Relieved by the pressure on me, I finally write about the Equatorial Loan of Pabest Bank. ?
This is a mortgage-based loan that can be used to buy a home, use it for free or buy a loan.
The big thrust of this is that the balance of your bank account opened with you is deducted up to a maximum of 70% of your loan’s current principal, so you only have to pay interest on the balance.
If you have a $ 10 million loan and a savings of $ 6 million, then the interest is calculated at only $ 4 million. Nevertheless, the normal monthly repayment is deducted and every six months the difference is accounted for so that the lower capital debt decreases the maturity rather than the monthly repayment.
This way, if you have enough savings in your account
Your maturity can be significantly shortened, which means you will have to pay less interest overall. (Logically).
In fact, if your payment arrives here, it will also reduce your monthly repayment until you spend it. (They look at your account balance on a daily basis.) True, for a ten million loan, a $ 200,000 payment only reduces the cost of the loan by 0.11%.
Who can benefit from this construction?
You might want to think about this arrangement if, for example, your income is not even because you have, say, a business. In such cases, we do not dare to commit to a higher fixed repayment and the shorter maturity involved. However, with this arrangement, you will be reduced in interest charges if the store is going well.
In the other case, we keep either the amount corresponding to our standard six-month living and the emergency reserve in this account, or other liquid resources that may be needed at any time, for example, in our business. With this method, we have not stripped off our trousers in a material sense, yet we do not have to pay the interest on the loan on our existing money.
It’s a little trick
The calculator on the Bank of Pabest page will be happy to calculate how much you will gain with the Equatorial Credit. If we borrow $ 10 million but have $ 4.5 million in our current account, then a 10-year loan will have 26 months of maturity and the APR of your loan will be only 3.44%.
Too good to be true? Well, yes, the calculator doesn’t count on the fact that we could invest that $ 4.5 million elsewhere, say at 5% interest. That’s why only such a fabulous THM value can come out. Because it projects interest on the total amount and forgets that the equity would be remunerated elsewhere, so you would not have to calculate a 0% return on equity.
Is it worth it?
As we have seen, product flexibility comes in handy in many cases, but how much do we gain from a competing offer?
At present, Pabest Bank offers a 6 month BUBOR + 4.65% home loan. (BUBOR is the interest rate on the interbank market, which is strongly linked to the central bank base rate.)
That is, the APR is currently 8.15%, which is recalculated every six months to reflect any changes in interbank rates.
For the sake of illustration, a competing bank can obtain the same home loan at a APR of 6.2%. (In case of a good debtor client.)
With these interest rates the monthly repayment of Pabest Bank will be HUF 84,579, the total interest expense over the term of HUF 10,299,188.
The competing offer is US $ 72.80 per month, with a total interest cost of US $ 7,472,405.
In other words, if you take a $ 84,579 repayment at a cheaper bank, we will pay off your credit in 15 years and 3 months, and your total interest expense will be only $ 5,485,582.
To achieve the same result, we need to keep 1.7 million in our Pabest Bank account! In this case, the two offers would be the same. And we haven’t talked about borrowing with that 1.7 million more than the competition, that is, it would be cheaper again, maybe with a 5% interest rate, our money would be $ 85,000 a year (before tax).