Credit regulation is particularly interesting in Hungary, as it often places a greater burden on families who can show more modest income data than their richer peers. Often, in Hungarian banks, “take personal loan for self-sufficiency” is a tedious idea if we do not have access to the ABC and DBE indexes, or the FGH interferes…
Good Lending is a self-force that is not self-sufficient
If we ask a bank administrator that the Good Lending is actually part of the equity or the DBE indicator (the capacity of the real estate. In Hungary this is a maximum of 80% of the market value of the property), then it does not understand the question. Without thinking, he cries out that Good Lending is part of his power!
In reality, the Good Lending is a part of the self-empowered child and is not part of its own power. In this case, Good Lending is that part of the self-sufficiency that reduces the burden on the property. This is logical, because if we cannot fulfill the conditions, then we have to pay back the Good Lending support. If we are unable to repay, then the bank will be charged with the property, which is now unable to pay 120-150%.
How do I count Good Lending support for committed children when borrowing?
Good Lending is in this case a part of its own resources, but it has to be deducted from the capacity of the property. In the case of a used property of 25 million forints, this means that for two children (1.43M), we have to present 20% self- sufficiency besides the amount of Good Lending support .
In this case, the 20% self-capital is 5M forints, which cannot be replaced by 3.57 cash + 1,43M Good Lending funding for Good Lending. This means that we can get fewer loans, as 80% of the 25M forints are 20,000,000 forints, which means we need to deduct 1,43M forints from the Good Lending.
At best, we can borrow 18,570,000 forints for this apartment, because we have 5M + 1.43M = 6.43M for our own.
What should we do if we do not have enough of our own resources?
At this point, the process tends to take a very unpleasant direction, because due to unambiguous communication (often the bank branch does not reveal this rule), the clients would have to put in the unpredictable amount of the transaction. Here are some ideas for the solution:
- family help
- another property. up credit
- personal loan
Whichever solution you choose, your home purchase (even with millions) is guaranteed to be more expensive than what we have calculated for ourselves!
The Bank has no liability until it has made an official offer
To my day, it is incredibly unbelievable, as the regulation allows for the spread of semantic information and then the institution of shrugging in the banking system. Think of the process:
- You want to buy an apartment, you budget yourself
- You go to the bank to present the numbers, where they say they can’t say for sure, just when you release the material. At this point, a better administrator tells the pitfalls, but the average point doesn’t really deal with you
- You can only release the entire material if you are already flocking to the apartment and have the purchase. Buying means you pay the lawyer and the deposit / advance. At this point, you have invested hundreds of thousands of forints in the transaction without knowing the bank page.
- You go back to the bank, where you submit the material and pray that now you are welcome to accept the numbers.
- There are families that you will be told at this point that it will not work because there is little self-effort and you need to add x million HUF
- panic Impressions
- Solution for a personal loan or turn back and fail hundreds of thousands!
- The bank’s official response to your outrage: “You have done so, we can’t do anything.”
A personal loan is a very patient solution for the banking system
Think logically why there is a so-called debt brake in the system, which includes ABC (pay-as-you-go repayment) and DBE (property debts – 80-20). It would be exactly the purpose of the borrowers not to take over themselves.
But precisely, these brakes force families into the ever-increasing real estate market to take up significantly higher repayment installments by having people take more expensive personal loans instead of home loans.
Calculate how much such a family may fail!
Suppose we want to buy 25M for used real estate with CHOK 2 children and 3.57M fortune! I would like to take the loan for 25 years and their income together is 350 000 HUF.
We can see that if the family allowed credit regulation, they would be able to borrow 20M for 25 years in exchange for a monthly repayment of 105,000 forints. However, the problem of Good Lending’s self-sufficiency and hence the lack of cash forces them to be in a situation where the bank feels more secure when it pays a “$ 123,791” monthly loan for personal loans and mortgages altogether.
The loss, with unchanged interest, is HUF 225,492 per year for the first 8 years of the personal loan. You have to pay more than HUF 1,803,936 during this period!
Interesting, because the family can get even better in the long run…
Before we go further, it is worth checking out the full refund (assuming they will not be prepaid and with unchanged interest).
- In version 1, 300×105,000 = $ 31,500,000
- In version 2, 96 x 123 791 = 11 883 936 + 204 x 98 137 = 20 019 948 = a total of HUF 31,903,884.
That is, a total of HUF 403 884 will be repaid by “coercing” a personal loan, which would be a manageable obligation over a 25-year horizon. This is not the problem, but with a completely wrong way of thinking!
What makes the bank think this will be safer?
The real mystery is the logical assumption that a mortgage loan combined with a personal loan can work in the example, while the first version is banned by bank borrowing regulations, saying risky. So, there is a stupid regulation that “thinks” that the 105,000 forints repayment is more risky than the 98,137 + 25,654 forints.
The problem is, if the bank would release the first version (20M forint), they would go beyond the 80% real estate financing ratio, which the ABC believes would threaten the stability of the banking system in the next crisis period. Maybe it is understandable and justifiable, but not lovable!
The banking system is unstable if debtors are unable to pay their loans. There was never a fundamental problem with the over-financing of real estate (up to 100% financing), but with drastically changing repayment installments (foreign currency loans). Originally, the repayment installments that were originally assumed would have been real certainty for the average borrower!
The solution for 100% real estate financing is still HUF based, min. It could be a fixed interest period of 10 years!
home loan next to a home loan?" />
Of course, you can think about how to avoid making the banking system unstable. If we do not accept that unchanged installments alone can provide enough security for an average borrower (since this calculates the family budget), then we need to reach alternative solutions:
Such a solution could be the conclusion of a flat deposit! If we observe, in the example, the difference in the installment was close to HUF 20,000. This is the “price” of a flat deposit with a maximum deposit amount. Why is the bank not obliging the borrower to enter into such a contract at a financing rate of more than 80%, which will then be disbursed in 4-5-6-8-10 years after the loan?
- thus reducing the amount of capital
- thus reducing the monthly installment
- this provides assurance that the credit is stable
- it is actually making up your own safety reserve, as housing savings can be reached at any time and converted into liquid capital (support failed)