also directly over the bank?

It makes more sense to go through intermediaries

It makes more sense to go through intermediaries

Accordingly, many people use the Internet to search for cheap mortgage rates, and then directly contact the banks. But this approach is not that clever at all. In fact, it makes more sense to go through intermediaries. Below we explain why this is so.

First of all, there is the fact that the mortgage lending market is very large. Most aspiring property owners underestimate the number of providers. The number of direct banks alone is much larger than generally assumed. In addition, there are a few regional banks whose loans are accessible via mortgage brokers. As a result, going to the mortgage broker is more likely to find the ideal loan.

We can choose from a large number of financing solutions

We can choose from a large number of financing solutions

Also, the aspect of independent advice must not be forgotten. Many bankers are not just thinking about the customer. Nowadays, the focus is primarily on the sales specifications: In some banks, the customer does not get what suits him, but what the consultant has to sell right now. For a financial intermediary like us, this is different: we can choose from a large number of financing solutions – which specific provider we recommend at the end is up to us. Accordingly, interested parties receive independent and neutral advice.

Ultimately means that customers enjoy even more attractive interest rates

Ultimately means that customers enjoy even more attractive interest rates

In addition, the loan terms for the loan conclusion talk about a financial intermediary. Good intermediaries have access to preferential terms at some direct and regional banks, which ultimately means that customers enjoy even more attractive interest rates. If banks were to ask directly, these interest rates would not be accessible at all.