When it decides to accept or refuse a financing request, the bank is based on several specific criteria. In addition to the debt ratio, which appears as a precise indicator of the investor’s ability to repay his monthly payments, the credit institution systematically takes an interest in the borrower’s guarantees, which must be solid and reliable. If the loan is considered risky or if the buyer wants to strengthen his file, he can resort to mortgage bonding.
What is a mortgage guarantee?
The borrower making a mortgage guarantee as part of his mortgage agrees to mortgage a property: in other words, if the monthly payments are not assumed, a seizure becomes possible. This type of deposit is considered when the buyer does not have the capacity, independently, to gather enough guarantees to validate his credit file.
How to guarantee your loan with real estate?
The guarantee of a loan, based on real estate, must be subject to a notarial act. Otherwise, the initiative is considered void and the credit institution cannot legally seize the property in the event of default by the borrower.
Recourse to a third party for a mortgage guarantee is to be considered when the individual only owns an undivided property – and fails to obtain the agreement of the other owners. More frequently, this solution is considered by purchasers accessing the property for the first time and needing, to constitute a more solid file, an external guarantee.
When does the mortgage bond end?
If the mortgage bond involves a risk (of foreclosure!), You should know that this system ends when the credit is repaid. Note that the end of the contract, as well as the death of the borrower or the surety, can also lead to the cancellation of the mortgage when conditions provide. Please note, if no information on these particular cases is included in the agreement, the heirs of the borrower pay the debt – or those of the surety assume this role.
Housing loan, a reliable alternative?
If some people are skeptical about the idea of setting up a mortgage guarantee, they can consider another solution: a housing loan. This process, which does not involve requesting a notarial deed, is carried out more quickly, which sometimes simplifies the release of funds for the borrower.
Unlike the mortgage guarantee, the housing loan is presented as an active guarantee which follows the buyer and supports him in his project. Naturally, to benefit from it, certain criteria must be met: the housing loan studies each file in detail before giving a final agreement (or formulating a rejection). Note that in case of refusal, individuals can count on different companies ensuring the guarantee of home loans.
To guarantee a credit, it is possible to take out a deposit with a third party. If they wish, buyers are also able to post a mortgage bond. Anyway, it is essential not to confuse this approach with the mortgage, which the borrower assumes himself for his own purchase.