Heritage: The most effective guide to build it

To think ahead it is never too early, it does not matter if you are single or already have a family. 

Forming a heritage is an essential part of building the future you want: in this guide we will tell you everything you need to know to achieve it. 

What is a heritage?

Heritage is the set of assets that belong to you as a natural person or legal entity and that regularly constitutes the wealth that you have or will have in the future. If you have already started a family, it is time to think about the future and the people who will come after you. What set of goods would you like to leave them? How do you want them to live? In a house rented at a high cost or in a property that you inherited him in order to live quietly, safely and with the economic solvency to build his wishes. And if you are single and want to become independent or are already renting, you may spend large amounts of money on rent, without any return on investment. Can you imagine if you already had a house? All that capital that you pay today as rent, you could use it to travel, buy a car or fulfill any wish you have. Today you have the opportunity to start building a heritage for yourself, your children or the family that comes later. It does not matter if it is a two-bedroom apartment or a house with large patios, the important thing is the property that will be inherited from generation to generation and I get all the benefits that owning a property means. An estate is an insurance of tranquility, happiness and financial support for your loved ones. It is a legacy that will be effective in 20, 50 or 100 years. It is the help that you will leave once you are gone. For all that and more, it is important that you decide to buy an estate, that you begin to invest your money in a much more beneficial way. Maybe you have already thought about all this before, but you had not decided to do it because for you it means a great responsibility. And you are right, buying a house or apartment is a very important project, however, it brings with it many positive things that will make you feel calm and fulfilled. Have the courage to change your future today. The “Build a heritage” project begins.

How do you know if you are ready to obtain or build an estate?

It is often thought that buying an estate is "complicated", "difficult" and even "impossible", however, it is easier than it seems. The process will be user-friendly once the steps are broken down and the nature of each is understood. The first step in acquiring an estate is to ask yourself the question "Am I ready to buy?" If so far you have not had the need to have your own property either because you live in a family home or because you are very comfortable renting, it is important to start with this question. What do you think are the advantages and disadvantages of renting a property? Does it make a difference if you own an estate? What does it mean to have a long-term financial responsibility? Below we will compare some benefits of owning an estate against the real responsibilities that this act entails, this in order to have an objective and complete picture. The main benefit of having a heritage is the act of establishing or achieving a sense of belonging to a community or place, in addition, it will generate a sense of personal satisfaction by being able to share this achievement with friends and family. On the other side of the coin is financial responsibility that is large and long-term. You have to be aware that during the following years not only will the property be paid but everything that is around it such as service, maintenance and taxes expenses. Another benefit is the capitalization of an estate, that is, as the years go by, its value will increase. This is of utmost importance if the house is understood as a legacy, be it financial or real estate, that will be passed from generation to generation. Now, there is a reality in these points that can become negative if not considered. For example, it is not a law that as the years go by the assets increase in value, since it will depend on the maintenance that is provided and that the capital gain of the area or neighborhood where it is maintained. It should also be considered that in an extreme situation, if the relevant mortgage payments are not made, the financial institution that granted the loan has the right to keep the property even without a return of the money that has already been invested.

What are the costs involved in having an estate 

As you may have already realized, it is a reality that there are other payments to be made in addition to the monthly payment of the mortgage loan , there are even other expenses that must be covered before inhabiting the property of park view city Lahore . It is an obligation to make an initial payment, which usually varies from 10% to 20% of the value of the property. In some cases, a Private Mortgage Insurance is also required whose value is less than 20% of the initial payment. There is also a credit management fee that covers the cost of attorneys, title insurance, credit report, loan concession fee, appraisal, demarcation costs, and prepaid expenses. This payment is usually 10% of the value of the property Once the property is owned and formally inhabited, it is time to consider paying for repairs and maintenance. The amount will depend on the condition of the house, the number of people who live in it and even its location. Then come the taxes, which are generally paid annually. The amount will depend on the value of the property and will be calculated by a government institution. 

