What is real estate refinancing?
Still little known in Brazil, the concept of real estate refinancing and the way of doing so generate many doubts. Other forms of credit, such as loans and amounts available on overdrafts and credit cards, end up being the most sought after.
Refinancing a property is an excellent alternative for people who need a good amount of money, to carry out major projects. Credits: Klaus Aires
However, getting extra cash from these forms generates more interest and pays off less compared to any type of refinancing.
This type of transaction consists of obtaining credit, with the property being given as guarantee in case of non payment of the parcels. The modality is similar to the mortgage, in which the property is not owned by the creditor, although he has the power to auction it if the commitment is not removed. The difference is that in refinancing, the house or apartment becomes the property of the financial institution.
In the United States, this is a very common way of getting credit.
This type of refinancing has arisen for clients who need a larger amount of money to undertake major projects such as remodeling a home or studying abroad. In addition, it is a great alternative compared to other loans where the risk of default is high.
From now on, learn how to refinance real estate and all related details.
How does refinancing work?
Also called fiduciary alienation, real estate refinancing requires a contract, which must be approved and signed for the transaction to take place.
Knowing how to refinance real estate before completing the business is critical to finding the best opportunities.
The document must include the amount that needs to be paid, the description of the installments and all related fees. In addition, it is also necessary to include a description of the property used in refinancing.
These standards are in accordance with the Securities and Debt Register.
The installments are debited directly from your checking account.
Here are some details, separated by topics, that explain better how to do real estate refinancing.
Necessary documents
If you prefer to know how the transaction will be, you can simulate the values. So you can better plan the payment of the installments. In this case, you do not need to bring any documentation.
However, if you really want to close the deal, separating the items is one way to make the process faster and less bureaucratic.
The items to be refinanced for any property are:
- CPF;
- RG;
- Proof of address;
- Proof of income;
- Proof of marital status (birth certificate, marriage, divorce or death certificate);
- Copy of the declaration of the income tax and also of your receipt of delivery;
- Property registration
Remembering that all documents must be recent and / or updated.
Terms of the proceedings
In the refinancing of property promoted by financial institutions, the installments may extend for up to 240 months (20 years). For this reason, this is an interesting alternative for people who need a good amount of money and have no other alternative in this regard.
The loan repayment period is usually long and allows for planning. Credits: Joel Photos
An even more rewarding aspect is in relation to new lending possibilities. If you initially do not get the full amount you would need, you may have access to new credits in the first five years of your business.
Total Refinancing Costs and Rates
According to the bank, interest rates may vary. Therefore, before choosing an institution, you must look for several, do simulations and calculations, in order to choose the most attractive option.
Generally, the typical interest rates of a loan like this are charged. In addition, IOF (Tax on Financial Transactions) and insurance such as Property Damage (DFI) and Death or Disability (MIP) are also included. There is still the IGP-M, which is charged annually.
Compared to other forms of loan, the amounts are well reduced. You can find rates of just over 1% a month – a very attractive ratio to credit card (approximately 12%) and overdraft (10%). These fees are also charged monthly.
Even other forms of credit have higher percentages: Personal loans range from 4% to 7% per month (according to the institution that offers them) and the store credit practices 5%.
As you might realize, a property refinance has at least 4 times smaller numbers.
What types of real estate can be refinanced?
Many types of real estate can be refinanced, both commercial and residential. Houses and apartments, in general, in urban area, can be part of the business.
Rural estates are also usually approved, as are land in general, regardless of the size of the city and the environment (urban or otherwise). The presence of a construction is not an indispensable condition for the transaction to be fulfilled.
However, to be able to refinance the property, it must be worth at least 30 thousand reais. This amount, inclusive, is assessed by the financial institution before any loan consolidation.
It is important to note that the money to be assigned to the owner of the property is not its full value. The minimum value for this type of transaction is 20 thousand reais and the limit is 50% of the value of the good. The amount to be released, however, is due to some factors, such as the customer’s payment capacity (which is analyzed previously) and the level of contact with the financial institution that transfers the loan.
Likewise, the apartment, house or land must be removed and all documents in order.
Another important aspect is in relation to the survey of the property. Prior to refinancing approval, all of its characteristics are evaluated, mainly in relation to its physical and structural states.
For the negotiation to take place, the property must be in the name of the applicant. If this is not the case, other forms of credit are available, such as personal loan.
Throughout this text, you have seen how to do real estate refinancing and all topics related to its implementation, such as the necessary documentation, inspection, deadlines and amount to be released. He also knew the best times for which this type of credit is advantageous.
To learn about other forms of loan and their utilities, read the content already published on the website. Through it, you have precious information to make the best decision when it comes to credit.
