The property market has been slow in recent months, and many new projects are seeking to speed up sales. In addition to selling properties at "big discounts", many developers will also launch some mortgage discounts to help buyers. For example, there were new projects earlier. It provides mortgage interest rate protection, payment holidays (that is, interest-free and payment-free within a specified period), progressive mortgages, and stress-free interest payment non-payment plans, etc. Many people describe this type of developer mortgage plan as " "Breathing Plan" means that buyers can borrow money as long as they are still breathing. Is this true? Is this type of plan more cost-effective than a bank mortgage? Are there any risks?
Example analysis of new property mortgage plan
Let’s take two recent new mortgage plans as examples. First, calculate whether the payment holiday plan is cost-effective. Because of the "New Mortgage Insurance" plan (for example, a 90% mortgage for more than NT$4 million), you can only apply for the existing property. Therefore, if there is a new uncompleted project, the developer will provide a loan of up to 90%. The "first + second mortgage" plan is to make a first mortgage from a bank and then borrow a second mortgage from the developer to create a "high-percentage mortgage" plan. At the same time, buyers can earn instant property price discounts. Most of the second-mortgage loans from developers calculate interest in stages, such as interest-free and payment-free in the first year (contribution holiday), and the interest rate in the second to third years may be P-2% (currently about 3.8751 TP3T), the interest rate will be higher after renewal, and may rise to P+1% (currently about 6.875%).
Example analysis of new development “first + second” plan
Take a recent unfinished project with a similar plan as an example. Suppose a customer purchases a unit with an original price of about NT$8.61 million. The "first + second" developer discount is 9%. The discounted property price is NT$7.83 million. 70% is used by the bank. Mortgage, 20% is the developer's second mortgage. Due to the higher discount on property prices, if the interest rate and term remain unchanged, even if the second mortgage enters a high interest period in the 4th year, this plan will still be cheaper than the construction period payment plan. The monthly payment is as low as about 244 yuan. (See chart 1). Calculated in this way, it seems that just the high interest on the second mortgage portion is still not a "loss", but the owner's flexibility in remortgaging is greatly reduced.
Risk Analysis of Remortgaging to Earn Cash Rebate
Assume that property prices will remain at the current level in the next two years. If the owner wants to remortgage after two years to earn cash rebates, the developer must obtain the approval of the first mortgage bank for the second mortgage, so the owner cannot just transfer the first mortgage part. It is possible to "get rid of" the second mortgage at the same time. However, for this kind of loan application to transfer the second mortgage, the maximum mortgage ratio accepted by the mortgage company is only 80% (6.264 million yuan), and after two years of payment by the owner, the remaining loan amount It’s about NT$6.76 million. If you want to remortgage, you have to make up the difference of about NT$490,000 first.
In addition to providing second mortgages, some developers have recently launched mortgage plans that require no proof of income and no stress test. They can also have a low interest period for the first three years. The interest rate is lower than bank mortgage plans, and the mortgage ratio is as high as 90%. It is indeed "Easy to get on the bus." However, this type of mortgage plan generally has a very short term, for example, only 3 years. If the developer no longer provides a renewal mortgage plan after 3 years, the situation may have similar risks to the payment holiday just provided. If property prices do not increase in the next 2 to 3 years, if you want to switch from the developer's mortgage back to the bank's mortgage plan, you may have to make up money.
In addition, many developer mortgage plans may have looser requirements for applicants' income approval than mortgage companies. If the owner does not properly prepare income proof documents, such as tax bills, food receipts, and MPF during the developer's mortgage period, Payment record, or failure to maintain a good credit record, etc. may affect the smooth transfer back to the bank mortgage plan. It should also be noted that although the income test for developer mortgages is relatively loose, it is not necessarily a "guaranteed loan". Some will still require buyers to provide certain supporting information. Therefore, it is recommended to do your homework before deciding to purchase. Or find professionals to help analyze the risks, costs, pros and cons of developer mortgage plans and bank plans, and then make the decision that best suits your situation.
(Picture source: Data picture)