Because you have or because you have heard about it, you certainly know what mortgage credit is. But do you know what a mortgage loan is? When can you apply and what are its advantages?In fact, mortgage credit is a lesser-known solution, its name derived from the guarantee you have to give for the credit to be granted: a mortgage. But it’s not just a creditis indeed the global denomination of various types of credit, including home loans.
What is a mortgage loan?
A mortgage credit is a type of credit whose main characteristic is to guarantee of payment of the mortgage on real estate or other equivalent property.The asset may be owned by the person requesting the loan, or by a third party as long as the latter accepts in the contract that the asset is mortgaged as a guarantee of full repayment of the loan.
Types of Mortgage Credit
Since 2018, with the entry into force of Decree-Law No. 74-A/2017, the Mortgage credit is now covered by the same rules as housing credit🇧🇷 Thus, this also came to be encompassed under this designation. Thus, we can say that currently mortgage credit covers several types of credit: housing credit, related credit, consolidated credit and even the leasing of immovable property.
Mortgage credit is certainly the best known. if you want buy a house and do not have own funds to do so, surely, this type of credit will be resorted to. We can thus say that the home loans include credits intended for:acquisition or construction of own permanent, secondary or leased housing;acquisition or maintenance of property rights over existing or projected land or buildings;payment of the down payment due for the future acquisition of property for permanent, secondary or leased own housing. Whatever the purpose of the credit, have in common being a long-term creditwith the mortgage of the property constituting a guarantee, for the bank, that the loan will be repaid. In addition to the mortgage, the bank requires you to take out life insurance (whose beneficiary is the financial entity) and a multi-risk insurancebut both have the same purpose: to ensure that the property liable for debt🇧🇷 In case of death, life insurance will be activated, the insurer pays the loan and the heirs keep the property free of charge. In case of fire or other accident, the multi-risk insurance will be activated and the property will be rebuilt maintaining its value.Also read: How does life insurance work on a home loan?
Mortgage will have to be a first mortgage
Note, on the property, the institution will mortgage there can be no encumbrance or charge🇧🇷 In other words, there can be no valid mortgage. In other words, financial institutions only accept housing loans if they are the first mortgage detectors that exists on the same. The reason is simple: if there is a mortgage on the property, it is because it already guarantees the payment of another loan. AND in the event of default on that loan, the property will answer first about this credit and only then about the loan they granted. And that, in housing credit, no bank accepts.
a related credit it is a credit associated with a housing loan🇧🇷 In some financial institutions it has another name, such as multioptionsbut the purpose is the same: it is intended for a purpose other than the purchase of the property, such as works on the property, furnishing the house, or even financing the IMT. The mortgage that was taken out for the mortgage loan is still used as a guarantee for the payment of the loan. but already does not have the same conditions as this one in terms of interest rate, usually being higher. The term, however, is the same as the housing loan to which it is associated.
Consolidated credit is credit intended to settle all other credits you have in the banking systemthat is, it is consolidate all your credits into one, but at a more favorable rate that will be granted to you for delivering a mortgage as collateral.No consolidated credit there are some differences in relation to home loans, particularly with regard to mortgages. THE mortgage can be on a property which the person applying for the credit ownsbut it can also be a property of a third party who accepts that this is done🇧🇷 On the other hand, there are some financial institutions that accept second mortgages. In this case, it is expected that the institutions will also oblige the taking out life and multi-risk insurance, but it may not be so. All depends on the negotiation whatever you do. If the consolidated credit only aggregate personal loans and credit cards, the interest rate will be higher than if you include mortgage loans. The justification seems simple, since, in the latter case, they have the first mortgage on the property as payment guarantee.
real estate leasing
The financial leasing (or leasing) of immovable property for Own and permanent housing, secondary or for lease is also a mortgage credit.This financial product differs from the others in terms of ownership of the property🇧🇷 In this case, the property belongs to the financial institution and only at the end of payment of the financing will it become the responsibility of the person who contracted this product. it will not be necessary to take out life insurance since the property belongs to the financial entity🇧🇷 And this is also responsible for contracting multi-risk insurance.
Advantages of mortgage credit
Easier to get credit
When financial institutions analyze a credit application, they consider not only the financial situation of the applicant, but also the guarantee they have that it will be paid in full.Thus, if the guarantee is the mortgage of the property, it will be easier to obtain credit than if you just give your personal endorsement.
Most advantageous interest rate
The most obvious advantage is benefit from a lower interest rate than other loans taking into account the nature of the associated guarantee: the property mortgage. But, as they are covered by the same rules as mortgage loans, have other advantages.
Term identical to that of housing credit
These credits have a longer term than unsecured loans, which can be important in the case of credit consolidation, in which the aim is to alleviate the financial burden incurred. The term of these loans can go up to 40 years, if you are less than 30 years old. You can reach a 35-year term if you are older.Also read: Mortgage credit deadlines: Do you know the new limits?
The financial entity must deliver to the customer personalized pre-contractual informationthrough European Standardized Information Sheet (FINE)that at the time of the simulation, that at the time of signing the contract.A FINE is made up of two parts🇧🇷 The first part contains information on the loan: the amount, term, nominal annual interest rate (TAN), global effective annual interest rate (TAEG), charges, total amount allocated to the loan (MTIC ), as well as the remaining characteristics of the loan. The second part contains the reimbursement charts with installment simulationsif there is a rise in fees of interest🇧🇷 These tables are of paramount importance in situations of interest rate instability. FINE must also be delivered to the guarantorif this exists
proposal and contract
Taking into account that they now have the same rules as mortgage loans, the contract proposal made to the customer becomes valid for at least 30 days.On the other hand, according to the new rules, the contract cannot be signed within the first seven days after receiving the proposal🇧🇷 The goal is to ensure that you both have enough time to weigh the credit implications and make an informed decision.
Disadvantages of mortgage credit
The disadvantage is related to the fact that have a mortgage on the property🇧🇷 Ie, it cannot be sold without paying off the loan to which it is associated. If you fail to pay the loan, the bank will foreclose on the mortgage and you will be left without the asset.