After reviewing the advantages and realities of having an estate, it is time to answer the question: Are you ready to buy a home? What will the answer depend on? Of external and personal variables that you may or may not control. From whether you have time to take care of a house to having a savings to make the down payment on a mortgage loan. Here is a checklist that will help you know if you are ready to buy a house. As you may have noticed, each point is important, but it is unthinkable to start a heritage building project if you answered “No” at some point from 1 to 5. If you cannot pay the primary debts such as rent, loans and services, the less you will be able to buy a house. If you think that this check is not so important because in some way or another you will organize and pay for your next estate, know below two cases that could resemble your reality and reflect on whether or not it is a good idea to buy a property. Arturo and Mónica have very demanding jobs and live in an apartment with a monthly income of $ 12 thousand pesos. They are currently considering acquiring an estate and have already identified two houses that they like. It is important to mention that one of the properties needs repairs and both have an approximate value of $ 2 million pesos. The monthly payment of the mortgage loan would be $ 12,980 pesos. To buy any of the houses they will need most of their savings to make the down payment and they will have to cut some expenses to meet the rent or the monthly payment or both.

House or apartment, which one should I choose?

This would be the perfect property in the event that your life plan was the same as always being two people, but what if in the future you want to have a child or two. There the needs change and it will require at least three bedrooms and two bathrooms. An estate (house or apartment) of 100 square meters could be a start. Also at this point it is decided whether it is better to choose a house than an apartment. What are the advantages of a house?Mostly the apartments in Lahore Smart City have garages for one or two cars, sometimes it has a patio where children can play as well as the option to expand. In the apartments it is impossible to expand because below or above there is another property that delimits the area of ​​the house. Instead, a house has the flexibility to continue building for the top or the sides, so if the family grows larger, a solution can easily be found. Another point to consider are the neighbors. If you choose a house, you will likely have the opportunity to interact with them differently than in an apartment What should Monica and Arturo do? First option: Keep working to save more money until you can buy a house in a calmer way. Second option: Buy the house that is in better condition. Third option: Buy the house that needs repairs because it was the heritage that they liked the most.  Now, each of these options hasits advantages and disadvantages. The result will be the same, however, each decision can have a consequence or a benefit. Read on to find out what we mean:  The next step in the “Build Your Estate” project is to set realistic goals and make a financial plan before buying a home, even before looking for a property. You have to evaluate how much you can, what the characteristics of a house should be, choose a lender and get pre-approved for a loan. Let's start by determining the characteristics that the house should have. At this point you have to think about the present and the future, because now you may need a modest property as there are only two people. A bathroom, a bedroom and a study are enough. 

The advantage of a house is that the spaces are clearly delimited and are not divided by a single wall. In this way you have more freedom to do activities such as late-night meetings without disturbing or bothering your neighbors. Although you must take care not to disturb the neighborhood with noise, a house gives you greater freedom of action. In a few words, it is your space and your rules are, as well as your decision, the modifications that are made to the property inside and out. So if you want to paint your home a certain color you don't have to consult with anyone and also if you want to have a pet there is no regulation that prevents it. If you are one of the people who greatly appreciates your space and does not want to deal with other people, it is better to choose a house. However, there are also advantages to choosing to live in an apartment, for example security. In housing units it means creating a community that takes care of each other. In addition, there is almost always a doorman or a security person who is watching the main entrance of the property day and night. On the other hand, another advantage is the common areas that housing units usually have, such as play areas, swimming pools, multiple courts or gymnasiums.

Buying a new or used estate?

As we saw in the case of Arturo and Mónica, buying a used house requires investing more time for all the modifications and repairs that have to be done. In the case we took as an example, they had a greater interest in the used house even though it was not in the best condition. If they had chosen to keep it, they would have to invest a lot of time and follow-up on each of the repairs. This would also mean that for many years they would have to invest extra money to leave the property in optimal condition. If you have the time and money, it is valid to choose to buy a property that needs repairs, otherwise the most recommended is to get a new property, which offers certain guarantees and greater energy efficiency that in the long run reduces the costs of services. Again, choosing between new and used is a decision with benefits and consequences. You can choose the one that suits you best, always thinking about the future, the money and the time you are willing to invest.

