The consortium is a process where many banks finance a borrower based on standard assessments and documents and construct joint supervision plus follow-up exercises.
Is it even a good idea to do land financing? Well, know now: buying a lot to build the house or even resell is an exciting investment, yes! But have you ever stopped to wonder if the interest of a banking operation does not end up nullifying these advantages?
Be careful not to get carried away by anxiety. It is expected to maintain prudence at all stages of the procurement process. When discussing a high-value investment, you must carefully put the bills at the pencil’s tip. So, you can compare with the alternatives, such as the consortium, to see which is more attractive.
To evaluate whether the consortium is a viable option and know the costs of financing a land, follow the post today!
How Does the Real Estate Consortium Work?
Those who want to finance the Housing Finance System (SFH) find it difficult to acquire land without construction. The idea of the program is to favor the acquisition of its housing.
Some banks offer alternative financing lines for the purchase of lots. However, what happens is that interest rates are even higher than those charged by SFH and the Financial Real Estate System (SFI). Thus, the purchase comes out much heavier for the pocket.
Some people still do not know that the real estate consortium can also be used for land acquisition! That’s right: there are no impediments to this. It is allowed, therefore, to buy simple or under-construction lots in urban or rural areas.
Enjoy knowing some of the characteristics of this modality:
- Security: The Central Bank supervises it
- Accessibility: does not require payment of entry
- Practicality: can cover up to notary fees
- Economy: no interest collection
- Flexibility: it has longer-term options
- Facility: has more affordable plots
- Bargaining power: the letter of credit is worth a cash payment
A pause to better describe the cost of the notary’s office: who buys land through the real estate consortium can also use part of the value of the letter of credit to pay the fees charged in releasing the documentation of the property. Did you buy the land and still have a balance of the letter of credit? Then, you can pay for notary fees, documentation, and taxes!
Why is it an Alternative to Financing?
Many people who want to buy land soon face financing constraints. Also, due to the abusive interest in the modality, the final value is much higher than the initial one. Yes, the loss is significant. It makes land loans a riskier transaction for a lender.
Want to get an idea? Do the math! Imagine you wish to finance land costing $100,000 in 180 months. You find a bank that practices a rate of 8% a year (equivalent to 0.6434% per month) and finances a maximum of 80% of the land value. You will, therefore, give $20,000 input. When making the account using a financial calculator, you will see that, under these conditions, the monthly installment will be $751.68. 
However, when you go to the bank, you will come up with a figure well above that! They will include the following values:
- Bank fees
- Collection of taxes
- Insurance and other added products
- All this is embedded in the amount to be financed, composing the final installment!
All in All
A land loan is financing that lets you purchase a plot of land. You can get a land loan through a bank lender who evaluates your credit history and the ground to determine whether you are eligible to buy
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