Real estate developers compete with credit institutions

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The mortgage loans contracted directly with the developers mean less documents, are more flexible, more easier to obtain and are designed for a shorter term between 5 and 15 years.

Nevertheless, in the case of the ‘First Home’ programme guaranteed by the government, the term could reach up to 30 years, with the interest rates fluctuating depending on the 3-month Euribor, which is now found at a historic minimum. Moreover, the completion of the file to get the loans is difficult, with the customer risking to loose the advance if he fails to follow a certain order in bringing the documents.

The Be Igloo company, having some 800 apartments, launched the rent-to-buy system. ‘In the end, if the customer fails to contract the loan with the bank or to sell his/hers new apartment, the money will be returned’, Nimrod Zvik, marketing director with Be Igloo, said, quoted by Cotidianul.

For instance, for a two-room apartment, which costs 80,000 euros, the customer pays an advance of 10 percent, that is 8,000 euros. The monthly rent, to be paid for five-years, could be 300 euros, although we usually establish it with the customer. There will remain to be paid 54,000 euros, which could be obtained either from the bank either from the developer, who is offering the money for another 5-year interval.

‘If, after these 5 years, the buyer proves he affords not the apartment or he is able not to conclude a loan for the remaining amount or to find another financing modality, he/she will get back the 10 percent advance’, the representatives of Be Igloo said.
The file to be completed for the governmental programme needs to include a declaration on one’s own responsibility in which the applicant and his wife (her husband) do not own another dwelling or another mortgage loan.

It is also necessary a report of evaluation of the dwelling to be made. Moreover, the applicant will bring ID papers, income certificates and other documents. In order to complete the file, the applicant usually needs “to run to and from” for up to two months, depending on the goodwill of the office workers at the bank. The interest rate could range in the first three month of Euribor between 280 and 320 euros, after which they could go up, depending on the fluctuation of the index.

In the case of an apartment that costs 80,000 euros, if you do not have the remaining 23,000 euros you have to add to the amount of 57,000 euros guaranteed by the state, you could contract a 10-year credit for personal needs. In this case, you will have to pay an interest rate of 330-350 euros.

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