What is the best location for my estate?

 In the market the correct logic is: the greater the demand, the greater the supply. This rule is not always fulfilled when it comes to housing. Why? It is not a secret that the cities of the country are suffering from an overpopulation effect and therefore more and more people need a property. However, houses are not built at the same rate as what is needed, this because to build a house or a departmental building you need space and in CDMX, for example, it is the least you have. It is for this reason that the properties that are already built increase their value year after year. Faced with this phenomenon, the questions arise, where should I buy my assets: in the city or in the province? Again the answer is in the needs of each person. If you have an already established and immovable job in the city, the obvious thing would be to buy a house near the place where you work. The great advantages of living close to work is that money is saved on transportation, it takes less time to travel from one place to another and therefore the quality of life increases. The big point against, as already said, will be the high prices that must be paid to buy a property in this area. According to Leonardo González Tejeda, real estate analyst at Propiedades.com, the price of a home in 2018 will increase between 5% and 7% throughout Mexico. In the most important cities of the country such as CDMX, Guadalajara and Monterrey, prices will have a general increase of 9.5%, a higher percentage than last year.  “The price of housing in Mexico registered an average increase of 6.11% in 2017; with an average price of 869 thousand 513 pesos per property. The CDMX was the most expensive area with an increase of 7.9%, followed by San Luis Potosí, Sinaloa, Baja California Sur and Michoacán ”. As you may have seen, some states in the country also experienced an increase in the price of their homes, however, they still remain low compared to the largest cities in Mexico. So if you have the opportunity to move your work to the province you could get more out of your money.

What is the best time to acquire an estate?

As mentioned, year after year homes experience an increase in their value. If you have not yet bought an estate, this means that each year that you take it will be more expensive. If we add the phenomenon of overcrowding, even in the future you will no longer have the opportunity to buy property in the area of ​​your choice, since everything is already occupied. That said, the best time to buy a home is now. This way you avoid paying the annual increases suffered by the houses and occupy the time in your favor. How? If the assets increase in value year after year and if you already have a property in your name, this effect will be positive for you as well. If today you buy a house of one million pesos, in 10 years its value will double and the profit will be yours. This is called capitalizing, whose main objective is to increase an investment as the years go by. If you had not thought about it yet, buying a property is the best way to invest, because compared to investment models such as savings accounts or bosa shares, properties are hardly devalued, on the contrary, they enjoy an annual increase in value. Thus, each year that passes is money that you can win or lose, so it is always recommended that you buy a house now. Here we list the states with the highest average increases according to a bulletin from the Federal Mortgage Society (SHF) of 2017.

• Mexico City: 7.9%
• San Luis Potosí and Sinaloa: 7.1%
• Baja California Sur and Nuevo León: 7%
• Michoacán: 6.9%
• Yucatan: 6.8%
• Jalisco: 6.7%
• Colima and Guanajuato: 6.6%
• Campeche and Nayarit: 6.5%
• Puebla: 6%
• Quintana Roo and Morelos: 5.5%

If we talk about the CDMX, the delegations with the highest increase were Benito Juárez, which rose 9.20%, Cuauhtémoc with 8.4% and Gustavo A. Madero also with an 8.4% increase. The SHF complemented the information with the costs per square meter in each of these delegations, leaving the prices as follows:

1. Benito Juárez: 33,300 pesos per square meter
2. Cuauhtémoc: 24,181 pesos per square meter
3. Gustavo A. Madero 15 thousand 323 pesos per square meter

This figure reveals an estimate of the costs of an apartment.

For example, in the Benito Juárez delegation the price of an apartment of approximately 100 square meters is 3 million 300 thousand pesos, while in the Gustavo A. Madero the same department would have a value of 1 million 500 thousand pesos, that is, half.

