Understand Real Estate Credit PortabilityOn January 5, 2020 by admin
If you have any real estate financing, did you know you can apply for real estate credit portability? And because it usually takes many years to pay off, you can find another financial institution that offers lower interest rates. And today, people have been trying to cut some spending and this transfer may be an alternative.
But there are still many doubts and even for the lack of information, people are unaware of this possibility. And that’s exactly what we are going to show you today!
What is portability
In the case of mortgage loans, portability is nothing more than the transfer of a mortgage to another institution. Stated properly, it works similarly when you switch from one mobile carrier to another. Its main purpose is that the person can reduce their debt because it is possible to find another bank with lower interest rates as well as some lower administration fees.
In short, it is the migration of your debt to another bank. Later you will better understand how it works and how it should protect itself.
When to apply for mortgage portability
Let’s say you have a mortgage and the benefits are weighing in your pocket. One way out is to ask for real estate credit portability, as long as the interest charged is lower. Then the new institution settles the debt with the other bank and takes over the credit. And from that moment, its financing is linked to this bank.
There are instances when the institution may refuse to accept such a debt transfer, but under the Consumer Protection Code, it needs to inform in writing because it is denied.
Tips when requesting portability
Here are some tips for you to pay close attention to when asking for mortgage portability:
1. From research
It is crucial that you do research between various financial institutions. Just like that, you can already have an idea if you’re paying a lot or not. Then you compare the amounts charged and decide whether or not it’s worth it.
2. Don’t be attracted only to lower interest rates
It is very normal for people looking for portability to look only at interest rates. Only the new bank may be charging other fees and in that case the deal is not advantageous.
But before closing with the new institution, try to talk to the old bank and try to renegotiate the values.
3. Not accept charge for credit portability
You need to be careful as the new bank can not charge you anything to make this credit transfer. And this is Central Bank regulation. If this occurs, report it immediately to the Consumer Protection Authority.
4. Expansion of term of financing is not allowed
Some consumers think that by making portability, they will be able to extend the term of financing.
Unfortunately, this is not possible. The deadline agreed with the first institution cannot be modified. If in your contract you are saying there are 60 installments, the new one continues with the 60 installments.
5. Deadline to give up portability?
So when portability is requested, your bank has to pass all the data within two business days. And this time also applies to the customer if he wants to give up the transfer.
But your current bank may offer you a counter offer, and the deadline is up to five business days. And if you do not accept it, just continue the whole process.
Is portability of real estate credit worthwhile?
In fact, portability is only worth it if the interest is actually lower compared to what you pay today. Although we have already mentioned the tips above, it is worth pointing out a few points: you need to do some research to find out what rates are applied by other institutions. And today, the process is very agile, the only thing you will have to pay more is the registration with the notary, for example. Thus, the transfer of your debt will have all legal certainty, avoiding much headache in the future. Just remembering that the bank to which you are going to port real estate credit can not charge any additional costs for the transaction.
It is also noteworthy that the way debt is paid in installments, that is, amortization and term of financing cannot be changed. One thing to keep in mind: Even if the institution offers lower rates, you need to see if it will charge you any other costs. In that case, you have to put everything on paper and evaluate whether or not it is worth it. It is not complicated, but it is important that you are very careful, otherwise you will either trade a debt for another or risk paying even more.
For some time now, the demand for portability of real estate credit has grown considerably, where one of its main reasons is the reduction of expenses. But you have to be very careful, as has been said, to see if the new bank will not buy extra costs, as this is not very advantageous.
Therefore, you can look not only at the interest rate and the administration fee, but at the Total Effective Cost of the transaction. Suddenly you may find yourself doing a great deal and in the end you risk even paying more.