Leaving rent and buying a property is the dream of most people. However, the possibility of making the payment in cash is not the reality of most Brazilians. So, opting for real estate financing is the perfect alternative to realize that dream even before you think. However, it is necessary to know that the financing consists of two amortization systems: Table SAC and Table Price .
Do you know which is the best option for you? Often, people make the decision under pressure or even without paying much attention to this detail – either because they are in a hurry to close a deal, or because they are unaware of the difference between these systems. This can result in future regrets and losses.
With this in mind, we have prepared this post so that you can better understand how each of these systems is applied in financing. In this way, it will be possible to make the best choice for your budget. Follow us!
Understand the importance of the decision on the form of financing
A loan is equivalent to a long-term debt whose monthly installments commit part of your budget. Therefore, it is extremely important to know the forms of amortization in order to pay the lowest possible amount of interest. First, it is necessary to understand the meaning of amortization. The term means to pay gradually, that is, to write off part of a debt.
When a credit line is contracted in a financial institution, it is necessary to use some method to calculate the installments, add interest, define the total term of the financing and the balance due in each period. These methods are called debt repayment systems. Among the most used, are the SAC Table and Price Table.
Making a choice knowing the systems well enables good financial planning. In addition to ensuring the efficient management of your resources, a well-done management also helps when it comes to preventing unexpected difficulties. After all, default can lead to loss of property and, thus, your dream of owning your property falls apart and brings great inconvenience and frustrations.
For this reason, we will explain the most used financing modalities. After that, you can plan your budget to cover the installments without any problems.
Find out what the SAC Table is
SAC is the acronym for Constant Amortization System, and is the most common modality for real estate financing. As the name implies, the amortization works steadily, that is, the amortization in the monthly installments of the financing settlement remains the same throughout the payment. To better understand, look at the example below.
Let’s say that the value of a loan is R $ 360 thousand, divided into 60 amortization installments of R $ 6 thousand each, and that the interest is 1%. As the interest rate is applied to the debit balance of the previous month, the first installment to be paid will comprise the R $ 6 thousand of the amortization plus R $ 3.6 thousand (corresponding to 1% of the R $ 360 thousand of the balance initial debtor), which results in a total of R $ 9.6 thousand.
In the following month, the installment will be R $ 6 thousand plus interest on the outstanding balance, that is, 1% on R $ 354 thousand. This results in a portion of R $ 9540. As the price of the installments decreases over time, many people imagine that it is the amortization that decreases.
As we saw in the example, what actually reduces is the amount of interest – since it is charged on the amount that remains to be paid – and not on the initial debit balance. Therefore, amortization is constant and interest is decreasing.
See how the Price Table works
Financing using the Price Table has fixed installments over the entire period. The amortization increases over time, while interest decrease. Thus, the initial installments are made up of more interest than the final installments.
In other words, the first installment is made up of more interest than capital. This process is reversed as the contract nears its end. The Price Table system is mostly used for short and medium term financing, but there are several types of real estate credits that use this method.
Know the advantages and disadvantages of the SAC Table and Price Table
The biggest advantage of the SAC Table is the fact that a smaller amount is paid each month. So, as payment is made, there is a certain amount of slack in the budget for the following month. The disadvantage is that the initial installments are usually much higher than those of a financing that uses the Price Table. Therefore, the SAC Table is a good choice for those who are able to anticipate the first installments as much as possible.
In turn, the Price Table allows greater predictability to elaborate long-term planning, as the parcels do not change. The negative point is that up to approximately half of the financing, only interest is paid, while the amortization of the outstanding balance is slow.
Analyze which is the best option
As explained, the two amortization methods offer both advantages and disadvantages. To find out which option is best for you, it is necessary to analyze which one best fits your financial particularities when purchasing a property. For example, if you have enough income at the beginning of the contract to pay for larger installments, the SAC Table offers less interest and installments that gradually reduce until the property is paid off.
Otherwise, the Price Table is the best alternative, since the installments are smaller from the beginning of the financing and remain the same until the end. Therefore, the choice between the SAC Table and the Price Table depends on your ability to pay on the date the contract is signed.
Now that you know the SAC Table and Price Table, do a good financial planning to analyze which is the best option. The ideal is to have a reliable real estate company with great experience. With market knowledge, you will receive all the help you need to choose the best method to fulfill your dream of buying a property.
Contact us right now to find the ideal property as well as to help you with all financing questions.