What are presale loans?
Pre-sale loans are a form of financing that allows buyers to purchase a property before it is built or completed. Typically, the terms of these loans can range from 10, 15 and 20 years, which provides flexibility to meet the individual financial needs of each buyer.
With this type of financing, buyers can obtain up to 90% of the value of the property, which allows them to access greater purchasing power and take advantage of investment opportunities in the real estate market. This financing may be provided by financial institutions such as banks or credit institutions, and is generally subject to certain requirements and conditions established by the lender.
In summary, pre-sale loans represent an attractive option for those who wish to secure their future property in advance by obtaining the lowest prices, with flexible terms and a high percentage of available financing. However, it also carries certain risks, such as possible delays in construction or changes in market conditions.
Benefits of acquiring a presale property
Considering these benefits to purchase a pre-sale property can be an excellent option to secure your future property and make a smart investment in the real estate market.
- Lower costs: By buying pre-sale, you can access lower prices compared to the market value once construction is completed, allowing you to save significantly on the purchase of your new home.
- Higher appreciation in the future: Investing in a pre-sale property tends to generate higher appreciation over time. By acquiring your property before it is built, you have the opportunity to benefit from an increase in value as development progresses and construction is completed.
- Brand New Everything: One of the greatest advantages of buying pre-sale is the possibility of brand new everything from the ground up. Enjoy a brand new home, designed according to your tastes and needs, without worrying about remodeling or repairs.
- More Affordable Payment Schemes and Down Payment: Developers usually offer flexible payment schemes and a more affordable down payment for pre-sale buyers. This facilitates the buying process and allows you to spread the cost of the property more conveniently over time.
Risks and Considerations
Before purchasing a pre-sale property, it is important to consider the following key risks and considerations:
- Potential Construction Delays: One of the main risks when buying pre-sale is the possibility of construction delays. Factors such as weather conditions, financing or permitting issues can cause delays in project delivery, affecting your move-in plans.
- Changes in specifications: As the project progresses, the developer may make changes to the original specifications for the design, materials or layout of the property.
- Financial Risks: While pre-sale payment schedules tend to be more flexible, you should carefully consider your financial ability to meet scheduled payments. A change in your financial situation could affect your ability to complete the payment for the property.
- Developer Default: There is a risk that the developer may default on its contractual obligations, either because of financial difficulties or unethical business practices.
- Warranties and Legal Protections: Make sure you understand the warranties and legal protections available in case of default by the developer or any other problems during the purchase process.
Acquisition Process
The process of acquiring a pre-sale loan involves several crucial steps, here are the most general ones:
- Submit the Credit Application: Start by completing the credit application with the bank or financial institution of your choice.
- Receipt and Review of Documentation: Once the application is submitted, the required documentation is received and reviewed, such as proof of income, official identification and financial statements.
- Income Review and Bank Approval: The bank will review your income to determine your ability to pay and evaluate the viability of the loan. Once approved, you proceed to the next stage.
- Appraisal and Title Deed: An appraisal of the property is performed to determine its commercial value and the title deed is executed, where the terms and conditions of the loan are established.
- Signing of the loan: Finally, the loan contract is signed, formalizing the agreement between the buyer and the bank, and the funds are delivered for the acquisition of the property.
This process guarantees a secure and transparent transaction, giving you the necessary confidence to take the step towards the purchase of your new home in pre-sale.
Requirements
To apply for a pre-sale loan, the general requirements are usually the following:
- Age: Be between 18 and 65 years old.
- Verifiable income: Present verifiable income through bank statements, payroll receipts or other bank instruments.
- Payment capacity: The payment capacity must be at least 3.5 times the amount of the loan requested.
- Work seniority: Have a minimum seniority of 3 years.
- Joint income: Income may be added with that of a partner, siblings, partners or friends, provided that all submit their application for enrollment.
- Official identification: Present a valid official identification.
- Credit bureau: Have a current and favorable credit history.
- Credit application: Complete and submit the corresponding credit application.
- Proof of address: Provide a recent proof of address.
- Additional documents for Infonavit Support: Irrevocable letter of instruction and letter of authorization.
Hir Casas
Requirements to contract PreSale Credit
- Age from: 18 to 65 years old.
- Verifiable income with different bank instruments or receipts.
- Bank statements or payroll receipts.
- Payment capacity must be 3.5 times.
- Income can be added with partner, siblings, partners, friends.
- Everyone must submit their application for enrollment
- Official identification
- Updated credit bureau (regardless of your form of income verification).
Benefits and features of Hir Casas mortgage loans
- Lowest down payments in the market
- Flexibility in Income and Credit Bureau verification
- We finance other types of properties
- Includes Life, Unemployment and Property Damage Insurance
- Financing for your real estate or development property
- Professional treatment and agility in the title deed.
