New Mortgage Loans
In May 2009 the Argentine federal government introduced a new line of mortgage and construction loans to help stimulate the economy and assist middle class families in the acquisition, expansion or construction of a home.
These loans are now possible as a result of the national government’s new partnership with the Banco Hipotecario – Grupo IRSA. Loans will be financed with funds from the Administración Nacional de Seguro Social (ANSES), Argentina’s equivalent of the Social Security Administration. A total of 3,000 million pesos will be made available for these new loans.
All of the loans are long-term, fixed-rate loans for a maximum of $300,000 pesos. ANSES funds in the past have contributed to banks granting short-term (12 to 18 month) loans with a fixed rate of 11%. However, the longer terms of these loans, 15 to 20 years, make the use ANSES funds more controversial. Some fear that the ANSES would run out of money for retirees in the future, especially considering current inflation and a possible recession.
The new loans target four different purposes: new construction, expansion/completion of an existing property, purchase of newly constructed property, or purchase of resale property. Interest rates and conditions vary according to the type of loan:
• Construction loans provide 100% financing for 10, 15 or 20 years with a fixed annual interest rate of 10%.
• Loans granted for property expansion/completion provide 100% financing for 10 or 15 years with a fixed annual interest rate of 10.10%
• Mortgage loans for the purchase of newly constructed property finance up to 70% of the property’s value in terms of 10 or 15 years with a fixed annual interest rate of 13.50%.
• Mortgage loans for the purchase of resale property finance up to 70% of the property’s value in terms of 10 or 15 years with a fixed annual interest rate of 15.20%.
The requirements are the same for all of the different types of loans:
• The borrower must be between 18 and 65 years of age.
• Net family income must be a minimum of $2,000 pesos.
• Borrower must be able to verify employment over a minimum of the past six months, one year if self-employed.
• The monthly mortgage payment amount must not exceed 40% of the net family monthly income.
As the interest rates reflect, the loans will favor construction, property expansion/completion and the purchase of newly constructed property, all of which stimulate the construction industry. In the case of construction loans, they will only finance the construction project itself; the borrower must provide the lot on which to build.
Though the minimum net income requirement is $2,000 pesos, the fact that the monthly payment can not exceed 40% of the monthly income means that someone borrowing the full amount of $300,000 pesos must have a minimum monthly income of over $4,000 pesos depending on the type of loan and the terms selected. Nonetheless, for those that do qualify, these loans provide a new opportunity to construct, improve or purchase a new home.
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