It should be noted that a 100 square meter apartment is a basic space for a family of four where you can even have up to three rooms and two small bathrooms.

What is the savings plan that I must have to build my wealth? 

Do you remember the checklist you made to know if it is time to buy a house? The most important points concerned your financial situation. You have to start from the question: How much can I pay monthly on a mortgage loan? Financial specialists advise that 30% of the salary be used to pay for housing. If you receive 40 thousand pesos per month net, then your monthly payment should be approximately 13 thousand pesos. Although it may seem easy to pay this amount, the really difficult thing is that you have the money available, since many times your debts monopolize all the salary, making it impossible to even invest 20% in the project "build an equity". So if your savings plan begins with the elimination of debts. If you have credit cards, it is best that you pay them in full, this will save you money on the high interests that are generated and will give you a good credit history that will be the best recommendation when requesting a financial loan. The next step is to cut down on expenses. If you are renting an apartment, think about whether you can rent a smaller one to save money. It also identifies those small income leaks that you have monthly, such as weekend outings, shopping for gifts or restaurant meals. You can do without them and invest the money in the "build a wealth" plan. In some cases, you may even have to work harder to earn extra money. For many this will be the only way to save a significant amount to buy a good, it seems to be complicated but with determination and being clear about the goal in the future, any complication will be overcome.

If I want to increase my equity, in which cases should I apply for a mortgage loan?

Once you have seen the pros or cons of whether a house, an apartment, what budget you have, the location, and above all, if it is better to have your own assets to rent, then you can continue with the following points. It must be emphasized that acquiring an estate is a long-term responsibility and all those involved in the project must have a high degree of commitment. Whether you decide to buy a home with your partner, husband, or someone else, both of you agree and have the same life goals. Once you have a pulse on your financial health, you can know if you are in a position to apply for a mortgage loan or if you have what it takes to buy an estate with a single payment. We must be frank, very few people have the possibility of liquidating a property in a single exhibition, usually they are people who have millionaire inheritances or land that they can convert into cash to be invested in a property. If this is not your case, do not worry, there is always the alternative of applying for a mortgage loan, which can be adapted to your finances, needs and aspirations. Currently there are many financial institutions that can grant a loan, but there is always one that turns out to be the best option for you. ION Financiera is an inclusive financial institution as it aims to help all employees, merchants, professionals and independent entrepreneurs who have difficulties in proving income in a traditional way. Either because they do not have payroll receipts, account statements or invoices due to the nature of their business, ION Financiera performs an income check that is adapted to each case, speeding up obtaining a mortgage loan. In this way, hundreds of independent workers have acquired their assets in the main municipalities of Querétaro, Guanajuato, Jalisco, Puebla, Hidalgo and CDMX.

What do banks look at when granting a mortgage loan?

Banking institutions have a very strict model to check income and know if you are a trustworthy person. When you apply for a loan, the first thing they do is access your credit information and see what rating you have in the Credit Bureau. If the rating is not within the guidelines of a trusted person, your application will be rejected. Here are some factors that affect your credit history:

• Failing to make loan payments on time
• Too many accounts opened in the last 12 months
• Insufficient credit history
• Credit account balances are near their limits
• Negative information in public records such as liens, court judgments, or bankruptcy
• Not having recent balances on credit cards
• Too many recent credit inquiries

What is recommended for a positive credit history? It is primarily paying bills on time, keeping credit balances low, and opening new accounts only when needed. Complying with these elements speaks well of you to a financial institution, which makes it easier for you to grant a loan. However, there are many people whose work is in an independent place, on public transport or in the new modality of freelance. To check income in a traditional way and as banks request it, the first thing you need is to be affiliated with Social Security (IMSS), to have your payroll paid every week, fortnight or month, that is, to have a fixed salary, it is also important have benefits and have made all declarations before the Ministry of Finance and Public Credit (SHCP). When you are not a worker affiliated with Social Security, some banking institutions can grant credit, but the procedure and verification is difficult. In general, alternative papers are requested to the payroll receipts but if you do not have any of them then there will be a resounding No as an answer. Some of the papers that they ask for if you are not an affiliate are:

