Home buying options that compete with traditional loans

Banks are not the only ones that lend money. Learn about other alternatives and how to access them.

Although at the end of last year 13.9 million Colombians had an active loan, only 1.1 million had one for buying a home, according to the 2018 financial inclusion report, making it the product with the lowest penetration in this market.

The trend continued this year, and the number of homes financed during the first three months fell by 5.4 percent compared with the same period last year. One of the reasons, among others, is that people —at least for now— do not want to take on long-term debt.

Others point out that asking prices are high and even that the adjustments the market is going through have forced companies to pause new construction while they sell the units still on the market. Amid these circumstances, this is healthy for the business, since there is no risk of oversupply or excessive debt among potential buyers.

In this environment, it is also clear that of the 26,177 properties financed during the first quarter of the year, 23,137 were financed —according to DANE— by traditional banks. And although this confirms their leadership, it is also true that today people have other options to apply for a home loan, either as a first choice or as an alternative after a bank rejects their application.

Employee funds

These are non-profit associations made up of employees who must make regular contributions and save permanently, in the amounts set by the organization. They currently offer savings and loan services.

Cooperatives

These associations are characterized by the fact that their members "have joined together to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise."

There are two types of cooperatives where you can get a home purchase loan: savings and credit cooperatives, of which there are 181 in Colombia and whose services and benefits are available only to their members. Loans can also be requested from financial cooperatives, of which there are 5 in the country. In this case, you can access their services without being a member.

Fondo Nacional del Ahorro

The Fondo Nacional del Ahorro (FNA) is a state-owned industrial and commercial company that also aims to promote the purchase of both new and used homes. As of June this year, it has disbursed 8,804 loans worth 700 billion pesos.

The entity explains that "the main requirement to apply is to be affiliated with this fund through severance savings or voluntary savings, whether employed or self-employed. You must also meet a minimum score to submit the application."

These entities are therefore additional options to traditional bank loans and, as with any service offering, it is up to users to evaluate which ones best suit their needs.

Source: https://www.eltiempo.com/economia/sectores/alternativas-para-comprar-vivienda-que-le-compiten-al-credito-tradicional-387414