The selection of loans under “Youth Apartments” is so far limited. Banks that have it on offer usually offer higher margins than in the standard offer. However, despite the higher interest rate, the Loan and Credit loan is cheaper due to the lower amount we borrow.
Seven institutions have already signed cooperation agreements with Bank Good Finance. For now, we can only submit loan. Other banks will start accepting applications from customers in a few weeks.
The selection is not too big and the price conditions
Are usually higher than in the case of a standard loan without any additional payments. In the case of PKO BP, the Loan and Credit loan bears an interest rate higher by 0.1 pp than the standard offer. In Pekao SA, the loan with subsidies has a margin higher by 0.1-0.25 pp depending on the loan amount. At E-Money Bank, the Loan and Credit and “ordinary” loan offers are the same, but the lowest margin possible is 2.20.
However, when assessing the loan under the “Apartment for the Young” program, it is worth comparing the installment paid by the customer and the total interest cost that will have to be incurred throughout the entire loan period. Despite the higher interest rate, with differences in margins at levels of 0.1-0.25 pp, a loan with additional payments is cheaper than a loan without additional payments.
The key to answering the question
Why this happens is a lower loan amount. Due to a subsidy of 10 or 15 percent of the replacement value, the borrower must return the lower amount of capital to the bank, and thus interest is accrued on the lower amount.
Two cases were analyzed – the purchase of a flat by a childless marriage and the purchase of a home by a married couple with one child. As follows from the calculations below, in each case the “Flat for the Young” loan is a cheaper solution than the loan without any additional payments. Despite the higher interest rate, the installment paid in the Loan and Credit loan is definitely lower.
By when will Loan and Credit pay off?
The key question remains at what difference in credit margins Loan and Credit will still be profitable. For the first example, the Loan and Credit loan installment will be equal to the standard loan installment at the moment when the Loan and Credit margin will be higher by about 0.9 pp.
In the second example, the installments will be similar when the loan with additional payment will be offered with the margin higher by about 0.7 pp. Therefore at such levels of interest margins, the loan with an additional payment will cease to be profitable.