Homeownership is still the dream of many Brazilians. But an investment of this size is not feasible for most people. Thus, real estate financing becomes a necessary option. The real estate credit can be classified in the SFH or not. But what is the difference between the systems?
SFH (Housing Finance System) and SFI (Housing Finance System) are the two existing financing systems in Brazil. It is important to clarify that when we refer to them, we are talking about standards. The goal of SFH and SFI is to impose on credit companies a set of rules to protect the financial market and the consumer.
Otherwise, each bank would work in its own way and this would cause disagreements. Having made this clarification, we recommend reading this article in full so that you can understand the topic!
But, what is SFH?
Created in 1964, SFH was designed to help the country’s lower-income classes obtain their own home. Today, however, this system serves people from different income groups, due to the values of the properties. For you to better understand, a program that fits into SFH is Minha Casa, Minha Vida.
And why is the interest rate cheaper?
You pay lower interest rates because your financing money also comes from cheaper sources. SFH funds come from the Savings Account. It pays very little for those who leave their capital in the savings account. In 2018, this investment option brought nominal gains of 4.62% to investors, so it costs less for the bank that borrows the money.
Another source of funds is FGTS, which yields less than Savings. In 2018, the amounts raised by companies for deposit in this fund had a nominal yield of 4.16%.
What are the rules?
The maximum value of a property that falls under SFH is R $ 1.5 million. The financing cannot represent more than 80% of the value of the property (including incidental expenses).
It must be registered with the Real Estate Registry Office, be residential and urban, be located in the region where the contractor resides or works (for at least one year). In addition, FGTS has not been used to finance or build the property in question in the past three years.
The rules governing SFH were created by the government and are supervised by the Central Bank, but were updated in 2018. The new SFH rules began to apply in 2019. In the past, the maximum interest rate was 12%. However, banks are now free to negotiate this value with the customer.
It is important to clarify that the average amount of interest charged has always been around 10%, never approaching the maximum ceiling, making it of little relevance in practice. The consumer should also be aware of the index that will readjust the contract.
With the new regulations, they also vary from bank to bank. This means that the client must research these values before contracting the financing.
The maximum term is 35 years, equivalent to 420 months. It is worth mentioning that it is necessary to have a clean name, that is, to have no negativity in the SPC Serasa or pending issues with the Federal Revenue Service.
What are the advantages of SFH?
SFH offers the borrower the main advantage of receiving financial resources instantly to immediately purchase their property. This is the system most used by consumers for the acquisition or construction of residential properties because interest is the lowest and it is possible to use FGTS in financing.
The values are available according to the limits imposed by the state, and they vary from one entity to the other. With the use of the Constant Amortization System, the borrower will be able to finance up to 90% of his property. Otherwise, the financed amount will reach 80% of the property’s value and the bank cannot commit more than 30% of its income.
In this modality, the program Minha Casa, Minha Vida is inserted, which is highly sought after by Brazilians who dream of having their own property. The correction of each installment is made based on the reference interest rate, which is the same as the savings account.
And the disadvantages?
The main disadvantage of SFH is that banking institutions charge numerous fees to the borrower to register and do not finance 100% of the property’s value. Another negative issue is that the states determine a maximum amount that can be financed. In some cases, this amount may be insufficient for the purchase of the desired asset.
In addition, the borrower cannot have his name denied or enrolled in the credit restriction bodies. If there are irregularities with the Federal Revenue Service, registration with Serasa, the Central Bank or the SPC, the loan will not be granted. To use FGTS, it is mandatory to have three years of formal contract and the applicant cannot have another financing through the same system.
In addition, the property must be located in an urban area and be for residential use, as well as be registered with the city’s Property Registry. No other financing could have been made in the past three years to build the house or apartment. The buyer will have to prove that he has lived or worked in the city for at least one year.
Can I use FGTS?
If you intend to use your FGTS balance to reduce the amount financed, it is important to know some prerequisites. Are they:
- have no other SFH financing;
- not having another urban residential property in the region where you work or reside;
- having contributed to the FGTS with at least three years of work, consecutive or not, in the same company or in another.
If you are buying a property together with another person, be aware that it is possible to add the FGTS balance of more than one buyer, as long as both respect the rules mentioned in the previous topics.
As this amount is deposited monthly by the companies, during the financing, the customer will be able to use it to repay his debt or pay up to 12 installments that are overdue.
What is SFI?
The Real Estate Financial System encompasses all financing that is not in SFH. That is, to find out if the property in question is included in the SFI, just pay attention to the requirements of the SFH. If any is violated (value greater than the allowed price, commercial property, property in a rural area, located outside the region where the contractor resides or works, etc.), the financing is governed by the SFI.
This system serves an important part of the real estate market: investors. Remember that there are people who buy real estate in order to resell them, making a profit. In this case, SFI meets the needs of that sector.
Another slice of the real estate market served by SFI is the luxury real estate trade – and this is very important for the sector, since they are complex projects, with great market value and that generate many jobs in their construction.
To give you an idea, even in the crisis, interest in luxury properties has grown. An article in Correio Braziliense showed that this sector had a 20% increase in its constructions.
Finally, companies are also benefited by SFI, since they need financing to buy a property that will host the business, for example.
And where does SFI money come from?
In the case of SFI, the resources that enable real estate financing come from investors in the real estate sector, such as banks and finance companies. Fixed income funds, for example, often finance SFI.
The rates for SFI financing are not fixed. In 2018, the average value of this interest was 10% per year. Banks have the autonomy to practice the rates they believe to be adequate, making consumer research very important.
It is necessary to remember that it is not possible to use the FGTS in the case of financing governed by the SFI. This is not a bad thing, as this credit option attracts corporate clients and does not make much sense for workers with a formal contract.
What are the advantages of SFI?
Among the advantages of SFI is the possibility of acquiring more than one property using the same system. Furthermore, the property does not need to be used exclusively for residential purposes. In this way, the borrower will be able to make use of it for trade and there is no limitation in relation to the amounts financed or the price of the properties.
Large investors bet their resources, for example, on investment banks, insurance companies, fixed income and pension funds. Its transactions follow the real conditions of the real estate market and are freely practiced. The Consumer Protection Code is applied to contracts to avoid an imbalance in the relationship between banks and credit applicants.
And the disadvantages?
One of the disadvantages of this system is the impossibility of using FGTS values. Another negative factor of the SFI is the higher interest rates and the need for proof of income for banking institutions. If there are illegalities, such as onerousness, tied sales or unfair terms, the consumer will have to go to court to review the conditions of the loan.
Which is best for me?
The answer is simple: if the property you want to buy falls under SFH, the regulated (and low) rates, in addition to the possibility of using FGTS, make financing more attractive and less costly.
If the property does not meet SFH requirements, do a new market survey with the requirements in mind and pay attention to cheaper financing opportunities. It is possible to find good properties and buy your home without compromising much of the income!
In addition to SFH and SFI, whoever wants to buy a house or apartment must include one more term in this alphabet soup: the Total Effective Cost (CET). It is common for the customer to focus only on the interest rate on a loan, but this transaction involves other costs, such as fees and taxes. In practice, knowing this value will help you make the best deal.
Understanding how SFH and SFI work is important for citizens to learn more about the real estate system. It is one of the most relevant sectors of the economy, as it generates jobs, works with private financial resources (Savings, FGTS, etc.) and finances the biggest dream of the Brazilian: housing.