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?
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?
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!
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.