Home loan self-sufficiency!



This is not only the case in Good Finance real estate but also in the countryside. There are several reasons for this, but the most important is the soaring real estate prices.

Salaries have not risen as much as real estate prices have risen in recent times.


Banks are also starting to feel overpriced real estate prices today, so they are more cautious than valuing real estate.
The rise in prices in the real estate market has slowed down, but that only means that they are growing at a slower pace than previously experienced. Unfortunately, as the purchase price rises, the amount of own resources required increases, which is often difficult to obtain for home loan applicants. Today the price of real estate in Good Finance has almost doubled compared to 2014 prices. There was no such increase in the countryside, but here too the purchase prices increased by at least 40-60%.

During the same period wages increased much less. This can also be approached by working more hours nowadays to generate the same real estate purchase price or necessary self-sufficiency as 5-10 years ago.

So it is now much more worthwhile to pay attention to the available state subsidies and compare banks’ offers and requirements when applying for a home loan.

Banking requirements for home loans are also affected by rising property prices. The debt brake regulation obliges the GFI to examine the ratio of 2. The carrying capacity of the property and the carrying capacity of the income must always be examined. Moreover, the GFI has made the minimum value and compliance with these rules legally binding on banks.

How do rising real estate prices affect banks’ expectations?


Earnings Requirements:

The higher purchase price usually requires a higher mortgage loan. The higher loan amount increases the installment (if we do not increase the maturity). An increased installment already requires a higher family income. The amount of the statutory minimum income is determined by the current GFI rules. According to current rules, up to 60% of the family income can be charged in installments if it exceeds the monthly net amount of HUF 500,000. We can only charge 50% of family income below $ 500,000 net. The repayment installments shall be based on the combination of the current repayment details of existing loans and the future installment of the new loan planned to be drawn. And no matter how many years the interest rate on the new loan is fixed. The table below is intended to make the GFI rules transparent.



The minimum required own funds also increases in direct proportion to the increasing loan amount.

The extent of own resources is also regulated by law . Here are 3 examples to illustrate how much of a bank you choose.

For a real estate loan, 80% of the market value of the property accepted by the bank through a valuation may be the maximum loan amount.

If the loan up to 80%, it follows also that the legal minimum down payment of 20% expectation.

And then the 3 examples for a $ 10 purchase price:

The case:

At the purchase price of HUF 30 million, which is accepted by the bank’s valuer, HUF 6 million of own funds must be presented.

Case B:

The minimum requirement of 20% self-sufficiency is only a legal requirement, the bank can be even stricter and say that he requires 30% self-sufficiency. This amounts to 9 million of own funds at the previous purchase price of 30M.

Case C:

The bank is no stricter than the law and is content with 20% of its own resources. But the internal collateral valuation rules say real estate prices are too high in today’s market. Thus, the real estate subject to sale is valued at only 28M instead of 30M HUF . That is, 20% of the estimated value is self-sufficiency. 20% of HUF 28 million, which would mean 5.6M of own power. But this also means that only 80% of the reduced 28 M real estate value, which can be given as a home loan, is only 22.4 M HUF. If you do not manage to negotiate the original purchase price of 30 M for 28 M, then the 30M (purchase price included in the sale) is -22.4 M (80% of the 28 M bank valuation, ie the maximum home loan), ie 30-22, 4 = HUF 7.6 million of own resources needed.

How can you replace self-sufficiency?


With replacement property:

In this case, we cover other real estate as well as the real estate. In this case, the bank sends an appraiser to both properties and uses the combined value of the properties. In this case, up to 80% of the total value of the two properties may be given as a maximum home loan amount, but this may not exceed the purchase price.

Including other unsecured loans.

If your income can handle the repayment installment of an additional, unsecured loan, you may want to think in that direction.

Such a loan is also a personal loan. The GFI does not like this solution because it fears that its customers will be over-indebted, but under current rules it is not recommended, but it is not prohibited by law.

Such a loan is also a baby-sitting allowance, which can be used as self-sufficiency. In fact, this loan is interest-free from the beginning. In order to remain free of interest until the end of the term, a baby must be born within 5 years of applying. The second child born after the application means a capital release of up to HUF 3 million. If a third child is born after the claim, the remaining principal will be released. It should be noted here that only 75% of the requested baby loan can be used for own funds if they take out a home loan and there is no 3 months between the home loan and the baby application date.

Choosing the right home loan is also very important because the lower the installment payment, the lower the burden on income (GFI).

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