If you own a home and it is not taxed, then you have several options to mortgage a house and get a loan. In this article I inform you more about the requirements and benefits of these types of loans, offered by the financial institutions of Peru.
A home equity loan is a personal loan granted by a financial institution, in which a real estate of your property acts as your guarantor. Depending on the conditions of the loan, the borrowed capital may be freely available or be dedicated to some particular activity, such as the remodeling or extension of the housing placed as collateral.
What are the options to mortgage a house and get a loan?
The available options can be qualified according to the type of financial institution that offers it, as I will explain below.
1. Banking institute
This is the preferred option for Peruvian citizens, mainly because banking institutions offer these loans at the lowest interest rate in the market. Currently, the interest rate on a mortgage loan in banks averages around 8%.
Among the advantages offered by this option are:
- The cost of the mortgage loan offered is lower, due to the aforementioned.
- They offer different types of mortgage loans, so it will be easy for you to find the one that best suits your needs.
In counterpart, you should consider that:
- It is necessary that your credit history be positive, in order for your credit application to be approved.
- Banks are more demanding with their requirements (minimum income, age of the applicant, etc.) than other financial institutions.
2. Savings and credit funds
Some savings and credit funds also offer home equity loans, aimed at improving services, or expanding and remodeling homes. The interest rate of these credits currently averages 13%.
Some advantages that this presents are:
- Savings and credit banks tend to serve sectors that are not properly assisted by Peruvian banks. Therefore, they may meet your need even when the home is in a sector not assisted by banks.
- Compared to private banking, their requirements are more flexible.
In return, you should pay attention that:
- The interest rate is high, compared to those of similar loans offered by banks.
- With exceptions, you can only use this type of credit to improve the conditions of your home.
3. Financial companies
The third option you have, when requesting a home equity loan, is to go to a financial company. These offer it only for free availability, requesting as a guarantee a real estate in case the amount of the same exceeds a certain amount of money. However, because they work with high-risk clients (not considering their credit history), their interest rate is very high (20% or more).
Among the pros that this alternative presents are:
- They do not take into account the applicant’s credit history.
- Therefore, they usually issue the loan more quickly.
However, requesting a loan from a financial institution has the following disadvantage:
- The interest rate is very high, compared to that of similar loans offered by banks.