Mortgage Credit: What is it?

There are some guarantees that banks require to approve your loan. One of these guarantees can be mortgage credit. Find out in this article what it is, what it is for, and how you can order one.

 

Mortgage credit can be a solution for those who want to see their credit approved, housing, or even consolidated. This type of credit agreement will serve as a guarantee for the payment of the loan you request. But, let’s see in more detail what it is about.  

 

What is a mortgage loan?  

A mortgage loan is a type of credit in which the borrower can pledge another property, as long as it is free of charges, other mortgages, or another similar property, such as cars, ships, and aircraft.  

This type of credit gives banks a greater guarantee of payment, having the right to proceed with the request for execution of the mortgaged asset in the event of default by the debtor. The immovable or similar property may belong to the creditor or a third person, as long as the third person agrees to mortgage the property as collateral for the respective loan. 

How can I apply for a mortgage loan?

You can apply for a mortgage loan from the bank where you are going to make your loan. However, be aware that to be eligible for this credit, you will have to fulfill, in parallel, other requirements, such as appropriate age for the credit and a low percentage of the LTV ( Loan to Value ) rate.

After applying for mortgage credit, the banking institution will have to carry out an appraisal of the property or asset being mortgaged to verify that its value covers the amount that it is applying for a loan. In addition to this, an analysis will also be carried out on your profile to check if you are eligible for credit and if you can pay monthly installments. This is a process that can take a few weeks. 

If the bank determines that you are eligible for mortgage credit, it will proceed to the contract.

What types of mortgage loans are there? 

Mortgage credit is not only required for mortgage credit. You can use mortgage credit in various situations, following the various types of mortgages that exist:  

  • Mortgage loans 

This is the most common type of credit aimed at real estate.  

  • Related Credit 

Best known for credit multi-risk or Multiopções, this type of contract is entered into with the same institution where it was contracted mortgage loans and assumed the mortgage (guarantee of mortgage credit contract). 

  • Consolidated Credit 

When we talk about consolidated credit with a mortgage, we refer to a consolidated credit (joining all credits into a single one with better conditions) where a real estate property (own home, secondary home, or even a property belonging to a family member) is used as a guarantee to the loan. 

What types of mortgages are there? 

There are three types of mortgage: voluntary, legal, and judicial. 

The voluntary mortgage results from a mutual agreement between the bank and the person who requested the loan and may also apply to a comparable immovable property. 

The legal mortgage results directly from the law and applies in favor of the State, local authorities, or other public entities whenever the debtor is in debt and has no other way to pay off his debts. This happens, for example, when taxpayers are owed money to Social Security. This is the State’s way of recovering the defaulted amount from the debtor.  

On the other hand, the judicial mortgage results when the creditor obtains a judgment against the debtor, in the context of a judicial process, which dictates that the debtor has to pay a certain debt using a mortgage registration on his assets. A judicial mortgage is typical of insolvency situations. 

What are the fees charged by banks?

As there is a property or similar asset as collateral, the bank may charge lower interest rates. On the other hand, the repayment term is longer.  

However, it is always advisable to search different banks to see which conditions are best for you.  

Before concluding this article, we would like to alert you that this is a type of credit that requires a lot of documentation and must be done with caution, as the impossibility of payment causes the loss of the property or similar property.  

If you have any questions or need help finding the best credit for you, you can count on Doctor Finance’s (free) help. 🙂

Read also: Everything you need to know to have the best mortgage loan.

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