The mortgage loan guarantee is a legal obligation if you wish to take out a mortgage with a bank. However, understanding these solutions and the associated fees can be complex. In this article, we’ll take a detailed look at the various collateral options that exist to secure your loan, along with their benefits and costs. We will see how to choose the best option according to your situation and how to benefit from the preferential rates offered by certain organizations or notaries. Pay attention to us because we bring you additional insurance for your real estate project!
The mortgage loan guarantee is a legal obligation if you wish to take out a mortgage with a bank. However, understanding these solutions and the associated fees can be complex. In this article, we’ll take a detailed look at the various collateral options that exist to secure your loan, along with their benefits and costs. We will see how to choose the best option according to your situation and how to benefit from the preferential rates offered by certain organizations or notaries. Pay attention to us because we bring you additional insurance for your real estate project!
Home loan guarantee: Types, usefulness and costs to secure your loan
Most banks require collateral to secure home loans to protect both lenders and borrowers in the event of default. The most common solutions are the mortgage, the lender’s lien (PPD) and the surety by a specialized company.
The guarantees generate costs but are necessary to protect the bank in the event of cessation of the repayment of the monthly payments by the borrower.
The mortgage guarantee: protecting the lender and the borrower
When a borrower applies for a mortgage, he must provide a guarantee, which consists of putting real estate in mortgage. This means that if the borrower does not pay his debts, the bank can seize these assets to reimburse itself.
The real estate is placed under the judicial authority, but the borrower retains the property as long as he fulfills his obligations.
The mutual guarantee: a mortgage-free option for your mortgage
The mutual guarantee allows an organization or financial company to ensure your commitment to the bank. It then becomes responsible for your payments and automatically takes care of paying the entire amount remaining on the capital for you if you stop the payments.
This solution can be less expensive because it eliminates certain charges associated with other forms of guarantees such as notary fees or mortgage-related costs.
The money lender’s privilege (PPD): an alternative to the mortgage
The PPD provides additional protection to the lender against default by a borrower. It is governed by a notarial deed which gives the lender priority over any other registration document, including a document such as a mortgage.
Just like with a mortgage on the house, this privilege serves to protect the lender, but without requiring the intervention of a notary. For this reason, it is often more affordable and safer for borrowers who want to secure a home loan.
The usefulness of home loan guarantees in the borrowing process
Reassure the bank and facilitate obtaining a mortgage
Guarantees provide protection to the lender in the event of default by the borrower. They provide the bank with insurance on the investment it makes on behalf of the borrower, which can be essential for obtaining a mortgage.
Protect the borrower in the event of default
Collateral also serves to protect the borrower in the event of default. In this case, the bank can seize the principal goods put in mortgage (for example the house) and sell them to refund itself.
But before that, it has to follow certain time-consuming rules and procedures that the consumer can use to his advantage.
Compare options to choose the best coverage for your situation
It is important to compare all the different options available to find the coverage that best suits your financial situation. The costs associated with the different types of guarantees are significant and vary greatly between them.
The costs associated with the different home loan guarantees
Costs and notary fees for the mortgage guarantee and the PPD
To take out a mortgage or a PPD, you will have to pay legal fees (notary fees). These fees mainly include professional fees (notary), registration fees (depending on each country) as well as administrative costs for the loan file.
The amounts at stake for the mutual surety and the surety organizations
When you opt for a deposit, you pay a fee to the organization in question. These fees are usually between 1% and 2% of the total amount of the mortgage, depending on the provider chosen as well as factors such as your personal and professional profile.
The impact on the total cost of mortgage and insurance options
The costs of each guarantee must be taken into account when calculating the total cost of the loan. It is therefore important to carefully compare the different offers in order to find the one that best suits your financial situation.
Additional insurance can also be taken into account to reduce the risks associated with the different types of guarantees.
Find the best guarantee offers to reduce mortgage costs
Once you know your budget, you can search for the best deals available. You can consult specialized brokers or obtain information directly from banks and guarantee organisations.
Once you have made your choice, ask for a clear and detailed estimate of the costs associated with the type of guarantee you are considering.