- Personalized advice and support
- A lasting relationship
- Reliability and trust
Application and approval process
- Calculate your financing
- Enrollment
- Periodic Payments
- Award
- Deeding
Scotiabank
Scotiabank Mortgage Loans: Available Options
| Crédito Valora | Crédito Pagos Oportunos | |
|---|---|---|
| Deadlines | 10, 15 y 20 years | 7, 10, 15 y 20 years |
| Financing | Up to 95% | Up to 95% |
| Profits | By paying on time, the customer can reduce the rate and prepay the loan. | By paying on time, you will prepay your credit. |
| Pre-sale loans offer fixed rates and constant payments, with the possibility of reducing the interest rate annually if the client pays on time. An increasing payment schedule is also offered, where the interest rate is determined according to the down payment, credit history and level of indebtedness of the client. | ||
Requirements to contract PreSale Credit
- Age from 25 years old.
- Minimum verifiable income (Infonavit support $7,500 mxn, without Infonavit support $10,000 mxn).
- Minimum 2 years of seniority in current and previous employment.
- Credit application
- Official identification
- Proof of income
- Proof of address
- Irrevocable letter of instruction and letter of authorization (only applies to Infonavit Support)
- Work program and budget
Benefits and features of Scotiabank’s mortgage loans
- Lower cost of the property: Buying in pre-sale generally allows you to acquire the property at a lower price compared to the value once completed, which can generate a higher capital gain.
- Customization opportunity: By acquiring a property from the pre-sale with the developer, you have the opportunity to make adjustments and customize certain aspects of the property according to your tastes and needs.
- Deductibility of interest: The actual interest on the mortgage loan is tax deductible, which can represent a significant tax savings.
- Apply your Infonavit support: You can use your Infonavit support to finance the purchase of the property, combining your labor benefits with bank financing to maximize your purchasing power.
- In order to make the loan available, a work progress verification must be prepared for the house or apartment to be financed.
- In order to grant subsequent installments, it will be necessary to carry out additional verifications of the progress of the work.
PreSale Loans Which to choose: Hir Casas and Scotiabank
| Hircasa | Scotiabank | |
| Benefits | – Lowest down payments in the market
– $7,700 MXN for each million contracted – Flexibility in payments – Life and unemployment insurance |
– Low monthly payment -Decrease in interest rate and term of loan for on-time payment |
| Financing | Pre-sale from $300,000 MXN to $15’000,000 MXN | Up to 95% of the value of the guarantee |
| Deadline | Maximum term up to 10 years | 10, 15, 20 years |
| Fixed initial annual interest rate | It will be in the range of 7.6% and 9.9%. | It will depend on the credit study and will range from: 10.75% to 13.00%. |
| Monthly payment per thousand pesos of credit | $7,700 MXN for each million contracted | It will depend on the initial rate |
| Opening Fee* | Not available | – 0.75% for each installment if with Infonavit Support
– 1.00% for each installment, exchangeable for a prepayment penalty fee** of 3% + VAT. |
| AVERAGE CAT (Excluding VAT) | Not available | – 10 years (11.7% – 11.9%)
– 15 years (12.1% – 12.4%) – 20 years (12.2% – 12.4%) |
Direct Financing
Direct financing is a method of financing in which developers or suppliers of goods and services offer credit directly to buyers without the intermediation of traditional financial institutions such as banks. This type of financing is commonly used in the construction industry, especially for projects in the pre-sale stage.
How does Direct Financing work?
The direct financing process involves several stages and is characterized by the direct relationship between the developer and the buyer. The typical operation of this system is detailed below:
- Developer’s Offer: Real estate developers offer direct financing to buyers of properties under construction. This financing may cover from the beginning of the project until its completion and delivery.
- Credit Terms: The terms of the loan, including the term and interest rate, are set by the developer. In many cases, terms range from 1 to 10 years, with interest rates as low as 7% per annum.
- Financing Agreement: The buyer and developer sign a financing agreement that establishes the terms of the loan, payment terms, and required guarantees.
- Payments and Disbursements: Payments are made directly to the developer according to the agreed upon schedule. Disbursements usually coincide with construction milestones, providing a steady cash flow for the developer.
Advantages of Direct Financing
Direct financing offers several advantages for both buyers and developers. Here are some of the most relevant ones:
- Accessibility: This type of financing is often more accessible than traditional bank loans, as approval requirements may be less stringent. This facilitates access to financing for a greater number of buyers.
- Flexibility: The terms of direct financing can be more flexible, allowing for customized arrangements that better suit the buyer’s needs.
- Competitive Rates: Interest rates offered by developers can be competitive, in some cases as low as 7% per annum, which represents an attractive option compared to bank rates.
- Simplified Processes: By eliminating bank intermediation, the credit approval and disbursement process can be faster and less bureaucratic.
- Mutual Benefit: Developers secure early sales and steady cash flow, while buyers have access to financing to acquire properties under construction, often at lower prices during pre-sale.
Financing 30/70
30/70 financing is a payment scheme in which the buyer pays 30% of the value of the property as a down payment and the remaining 70% is paid upon delivery of the property. This method is common in pre-sale or pre-construction real estate projects, allowing buyers to secure a property with a relatively low initial investment.
