Since spring, demand for banks’ mortgage loans has been steadily increasing. When it comes to choosing the best one, we have no easy task. We have used our calculator to select the most favorable home loan available to us.
There is a significant increase in the number of people buying a home or considering buying a family home. Significant increases in real estate prices are largely offset by the availability of loans on the most favorable terms. Banks have launched many options today, so we have to think carefully about which one to choose? We can save millions with a prudent decision and fail the same with the wrong choice.
So let’s see which one to choose?
Using our calculator, we compared the banks’ offers. We have examined two variations that must be decided by anyone who wants to apply for credit.
Our parameters are the same in both cases,
- $ 10 million we claim,
- We asked for a repayment period of 15 years, so the maturity is 15 years, and
- The regular monthly income is over 250 thousand HUF, which is nowadays average in a family with two earners.
The difference between the two types of loans examined is that of the first
- a variable rate loan, alternating between periods, while the other
- Fixed interest rate for 5 years, no change in interest rate for 5 years.
The APR% is ranked first by Budapest Bank according to the Total Rate of Payments Index, and as shown in the figure, because of the favorable APR of 2.24%, this bank offers the cheapest loan with the smallest amount to be repaid. If you have a $ 1 million savings in your checking account, where your income goes, and you can spend $ 20000 per month on a monthly repayment, the automatic prepayment is free, and due to the prepayment and monthly savings, the maturity is constantly reduced.
This is a very favorable form of credit, but banks are keeping the APR% low, 50% of credit institutions are low, below 3% at most
Perhaps not only is this the only favorable home loan offer, half of financial institutions are basically selling their products at below the Full Percentage Rate, and we can’t even find a bank that slips above 4%! The difference in repayment amounts is more expensive at banks, with a difference of up to HUF 1 million on early repayment.
What to look for in a fixed rate home loan?
In Hungary, the number of those who choose a fixed form of loan has increased significantly, and within that, fixed-term loans are more in demand.
Since this is statistically the case, our second comparison deals with such a credit product.
- Here again, the fixed-income product of the Budapest bank with a low APR became the leading one.
- K&H Bank’s housing loan is followed by a very slight disadvantage. In addition to known regulations, this credit institution also conducts home insurance for the offered home-collateral. And here I would like to point out that only these two banks offer a product with a fixed interest rate for a period of 5 years at a rate not exceeding 4% APR.
As shown above, there are striking differences between banks in this form of credit. By the end of the repayment, in many cases a difference of up to HUF 2 million is possible.
So what to consider when choosing a home loan?
When tying up a portion of a family’s cashier for a longer period, not just looking at APR and monthly or final repayments, it’s not enough just to compare them. It is also important to be aware of the extra services offered by credit products, which have a positive impact on credit changes during the term.
- It is important to know the larger amounts that can be repaid free of charge, prepayments.
- If we can pay off a higher installment if the payment increases,
- Possibly, if a legacy or an unexpected round amount arrives, the maturity will be reduced by the amount of the prepayment.
- Our monthly Savings in Home Savings Fund deposit may expire, which can also be added to your existing home loan free of charge.
If you are unsure, you are not familiar with the maze of new home loans, CSOKs, consumer friendly loans, contact our qualified credit broker who will provide you with free information on your choice.