These mortgage loans provided will bind the borrower for a specified period of time. If a country's economy is experiencing good growth, supported by a decrease in the unemployment rate will have an impact on the increased purchasing power of the people. So that home sales are expected to increase. Ultimately, under these conditions, the housing market will experience rapid growth. Housing prices will decrease due to decreasing public purchasing power as a result of the decline of the economy of a country.
As per-capita income rises, home prices will increase. This situation occurs in a state where a country's economy is growing. However, although people's purchasing power has not increased significantly, the need for housing remains high. So the dependence on society will arise a financial instrument that helps the community in meeting the needs of shelter. This financial instrument, now known as the Housing Loan (KPR).
The level of community dependence on mortgages is increasing. In today's conventional financial system, lending rates have become an indicator of housing growth. At a time when a country's economy is experiencing a positive growth, the lending rate will decrease. This is utilized by the banking sector to optimize the disbursement of housing loan funds to meet the needs of home purchases. So when the economy improves, the demand for housing will increase. A mortgage in a conventional financial system is one of the loan products provided by a conventional financial institution given to a prospective home buyer with a loan size scheme up to 70% of the price of the house to be purchased. For Indonesia, financial institutions that issue mortgage products are dominated by banks and some finance companies (leasing).
This loan will bind the borrower during the period specified in accordance with the agreement, to repay the principal loan plus the interest according to the monthly interest rate of the loan. The loan interest rate has been determined by the bank issuing the mortgage product.
In the mortgage scheme, the purchase of housing is not fully borne by the bank. Consumers who want to buy the house was required to pay the down payment. In general, the down payment to be paid by a home buyer is at least 30% of the house price, and the bank will provide a maximum loan of 70% of the price of the house. For example, if the house to be purchased worth 100 million, then the home buyer must pay a minimum down payment of 30 million. While the bank will provide a maximum loan of up to 70 million rupiah. The interest on the loan to be paid will increase with the length of the agreed term.