How 30/70 Financing Works
The operation of 30/70 financing involves several stages and options for the buyer:
- Down payment (30%): At the time of purchase, the buyer pays 30% of the total value of the property as a down payment. This down payment secures the reservation of the property and may come from the buyer’s own resources.
- Preconstruction: During the preconstruction period, the buyer makes no additional payments. This phase can last between 12 and 18 months, depending on the project.
- Payment of the Rest (70%): Once construction is completed and the property is ready to be delivered, the buyer must pay the remaining 70% of the value of the property. This payment can be made through several options:
- Bank or Mortgage Credit: The buyer may choose to finance the remaining 70% through a bank or mortgage credit. However, it is important to consider that credit approval is not guaranteed.
- Own Resources: Alternatively, the buyer may use his own resources to pay the remaining 70% upon delivery.
- Resell the Property: In case the bank loan is not approved, the buyer has the option to resell the property, taking advantage of the appreciation period during construction.
Advantages of 30/70 Financing
This method of financing offers several advantages that make it attractive to both developers and buyers:
- Low Initial Investment: Only a 30% down payment is required, allowing buyers to secure a property with a relatively low initial investment.
- Payment Flexibility: Buyers have between 12 and 18 months to prepare the payment of the remaining 70%, either through a bank loan, mortgage or using their own resources.
- No Payments During Preconstruction: During the preconstruction phase, buyers make no additional payments, which provides temporary financial relief and allows for better financial planning.
- Possibility to Resell: If the bank loan is not approved, buyers can choose to resell the property, which can be an effective strategy to avoid losses and take advantage of the appreciation of the property during construction.
- Attractive for Developers: Developers can secure early sales and obtain an initial cash flow with the 30% down payment, facilitating the financing and continuity of the project.
Financing or Forms of Payment 30% – 40% – 30%.
Financing or 30% – 40% – 30% payment methods are a commonly used structure in real estate and construction projects, especially by real estate developers. This method involves dividing the total cost of a property into three main payments: an initial 30% down payment, followed by 40% during the construction period and the remaining 30% at the end of construction.
How does the 30% – 40% – 30% financing work?
- 30% down payment: At the beginning of the project, the buyer makes a down payment equal to 30% of the total cost of the property. This down payment can be considered as a token of the buyer’s commitment and is usually necessary to secure the project.
- 40% during construction: As construction progresses, the buyer makes additional payments to cover the remaining 40% of the total cost. These payments are usually scheduled at specific stages of the project, reaching the full 40% at the end of the main construction phase.
- Remaining 30% at the end of construction: Once construction is completed and the relevant authorizations have been obtained, the buyer makes the final payment equivalent to the remaining 30% of the total cost. This payment finalizes the acquisition process and allows the buyer to take full possession of the property.
Advantages
- Financial Flexibility: This payment structure offers flexibility for both the buyer and the developer. The 30% down payment provides the buyer with additional time to arrange the necessary financing, while the staggered payments during construction help spread the cost more manageably.
- Risk Mitigation: By splitting the payment into several stages, both the buyer and the developer share the financial risk more equally. This can reduce exposure to potential financial problems or project delays.
- Incentives for buyers: For buyers, this method of payment may be attractive due to the lower initial financial burden compared to other financing methods. In addition, by paying a significant portion during construction, the buyer may feel more confident in seeing the progress of the project before making full payments.
Frequently Asked Questions about PreSale Loans
What happens if the project is delayed?
If the project is delayed, pre-sale contracts usually include specific clauses for these cases. These clauses define the procedures to be followed and the rights of buyers in situations of delay. In addition, as a buyer, you can request compensation for damages caused by the delay. It is crucial to read and understand these clauses before signing the contract in order to know what your rights are and the actions you can take in case of a delay in the construction of the property.
Is it possible to cancel a presale loan?
Yes, it is possible to cancel a pre-sale loan, as long as you have covered 100% of the down payment. Once this is done, a time frame will be established for the return of your money, according to the terms and conditions agreed upon in the pre-sale contract. It is important to carefully review the cancellation clauses before signing to fully understand the process and any possible penalties or additional costs.
What are the additional costs to consider?
- Appraisal cost
- Notary and deed expenses
- Down payment (can be from 10% to 20% of the total value of the property)
- Credit approval
What are the financial benefits of acquiring a presale property?
One of the main financial benefits of acquiring a property in pre-sale is the significant savings you can obtain. By buying at this stage, i.e. the stage with the lowest price, it is possible to save up to 30% of the value of the property compared to its price once construction is completed. This discount is due to the fact that developers usually offer lower prices to attract first-time buyers and secure project financing.
Conclusion
Pre-sale loans represent an excellent opportunity to acquire properties at lower prices and with appreciation potential. As you can see, Hir Casas and Scotiabank offer integral solutions that facilitate this process, providing security and confidence, as well as helping you save time and hassle. For more information, you can contact us directly to give you specialized advice and start building the path to the property of your dreams.
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