Mortgage loans in Biess: your interest rate depends on these three factors

For mortgage loans, a maximum effective rate of 10.40% per year applies, although most of this type of credit is below that percentage, both in the public and private sectors.

Thus, the different financial institutions offer rates ranging from 4.87% only for affordable housing to 9% and 10%.

The Biess has delivered between January and August 2022 $431.5 million in more than 7,000 mortgage operations, according to figures from the entity. While the bank reported $419 million granted in new housing loans in July in 4,577 operations, this represents an increase of 14% in amount and 4% in number of loans.

The rate that Biess charges for the purchase of a home depends on the amount and the term in which that credit will be paid. In addition to the type of property, because if the mortgages are to acquire land or premises, the interests are higher and the term is shorter.

These are the interest rates that apply for the second semester of 2022 in Ecuador

The Biess lends at 5.99% annual interest for the completed home purchase if it costs up to $90,000 regardless of the term. But there are three other price ranges where the percentage goes up.

Thus, the rate is 6.99% on these loans if the home is valued at over $90,000 and $130,000 and if it will be paid in ten years. If the financing is for 15 years, the rate rises to 7.99% and for the term of up to 25 years it is located at 8.90%.

For houses costing between $130,000 and $200,000, interest rates are 7.99% for a ten-year term; 8.45% for up to 15 years and 9% for financing up to 25 years.

For mortgages of more than $200,000, a rate of 8.19% for ten years, 8.65% for fifteen years and 9.10% for 25 years is applied.

The home construction and mortgage replacement they have three other ranks:

• Up to $130,000 the rate is 6.99% if the financing is from one to 120 months (ten years). 7.99% for terms of 121 to 180 months (fifteen years) and 8.90% from 181 to 300 months (25 years).
• For loans of $130,000 to $200.00, the rate is 7.99%; 8.45% and 9% at 10, 15 and 25 years, respectively.
• Greater than $200,000 the annual interest is 8.19%; 8.65% and 9.10% for the same terms.

For the purchase of land and for remodeling, expansion and improvement the rate is from 8.40% if the financing is given for five years and 8.90% when the term is up to ten years.

For offices, commercial premises and clinics it is 9.69% from one to 48 months (four years). 9.87% from 49 to 96 months (eight years). 9.93% from 97 to 120 months (ten years).

All these rates that appear in the Biess rate and that it advertises on its social networks are nominal, but the effective rates are also published and are between 0.20% and 0.50% higher in each of the ranges, but in no case do they exceed 10.40%.

As a result of the pandemic, longer-term loans are chosen due to the economic situation, however the goal of buying a house continues to grow in households. This is what the Crisfe Foundation expert in financial education notes, Karina Díaz, who cites data from the Biess of 3,629 mortgage loan operations for completed houses as of last May, compared to 324 operations for housing construction. The Superintendence of Banks registers 3,780 operations in the housing credit segment in the private system. “Although in the private banking figures there is no discrimination between completed housing, purchase of land or for construction, the Biess data shows that nine out of ten households prefer to buy a completed home instead of building it”.

What rates are offered in private banking?

Banco del Pacífico finances up to 80% of homes costing between $25,000 and $625,000 at a reference and starting rate of 7.99%.

At Banco Pichincha there are two types of credit for home purchase:

1. For social interest housing and public interest housing linked to the Government financing program for single housing at a maximum sale price of up to $97,000, with a nominal annual rate of 4.87% and a 25-year term. The buyer must contribute 5% of the price and the bank finances 95% plus legal expenses, appraisal and Solca’s contribution.
2. Traditional real estate loan for non-unique home purchase and/or sale price greater than $97,000, up to 20-year term. The annual nominal rate is 8.45%. The buyer contributes 20% of the price and the bank finances 80% plus legal expenses, appraisal and contribution from Solca.

Banco Bolivariano has a simulator: https://www.bolivariano.com/simuladores/credimax-vivienda and details of the loan can be obtained there. For example, for a $120,000 home, lend 80% and the buyer must have $24,000 down. The term is up to 20 years and the nominal annual rate is 8.50% and the effective annual rate is 8.87%. (YO)