Home loans are well known and there are no Hungarian people who have not heard of them, contrary to the concept of home leasing, which not everyone is aware of.
The access to the two homes is very similar to each other, and the differences will be discussed in more detail here, is the home lease a competitor to the home loan?
Who can be offered a lease and who has a home loan?
Should I own at start-up, or should I own it later at the end of the term?
Financial institutions can charge a lower interest rate on a home loan because our property is covered by a mortgage. What many people love and that is the driving force is to get ownership of the apartment right at the moment of sale.
Leasing is a bit different construction, the ownership of the apartment remains with the leasing company, we get the apartment up to use, or we can rent it. Ownership of the apartment will be officially written on our name only after payment of the details, but it can be used functionally.
The credit assessment is both!
For both home loans and home leasing, the bank requires the debtor to be certified, in which case they examine:
- whether our income is sufficient from the bank’s point of view
- whether the credit coverage is adequate
- can we pay the appropriate income-proportional installment according to the central bank’s expectations
The level of leverage leans towards leasing!
- In the case of a home loan, 80% of the property’s market value can be lent
- in the case of leasing, however, the upper limit is 85%
This means that for a 25 million HUF apartment, in principle, the mortgage loan is 5 million HUF, own capital is 20%, and the leasing is 3.75 million HUF, which is 15%.
In many cases, banks do not support maximum credit, that is, up to 80%, and usually have stricter conditions. This is the case with both home loan and leasing terms.
Without own power:
The opportunity is there, but it is very risky as it requires additional cover, which will involve the purchase of another property and, if unfavorable, may result in the loss of this property.
What does the JTM Rule mean?
The central bank’s requirement is the pay-as-you-go rule.
The rule for forint loans
- With a monthly net income of HUF 400,000, the repayment can be up to 50% of the income
- If the monthly net income is HUF 400,000, the maximum repayment amount is 60% of the income
So, in the case of real estate leasing, you may not be able to get a loan with a lower down payment because the repayment payable would be too high compared to our earnings, although the same limit could also be a barrier to a home loan.
What are the options for taking out a foreign currency loan?
Only available to those who receive payments in foreign currency, which is a very small layer. In Hungary, there is no real demand for foreign currency loans today. The low level of the forint interest rate does not make it reasonable!
Expert opinion: “JTM rules are much stricter than forint loans or forint-based leasing.
In the case of foreign currency loans, the repayer
- Up to 25% of the income can be less than 400 thousand HUF monthly net income
- Even if the monthly net income is above 400 thousand HUF, the repayment is not allowed above 30%
The repayment is lower than the lease if you buy a new home
If, for example, look at a used home loan and used home lease with similar terms and conditions, the monthly repayments are similar, would be 116,000-117,000 HUF.
The difference is significant for newly built loans.
In the case of newly built housing and open-ended leasing, the monthly repayment on the leasing is HUF 105 thousand, while the mortgage is HUF 117 thousand.
The supply is changing rapidly:
Two large banks offer home leasing at variable rates. The interest rate for a home lease (every 3 to 6 months) should be variable.
“The big difference is that there is no fixed rate option for leasing on the basis of the product information, so we take the entire interest rate risk.” Consumer leased qualifying loans do not yet exist or play a role in leasing. These new loans offer only a fixed interest rate for at least 3 years, but up to the end of the term.
The fee is also different in the two cases.
When buying apartment:
A property tax is payable on the purchase of the property
For used homes, the tax is 4% based on the purchase price shown in the purchase. There are several exemptions or reduced rates. Such discounts include purchasing a first home for those under 35, buying a newly built residential property, or paying installments. By default, this rate is 4% of the property’s market value. In the case under review, for a real estate of HUF 25 million, it is HUF 1 million.
There is a discount on new construction, the fee is only payable over the real estate value of HUF 15 million, which is 400 thousand HUF.
There are cases where a 2% surcharge is charged to the lessee as an extra. This is due to the leasing company who is buying the property for resale. Whether the leasing company bears the payment or not, you can decide.
If you need to make a choice if you are interested in a home loan or home lease, we can offer different current loan offers without having to visit several banks. We offer free, convenient, fast, reliable administration, and our credit intermediaries are guaranteed to offer such facilities as banks.