One question that arises when making a mortgage is the difference between the SAC or Price table. These two ways of calculating the interest on the debt installments can make life easier or harder for those who are about to buy your property.
In practice, understanding the operation of these Price or SAC calculation systems is very simple. The main distinction between them is in speed and in the form of a gradual reduction in debt or amortization. The total amount of interest and the value of the installments is affected according to the choice between these two tables.
If you are curious, read this article to the end to understand everything about this topic.
Understand how real estate financing works
Roughly speaking, people understand bank financing as a product offered by financial institutions, in which the company profits from interest. Therefore, in the minds of some consumers, banks charge interest without any specific criteria, just aiming at their own benefit.
This thinking is incorrect. First, interest rates must obey the rules of the current monetary system. In the case of real estate financing, carried out by the Housing Finance System (SFH), this interest rate tends to be around 10% per year. However, currently, this percentage is much lower.
However, it is important to remember that the function of interest is to protect the capital used in this financing. Therefore, when it comes to loans and financing, the rule is simple: the more risky the transaction for the lender, the higher the interest charged.
Another element that enters this equation is the monetary correction, which will affect the amount to be paid, correcting the loss of value that the currency may experience in the period – the result of the inflationary process.
So that the risks of this transaction do not disturb the real estate credit market, these companies organize this process in compliance with the fixed rules of financing, contained in the tables already mentioned.
Learn more about the existing tables for real estate financing
The moment someone decides to buy a financed property, they need to choose which amortization system will be applied to the amounts borrowed. The banks or finance companies, together with the consumer, define how the debt will be paid and whether to use the SAC or Price table. See the pros and cons of these two tables below!
The acronym that gives the name to this system means Constant Amortization System. Therefore, the payment of the amount lent by the institution occurs on a regular basis during real estate financing. However, the installment is not made up only of the payment of the loan, but of the sum of it and the interest.
In the SAC table, interest is levied on the remaining amount of the debt. As interest is paid, interest amounts to less and less money and, therefore, lowers the value of the installment. Therefore, whoever chooses this system starts the process by paying a high monthly fee, which reduces over the months.
Consequently, the amortization is higher at the beginning of the contract, making the first installment of the financing higher than in the Price table, since the same interest rate is applied. However, when it is compared to the final amount paid for the financing, without considering the monetary correction, the SAC system will charge less than the Price.
Therefore, the SAC table is interesting for those who do not expect to see increases in their income during the financing payment period. But if there is a possibility of an increase in the income of the borrower, the option for the Price table makes more sense.
- Real Estate Financing: What do I need to know?
In the Price Table, the monthly fee will be the same for the entire payment period. Interest is calculated based on the total amount of the loan. However, the composition of the plots is different. In the first payments, it will be constituted primarily with a view to paying interest, while the final payments are directed towards debt repayment.
For the consumer, this information only serves to resolve their curiosity, since, as already mentioned, the monthly fees will remain the same throughout the financing period. It is worth mentioning that this table is widely used to finance cars that normally have a payment period of 48 months. It facilitates the organization of accounts and is more predictable.
In both the SAC and Price systems, the debit balance is reduced according to the payment of each installment. In this way, the debt gets smaller and less interest is levied on the amounts. On the other hand, the agility and the way of amortization are different, since they affect the value of the installments, and the total amount of interest is impacted.
No matter what the amortization system selected by the bank or financial institution is, financing contracts generally have monetary restatement. The correction is used to update the amount of the outstanding balance and the amounts of the installments to be paid. It can be pre-fixed or post-fixed.
When the monetary correction is pre-fixed, the bank or finance company estimates the amounts and already includes it in the loan’s interest rate. In this case, the amounts will be higher than in the post-fixed model, which does not use estimated values.
If the monetary correction is post-fixed, it will be linked to one of the market indexes, for example, the IGP-M, the IPCA or the TR. In this situation, the update is calculated after the closing of each month. Therefore, it is important to assess how long the financing will take .
