FACULTY OF ENGINEERING AND

BASIC SCIENCES

GROUP PROJECT Grancolobiano Polytechnic University Institution

FINANCIAL MATHEMATICS

FINAL DELIVERY

HOUSING CREDIT IN PESOS AND UVR

PRESENTED BY:

GRANCOLOMBIANO POLYTECHNIC UNIVERSITY INSTITUTION

FIRST THEORETICAL PRACTICAL BLOCK/FINANCIAL MATHEMATICS IN-

PERSON MODALITY

2019

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 FACULTY OF ENGINEERING AND
BASIC SCIENCES

GROUP PROJECT Grancolobiano Polytechnic University Institution

INTRODUCTION

An adequate housing policy is essential for the development and economic growth of a country.
Within this policy, different improvement strategies must be contemplated in terms of the quantity
of housing and its quality. To achieve this improvement in access to housing, banks work to create
programs that promote the construction sector, access to mortgage loans and the savings habit of
citizens.

This study shows an analysis carried out on housing credit in Colombia. The general objective of
the research was to understand the two systems that are currently managed in Colombia, which are
housing credit in pesos and housing credit in UVR, which differ in many aspects that will be
explained in this report.

Currently, banks continue with projects to ensure that the percentage of people who have their own
home continues to increase and regain the confidence of Colombians in the banking system. Among
the new strategies are subsidies for the acquisition of social housing, the promotion of programmed
savings and coverage of interest rates.

Another initiative to increase the number of homeowners is the creation of an alternative to

mortgage credit, housing leasing. This type of financing was created as a credit option for people
who, although they can pay a monthly payment, do not have the ability to save to pay an initial
payment.

Keywords: Credit, mortgage, housing, UVR, Banks, interest rates, initial payment and monthly
payment.

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 FACULTY OF ENGINEERING AND
BASIC SCIENCES

GROUP PROJECT Grancolobiano Polytechnic University Institution

GENERAL OBJECTIVE

Study housing loans in Colombia, in this case I specify how the development of this would be in a
banking entity (BANCO DE BOGOTA) in the modalities of pesos and UVR, in this way to be able
to illustrate decision making regarding what type Credit has more benefits and how each of them
are executed.

SPECIFIC OBJECTIVES

 Study the different amortization systems for home loans in their peso and UVR modalities.
 Identify the variables that are relevant to take out a housing loan in Colombia.
 Describe the requirements for obtaining housing credit, the amounts, terms, interest rates,
amortization systems (ways of paying the debt).
 Execute amortization tables in peso and UVR simulating a housing loan, to conclude how
each of them is developed.

CASE PRESENTATION

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BASIC SCIENCES

GROUP PROJECT Grancolobiano Polytechnic University Institution

5.1. THE CREDIT TO EVALUATE WILL BE :

HOUSING CREDIT IN PESOS AND UVR.

Financial entity: Banco de Bogotá.

This financing line is intended for the purchase of new or used housing, which is backed by the
mortgage on the property to be financed.

A Housing Loan is a banking option through which you can finance a new, used or off-plan
property. The bank lends you a certain amount of money, which you must return within an agreed
period and which can vary between 5 and 20 years. Every month you pay a fee that includes capital,
interest and insurance.

It is necessary to have at least the value of the initial payment, which can be 20 or 30% percent,
depending on the type of home,

CASE: a social interest home (VIS) is chosen; whose commercial value does not exceed 135
SMMLV, in this case the home has a value of $46,655,920, for which there is an initial payment of
$9,331,184, then the entity BANCO DE BOGOTA will lend an amount of $37,324,736

5.2. REQUIREMENTS TO OBTAIN CREDIT

REQUIREMENTS:

Below, you will find the requirements for a housing loan. The documents may vary depending on
your economic activity, that is, if you are an employee, pensioner or independent.

For salaried or pensioned people:

 Photocopy of payroll or pension receipts for the last two (2) months.
 Income and Withholding Certificate for the last taxable year (if you present an Income Tax
Return, it is not required).
 Labor Certificate (no more than 90 days) indicating: position, salary, seniority and type of
contract.
 Photocopy of Income Tax Return from the last taxable year (if you are required to declare)

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 FACULTY OF ENGINEERING AND
BASIC SCIENCES

GROUP PROJECT Grancolobiano Polytechnic University Institution

AMOUNTS:

The simulation was carried out for a person who earned $1,500,000 per month, taking into account
that this is the minimum monthly income required by the bank and it can lend a maximum amount
of $46,655,920 over a period of 20 years. Then it must be taken into account that the amount of the
credit depends on the salary of the person submitting the application.

Image 1. Bank of Bogotá credit simulator.

DEADLINES:

The Bank of Bogotá can grant terms of a minimum of 5 years (60 months) and a maximum of 20
years (240 months) for its housing loans.

INTEREST RATES:

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 FACULTY OF ENGINEERING AND
BASIC SCIENCES

GROUP PROJECT Grancolobiano Polytechnic University Institution

The Bank of Bogotá manages annual effective rates for different types of housing loans, for when it
is new, used or for remodeling, VIS, non-VIS, VIP and for the special MI CASA NOW program.

