Mortgages, what are the options here in BA?

Cangurito

Registered
I'm looking for some advice. Do you know anything about the mortgage market here in Buenos Aires and can you recommend a product without exorbitant establishment [FONT=&quot][/FONT]fees or interest?

I've been looking around and the private, non-bank mortgage companies are prohibitively expensive...

For example, if you're buying a house for US $210,000 and require a US$ 70,000 loan, you pay $7,000 to establish the loan and $10,000 per year in interest. Paying principle plus interest does not reduce the interest payable.

Here are some of the fees bundled into a friendly loan package.

  • Interest: 14.5% per annum on $70,000.
  • Escritura: 2% on $140,000.
  • Escritura Hipoteca 2% on $70,000.
  • Registration Tax: 2% on $210,000.

In addition, rather than calculate the interest payable on the outstanding principle, they calculate the interest annually and divide that by the number of 'cuotas' or payments throughout the year. It's outrageous!

Any suggestions?
 

gouchobob

Registered
In answer there probably aren't any alternatives and my only suggestion is not to do it. I'm not a big fan of buying real estate here and adding a mortgage in like this only makes it worse. If you are dead set on it than find another way, borrow from a friend or relative back home or tap some other credit source outside of Argentina.

They are charging a lot because of the perceived risk they are undertaking. This should tell you something about how investments in Argentina are viewed(i.e. very risky).
 

Ries

Registered
I have never met anyone, either expat or porteno, who had a mortgage here.
And I know a good 3 dozen people I have talked with on real estate subjects.

It just isnt done, for the very reasons you describe- its ridiculously expensive.

The main reason is that there is no mortgage deduction from taxes, as there is in the USA, so there is no real incentive to pay triple the selling price in mortgage payments.

In the US, since you can deduct your interest, you arent paying all that money- you get a third or more of it back.

Here, you would pretty much have to be made of money to be able to pay 14% interest on a mortgage.

So nobody does.
 

cosaco

Registered
Actually, here mortgages are one of the main crimes happening nowadays.
If you have the chance, like gouchobob says, to borrough some money from someone back home, i´d recommend you to do that, specially if you can have someone that can take a credit for you not here in argentina.
Sorry gouchob, but i have to disagree, mortgage interest rates are not due the risk the banks undertake, of course they never take the house or building as guarantee if they can not auction it and recover the money plus some ganancia.
Isnt a matter of risk, it´s just a matter or incredible wrong and awful policy of "let´s profit as much as we can" in the lowest number of transactions.
And besides that, in many areas of the city there are houses, flats that are for sell like at least a year, but their prices keep going up.
Supply and demand law just dont apply here. Sorry for the disgression
 

gouchobob

Registered
Cangurito said:
GouchoBob, have you had negative experiences with mortgages here in BA?
No I never had a mortgage nor do I know anyone who has, mortgages here are fairly rare. All I know is the rates charged as you found out are very high. Actually I did buy a house here and was a bit short on the cash. What I did was a cash advance on a credit card, I was able to get a good deal with an interest rate around 5 percent at the time, but that would be hard to do as well today. What I did was treat the balance like a mortgage and quickly paid it back over a few years.

I have noticed that a lot of Argentines use the bank of mom and dad in buying their first property. Perhaps someone with some first hand experience with mortgages will write in.

Just out of curiosity is the deal you are describing in pesos or dollars.
 

Cangurito

Registered
I just want to add that i don't mind paying a higher interest rate for Argentina if absolutely necessary but the brokers and agents seem to be cloaking extra fees in the interest payments, agents fees and escribanos fees.

The house in question would be worth over $500k so in Sydney. I'm kind of thankful that credit is hard to find here in BA but it is still frustrating. Sydney has experience inflated house prices over the last 10 years due to government subsidies for first home buyers and low document loans. The same can be said for BA residents on a peso income.
 

criswkh

Registered
A local friend of mine was looking at buying a $250K house in Quilmes. The mortgage terms were only for $70-80K US at 20% interest for 2 years. He decided to wait a couple of more years to pay for the house in full. He was just tired of living with his parents at the age of 35.
 

gouchobob

Registered
Cangurito said:
I just want to add that i don't mind paying a higher interest rate for Argentina if absolutely necessary but the brokers and agents seem to be cloaking extra fees in the interest payments, agents fees and escribanos fees.

The house in question would be worth over $500k so in Sydney. I'm kind of thankful that credit is hard to find here in BA but it is still frustrating. Sydney has experience inflated house prices over the last 10 years due to government subsidies for first home buyers and low document loans. The same can be said for BA residents on a peso income.
Just remember you aren't in Sydney and just it's less costly than there doesn't make it a bargain. Remember incomes are a lot less in Argentina and prices are actually pretty high in comparison. If you are having trouble buying a place think how much more difficult it is for an Argentine with much less income and little or no access to credit.

Again the deal you quoted is 14% plus percent (probably the actual effective rate of interest is much higher based on the terms you quote). I disagree with the other poster on the reasons for this and believe lenders look at things like inflation, political and economic stability, and price a loan with a big risk premium to account for these problems. If Argentina didn't have these problems loans would be more widely available at more reasonable rates.
 
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