The Good Finance wants to bring about a radical change in Hungary by spreading Consumer-friendly Home Loans, so we can say that home lending with this qualified diversified product is ahead.
Let’s see what this is all about? We asked independent professionals how this loan is different from other home loans on the market. How much safer? Is it much cheaper? Is it easier to access?
So let’s look at the most important features of this qualified loan product
The Good Finance does not consider the Qualified Consumer Friendly Home Loan to be its own credit, but it is at its heart that ratings become more prevalent and that more and more banks apply for this rating! We are talking about a home loan that has been kept within the required limits and can therefore be taken out on more favorable terms for loan applicants.
So let’s see the required limits and features of this home loan:
- The interest rate spread shall not exceed 3.5 percentage points relative to the reference rate used for the interest rate change.
- The maximum maturity is 30 years.
- It has an interest period of at least 3 years, which means a fixed repayment period of at least 3 years.
- The maximum disbursement fee is HUF 150,000 or 0.75% of the loan amount.
- The prepayment and final repayment fee may not exceed 1% of the amount of the prepayment and final repayment.
- Prepayment is free of charge if the desired amount is repaid from the savings deposit.
- Dispensing time, unless otherwise required, 2 days.
- Credit evaluation should take place within 15 + 2 business days.
- And if these deadlines are delayed, the lender may not charge part of the disbursement fee.
The Good Finance will publish the above parameters from June 23, from which date the list of qualified home loans meeting the new requirements will be available at credit institutions.
Financial institutions also carry a general rating for newly born credit products
Of course, creditworthiness is also examined here.
- The borrower must also have the right conditions and general requirements, so no one will think it will be easier to pick up than the options available so far!
- The loan amount may not exceed 80% of the value of the dwelling and the applicant must prove that he / she has an adequate income. You can spend up to 50% of your monthly verified income on a repayment installment, unless you have a monthly income of $ 200,000 or more, in which case you can spend 60% on your loan repayment.
General current practice in Hungary indicates that those who approach the above limits and would like to apply for consumer-friendly credit will be classified as less favorable. You should pay a higher interest rate on your credit if you have a lower credit rating.
As a result, these customers may only receive higher-priced loans that do not qualify for the Consumer Friendly rating, so they cannot apply for this credit.
Our independent home mortgage experts predict that the review will gain access to new consumer-friendly credit, who will ask for a review of up to 65% of the value of the property, and who will pay up to 36% of their income.
It will not always be cheaper to have a consumer friendly loan now launched on the market. We may find ourselves borrowing at a lower APR, but for example. early repayment will be more than 1% or the cost of credit will be higher due to credit appraisal fees and we are already out of consumer friendly credit terms. A lower interest rate can offset the negative impact of higher cost items on credit.
The turnaround time of the borrowing process was also limited by the central bank.
By default, the credit assessment must be completed within 15 + 2 business days, and all documents must be received and the data must be available to the banks until the loan is issued. The starting date of the loan is determined by the available data, but there is no limit to the value of the valuation, which can cause considerable delays.
Comparing the timing of the current home mortgages to the consumer loan, one can immediately see that there is no significant difference between the two options in this respect, with a maximum of one week advantage over conventional home loans.
How Safe is Consumer Friendly Credit?
Let’s see the limit: for the longest period, 30 years, we need a mortgage with a fixed 3-year mortgage, and at the end of the period our interest rate will increase by 1 percentage point, in which case the loan repayment will increase by 11.4%. . If our interest rate may have increased by 3 percentage points, we will be paying 34% more monthly at the beginning of year 4. So, consumer-friendly home loans are not risk-free, so total security cannot be predicted with this loan product either. The borrower must continue to take into account the interest rate risk.
Once a home loan is started, we can’t turn it into a consumer friend, but it can be replaced by a new consumer friend loan. The substitution needs to be financially screened, does it make sense if we get the benefit of the exchange because a full examination can show it. At the end of every 2 years, it is worth reviewing your existing home loan to see if it could be replaced by a more favorable loan, and very few people in Hungary today demand it.
The Good Finance facilitates the selection of loans by requiring banks to present their products in such a way that the loan applicant can easily compare all the loan products available on the market.