• Tax return or fee receipts, income invoices, and lease receipts
• Investment / Savings / Checking Statements
• Contract of similar fees or letter of provision of services
• Evidence of Perception and Withholdings
• Receipts of assimilable fees
• Rent Scheme with Option to Purchase
• Good Payer Scheme
• Employment Certificate Letter

For unaffiliated independent workers it is very difficult to complete the long list of papers that banking institutions ask for, which is why getting hold of their assets seems like an impossible project.

Can you build an equity with a mortgage loan?

When building an equity by requesting a mortgage loan from a banking institution, in general, you will have to take care of every detail of the purchase and negotiation. What you should do is check with the bank the value of the property so that you can obtain the loan. You can also get support from a real estate agency that will support and advise you during this step of your project: “Build a heritage”. An important point in this step is to "make an offer", since the asking price and the sale price of the houses are usually different. If you use a real estate broker, the real estate agent will help you prepare the offer and present it to the seller.

How does this offer work?

The offer must propose a purchase price, the time frame within which you will want to assume ownership, the amount of the down payment and the conditions that must be met before the sale.

For example, the repairs necessary for the home to be in the proper condition for it to be inhabited.

You will have to make a partial deposit of the initial payment, which is often called "good faith money" or a "good faith gesture" to show that the offer you are making is serious.

Depending on the advice you have, the agent may advise you the recommended amount for this.

Sometimes a real estate offer is accepted immediately, however, sometimes it is necessary to negotiate and reach a mutual agreement.

When the offer is accepted by the seller, a "sales agreement" is reached.

This means that you and the seller finally defined the price and the conditions of sale and therefore there is already a contract in between that will be signed, not without first confirming that it is legally valid.

This process is known as "going to the contract", in which the terms and conditions of the sales document are evaluated by a trusted professional - in this case a lawyer - before signing it.

This is the time when it is recommended to ask everything that is not understood and, above all, check that the contract is not blank or incomplete and complies with the necessary clauses that benefit both parties.

Start building a wealth, the specialty of ION Financiera

As you may have noticed, being an independent worker or businessperson is not always welcomed by a banking institution despite having the solvency and capital necessary to exercise a mortgage loan.

This refusal of banking institutions is a problem that transcends in the country, since, according to information from CONDUSEF, only 38.1% of Mexican workers are affiliated with the IMSS or ISSSTE, leaving 62% of the working population no chance to have a home. 

To combat this problem, ION Financiera creates new models for verifying income, adjusting to the situation of the different workers and independent entrepreneurs who have financial solvency to buy a house or apartment, whether new or used.

The procedure to acquire an estate with ION Financiera is very simple, once you have chosen the house you want to buy, you should call 01 800 777 9292 so that one of their commercial advisers can contact you and advise you on the way to your project: "build a heritage".

Later, the commercial advisor will visit you and offer the product that suits your work situation.

If you have problems proving income, this is the moment where a tailor-made solution will be designed, because if you are a solvency worker and a healthy credit bureau for ION Financiera, there is nothing impossible.

The next step is to run a simulation of your credit. The terms to pay are 5, 10, 15 or 20 years, with a minimum down payment of 10% of the value of the home.

With the simulator you will know how much your required monthly income should be, the total initial expenses and the total monthly payment.

Then you will have to complete your documentation that is divided into four points:

1. ION Financiera credit application
2. Official Identification
3. Proof of address
4. Documentation checklist for Mortgage Credit for home purchase

Once you have completed the documentation and have carried out the simulation of your credit.

The commercial advisers of ION Financiera will guide you step by step until you reach the signing of the contract and the delivery of your new apartment.

Throughout the process you will have their advice and support so that you can enjoy your assets as soon as possible.

Start today with the project “Build a heritage” and leave a legacy for the generations that will come after you.