In our particular case we will work with the interest rate for a VIS home and that does not apply to
the MY HOUSE NOW program.

Image 2. Annual effective rates (BANCO DE BOGOTÁ)

AMORTIZATION SYSTEMS:

Amortization systems vary depending on the type of credit unit, whether it is in UVR or in pesos.

UVR amortization systems:

 Constant rate in UVR.

 Constant amortization to capital
 Cyclical Quota.
 Decreasing rate in UVR – coverage.

Amortization systems in PESOS:

 Constant fee.
 Constant capital amortization.

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 FACULTY OF ENGINEERING AND
BASIC SCIENCES

GROUP PROJECT Grancolobiano Polytechnic University Institution

 Decreasing fee in pesos – coverage.

For loans with a unit of pesos we will use the CONSTANT INSTALLMENT amortization rate,
which has the following characteristics:

 The monthly payment is fixed in pesos throughout the term of the loan.

 The capital payment is lower at the beginning of the credit.

 The balance of the debt decreases from the first payment, but to a lesser extent because the
capital payment is lower.

This works taking into account the amount to be financed by the banking entity, the monthly
payment is determined according to the agreed term, and the interest rate is fixed.

Image 3. Loan simulator (BANCO DE BOGOTÁ)

For the credit with UVR unit, the CONSTANT TO CAPITAL amortization system will be used. It
is the system that has the following characteristics:

 It has the lowest installments in pesos at the end of the loan, therefore, it requires a greater
income from the debtor at the beginning.
 The monthly fee expressed in UVR units decreases.
 The balance in pesos decreases faster because more capital is paid.

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FACULTY OF ENGINEERING AND
BASIC SCIENCES

GROUP PROJECT Grancolobiano Polytechnic University Institution

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 FACULTY OF ENGINEERING AND
BASIC SCIENCES

GROUP PROJECT Grancolobiano Polytechnic University Institution

CONCLUSIONS
In Colombia there is a tradition and experience in financing to acquire one's own home, today it is
protected by a solid institutional framework, significant financial support especially for the
acquisition of housing with banking entities and family compensation funds.
Taking into account the analysis carried out, it can be concluded that housing credit is a solution to
the need to have one's own home, and likewise, banking entities have implemented these types of
credit for their clients in comfortable terms and affordable installments that are accommodated. with
their users and can pay said amounts
Concluding from the example that was taken for this study, it can be seen in the amortization tables
that the interest on the debt decreases with the monthly payment of the installments, this means that
the interest is transferred to the remaining amount and constant interest is not paid on the capital. ,
one of the notable differences between both systems is that in the peso amortization system the
installments to be paid are always the same throughout the life of the loan, on the contrary in UVR
the installments vary.
In the UVR amortization system, it is analyzed that inflation has an impact on the value of the credit
which can generate a benefit or harm to it, which causes that in some cases more is paid than in a
credit in pesos, as It was in this specific example, where when comparing both amortization tables
at the end of the periods, the UVR loan obtained a greater amount of interest in pesos.
FINANCIAL RECOMMENDATIONS
Housing loans are developed in different ways in banking entities, so interest rates, terms and
amounts may vary, therefore, before acquiring a housing loan it is advisable to study each of the
entities, and conclude Which of these provides the best benefits.
The units in this case UVR and pesos must be taken into account, these two are distinguished
because the UVR unit depends on inflation, meaning that in certain cases it can decrease or increase
the fee, therefore in this modality the fees can vary and during the first years the balance in pesos
does not reflect a decrease, but the balance in the UVR debt does decrease from the first month.
With the modality in pesos the installments remain fixed month by month, and the balance of the
debt decreases from the first payment.
When choosing which will be the best option between a UVR credit or in pesos, your financial
situation must be taken into account, since credits in pesos are more stable, the installments will
never change and the debt is not capitalized, but in UVR credits we have more flexible options
where we can start with the first or last installments that may be lower than those of a loan in pesos
and adjust your expenses as the credit passes since these installments will increase.

ANNEXES

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FACULTY OF ENGINEERING AND
BASIC SCIENCES

GROUP PROJECT Grancolobiano Polytechnic University Institution

INSTRUCTION LETTER

APPLICATION FOR FINANCIAL SERVICES

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GROUP PROJECT Grancolobiano Polytechnic University Institution

I WILL PAY

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FACULTY OF ENGINEERING AND
BASIC SCIENCES

GROUP PROJECT Grancolobiano Polytechnic University Institution

BIBLIOGRAPHY

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FACULTY OF ENGINEERING AND
BASIC SCIENCES

GROUP PROJECT Grancolobiano Polytechnic University Institution

 Article “This is how housing credits work in the local market” Editorial LA
REPUBLICA, https://www.larepublica.co/finanzas-personales/asi-Funcan-los-creditos-de-
vivienda-en-el-mercado-local -2761255
 ASOBANCARIA virtual page, https://www.sabermassermas.com/escoja-un-sistema-de-
amortizacion/
 Banco de Bogotá virtual page, https://simulatorviviendadigital.bancodebogota.co/

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