If it is going to last up to 3 years, it may be worth opting for the Price table. On the other hand, if you prefer to assume a higher installment, the SAC table will provide a lower debit balance at the time of discharge. However, the consumer will not always be able to choose between the two real estate credit tables.
Banking institutions do not usually approve financing that exceeds between 30% of family income. This is because plots that are too high can compromise the survival of consumers, who end up not paying the debt later. The values in the Price table are cheaper at the beginning, and the installments of the SAC system exceed the percentage used as a limit by banks.
Find out what is the best form of real estate financing
Both options offer advantages to the customer. For those who do not have the capital to pay large installments at the beginning of the financing, Price can bring security in the purchase, since the first monthly payments in this table tend to have a low value, but not always lower when compared to the SAC.
For customers who want to reduce interest expenses, the Constant Amortization System is more suitable. Buying a property using this calculation can save the investor up to 15%.
It is always good to clarify that an important factor to make this purchase even more advantageous is the amount that will be given in the financing. Therefore, plan your financial life, pay debts so as not to damage your name in the square and do not spend your money on interest on such debts.
In addition, create a savings account, or at an investment brokerage, to be able to apply a fixed amount and increase the capital that will be offered in your mortgage loan. Another valuable tip is to do financing simulations to be able to visualize, in practice, the differences between the Price and SAC tables.
If you still have doubts about the amount you can pay for a property, keep researching and visiting. As we know, the economic recovery is still taking place, which means that many people are disposing of their properties in order to raise capital. Therefore, it is worth spending to go in search of good business opportunities.
Discover the advantages of the Price and SAC tables
Each table has its own advantages. For this reason, the consumer needs to analyze his needs and conditions when making his choice and applying for financing approval.
Below, check out some important points that must be taken into account!
With the Price table, the consumer knows exactly how much he will pay from the beginning to the end of the loan or financing and the amortization is increasing. The debit balance is being reduced more slowly so that it is indicated to facilitate vehicle financing.
The SAC table, on the other hand, presents the latest cheaper services and is indicated to promote the acquisition of real estate.
The calculation of installments in the Price method is carried out by means of a formula, with the application of the interest rate in a given period. Thus, the value of the parcels is determined according to the value of the good that will be acquired by the consumer.
Tuition fees do not increase due to initial payments and the amortization of the outstanding balance, although the total interest is higher.
In the SAC system, the consumer saves money, as the interest rate will only apply to the rest of the debt. The installments paid at the beginning are higher, while the final payments are lower because the repayment of the financing is carried out every month. There is a steady and progressive drop in monthly fees from the first to the last payment.
Over the years, the value of the installments varies in the SAC system, regardless of whether the term is 20 or 30 years for the settlement of the debt or the use of FGTS in financing. However, after 10 years or a little more, tuition tends to decline.
In the Price table, there is no way to change because the value is fixed at the beginning of the contract and cannot be increased or reduced. Interest calculations in this system are done differently from the SAC system.
The application of the formula in the Price method generates a table that shows the interest entered in the installments. In the SAC system, amortization is applied with interest to calculate the final balance in each monthly payment.
This mathematical account is performed using the formula:
installment value = amortization + interest
The amortization calculation is performed by dividing the total debt by the number of installments.
Amortization is a process carried out to extinguish a debt by periodically paying amounts in a planned manner. The installment corresponds to the repayment of the money plus interest on the outstanding balance. It is a technique used to reduce the debts of different loans by means of gradual settlement agreed between the parties.
This constant and decreasing reduction is carried out until the complete elimination of the debt in the SAC system. In the Price table, the debt amortization value remains unchanged until the end of the financing or loan. This means that the value of the debt will increase due to the drop in interest rates and the maintenance of the same value of the installments.
Anyway, now you know everything about real estate financing, you can evaluate between the PriceE or SAC tables according to their advantages and differences! As we have seen, the calculations made to offer real estate financing are much simpler than most people realize.
Do you want more information on the topic? Then read our article on IPCA right now and understand what it is and how it is calculated!