In order to save money, it is necessary to know how to organize finances so that it becomes possible to have a reserve available. These values can be useful to acquire the long dreamed of own home. It happens that it is often difficult to save resources over time. Therefore, financial institutions created alternatives for buying real estate.
In this post, Blue World City Islamabad will let you know about the benefits of consortium, what types are available and how they work in practice. In addition, we are going to present a comparison of this modality with financing, which has different characteristics.
Here, you’ll discover details about tax savings, scheduled purchases, plans, deadlines, and more! Want to learn more about the consortium benefits? Follow the reading.
What is a consortium?
Consortium is a type of savings or collaborative purchase that allows a group of people to purchase goods or services. It is an excellent option for those who want to acquire a durable good and who can wait a certain time before getting it. The template is important if you want to buy without paying high interest rates.
How it works?
Consortia follow a pattern of operation, no matter what their type. Group members pay a monthly installment until they reach the full amount of the plan. However, while payments are being made, the managing institution makes monthly drawings and the members of the group are awarded.
The financial institution performs a credit analysis before awarding the award. After being drawn, the participant continues to pay the monthly installments, as he became the debtor of the amount that is needed to close the value of the good. If he interrupts payments, the property can be seized according to the terms established in the contract.
What types are there?
There are several types of consortia available on the market. Among them are plans for services, automobiles, machinery and equipment, boats, aircraft, furniture and real estate. Generally people make a consortium for motorcycles, cars and houses or apartments. Real estate such as land, buildings and renovations can be consortium objects after they are built or still on the plan.
When someone makes a consortium for investment in property , it can take up to 15 years to receive the letter of credit. However, if the participant can bid higher, the odds of receiving the good are greatly increased. Upon receiving the raffle document, the group member has the possibility to choose a piece of land, a new or used house, or use the money to build and renovate.
What are the benefits of a real estate consortium?
If you prefer, it is possible to make a direct financing with the construction company, but the consortium benefits to the group’s participants are countless. One of them is the fact that you don’t need to give a down payment to start paying the installments. The consortium member can advance them in order to be contemplated quickly. See below for the main advantages!
1. Savings with fees
The lending bank include interest charges are not included in consortium mode. As a result, the consortium participant will pay much less than if it were to borrow from a bank. On the other hand, if the consortium member is contemplated and does not want to withdraw the amount immediately, the money remains in an account earning interest at the Selic rate.
Practicality is another interesting aspect of the consortium. The letter of credit is given to the participant, so that he can buy a property according to his needs. In this way, a land, house or apartment with a lower price can be chosen, and the rest of the amount can be used to pay off other installments of the consortium or pay documents related to the acquisition.
In the real estate consortium, the consortium member is free to do whatever business he/she wishes. The only requirement is that the category of the good is not changed. The property can be residential or commercial. In addition, the value of the letter of credit is available to be used to pay a debt related to another financed property, renovate your own home or build on land.
Another option is to withdraw the money corresponding to the credit and settle the quota through a bid so that you no longer have debt related to the consortium. In case of withdrawal, the consortium member will receive back a portion of the amounts paid. The reimbursement forecast must be registered in the contractual instrument signed by the parties.
4. Scheduled purchase
Scheduled purchase is essential for people who want to have their property paid off, however, they do not have the resources to make a down payment. Through it, it becomes possible to plan without compromising the entire monthly budget. Payment is facilitated by bank slip, automatic debit and credit card. This is a way to make dreams come true without having to use savings.
5. Variety of plans and deadlines
Consortium financial institutions present different plans with different deadlines, so that one of them fits the profile of the interested parties. The value of the letter of credit is defined so as to be proportional to the desired asset, with affordable installments and a term within the financial conditions of the consortium member.
6. Reduction of bureaucracy
The process for joining the consortium is less bureaucratic than real estate financing . The consortium member does not need to prove monthly income and can be registered with the credit restriction agencies. The situation will only be analyzed when the group member receives the letter of credit, so that he will have more time to regularize his name.
7. Use of FGTS
Use of the Severance Indemnity Fund (FGTS) is permitted by law to place a bid . This way, the consortium member has a chance to buy his house before paying off the contract in full. The FGTS portion can also be used together with the credit amount in order to acquire a more valuable asset.
What are the differences between consortium and real estate financing?
There is no interest charge on consortia as there is for bank financing, but a reserve fund, insurance for the property and a small administration fee can be pre-established to cover the costs of the administrators. Thus, the consortium becomes a long-term investment .
The consortium member can be drawn at the beginning of payments or within a few years he will receive a letter of credit. In loans, the consumer receives the amount borrowed right after signing the contract, but in the end will pay a much larger amount than what he received.
How can a consultancy help?
A consultancy can help the buyer to choose the best consortium plan according to the economic conditions of each one. The professional will explain all the points and indicate the most viable alternative after checking the documents presented.
Anyway, now you know the seven benefits of the consortium that you needed to know. The CrediPronto offers expert advice on mortgages for their clients, take all doubts with agility and facilitates the purchase of real estate throughout the country. The financial institution has been in the market for many years, is 100% reliable and avoids bureaucracy. Download the CrediPronto app from Google Play or the App Store to simulate real estate or consortium financing.
Still have questions about financing and consortia? Please contact us now and request more information!