Real estate transactions are governed by numerous warranties and terms. What is mortgaged real estate and what is a mortgage with a mortgage guarantee? We explain everything about this bank transaction that protects the lending institution against loan or credit outstanding from a borrower.
- Mortgage: the mortgage guarantee during a real estate loan
- The operation of a mortgage
- The ins and outs of the mortgage: the cost
- Calculation of the mortgage fees
- The notary’s emoluments
- Mortgage: the guarantees for the borrower?
- Know your ability to repay
- Borrower insurance: protect yourself
Plan de l'article
Mortgage: the mortgage guarantee during a real estate loan
When a borrower contracts a real estate loan or loan over the long term (between 15 and 30 years), the bank or lending institution puts forward itself and takes certain risks. Faced with a defaulting borrower, inability to pay or serious unpaid payments on the scheduled monthly repayment, it is possible to provide a form of security: it is the mortgage guarantee, or mortgage.
The operation of a mortgage
No, we’re not in a giant part of Monopoly, but in reality. It is not uncommon for a borrower to be unable to fulfill his duty to repay: it is said to be “defaulting”. That’s where the mortgage comes. Amortgage is a guarantee that allows a bank — or any lending institution — toprotect itself from any default on the part of a mortgage borrower.
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The real estate concerned by the real estate loan (or another property owned by the borrower, or even several) is mortgaged. This means that the property can be seized and sold so that the bank recovers all the capital loaned. These are extreme situations but more common than we think. A seizure of real estate following an unpaid loan or credit has a cost. The seizure may not exceed the value of the property .
Upstream, a mortgage guarantee is formulated in writing with the notary (authentic deed of notary). She is then registered in the Land Advertising Office.
The ins and outs of the mortgage: the cost
Does the mortgage have a price or a cost? Yes, any mortgage has a cost . At the time of signing the notarial deed, the borrower pays a mortgage fee. These fees will be paid in part to the Land Advertising Service but also to the Public Treasury.
Calculation of fees mortgage
To calculate your mortgage charges, you should know that these are calculated based on the amount of the loan secured by the mortgage. This represents about 1.5% to 2% of this amount.
Your mortgage costs consist of :
- property advertising tax (0.7% of the loan)
- property security contribution (0.10% of the sale price, minimum of 15 euros)
- notary’s emoluments
- cost of mortgage statement searches and VAT at 20%
Note : the fees of a notary are not calculated in advance according to a percentage asa notary’s fees cannot be set freely . A scale established by the State must be scrupulously followed up.
Generally speaking, the emoluments of a notary represent:
- 1.333% of a loan between 0 and 6,500 euros.
- 0.55% of a loan between 6,501 euros and 17,000 euros
- 0.366% of a loan between 17 001 euros and 30 000 euros
- 0.275% for all borrowing more than 30 001 euros
Mortgage: guarantees for the borrower?
By choosing the mortgage system to be sure you have a guarantee to pay your loan, you have a guarantee. It’s a big risk to take, of course. Any borrower who embarks on a mortgage takes this conscious risk of losing his or her property or even several real estate. The property will be seized in the event of a failure of payment on the part of the borrower.
Before taking out a credit, assess your borrowing capacity seriously and with the help of your bank advisor. Mortgage registration is in a way a form of surety or suretyship set up to protect real estate financial transactions and any lending institution. This is by no means a privilege for a bank: the lender to borrower relationship is a donor-giving relationship.
Know your ability to repay
Loans and loans entered into must be able to be repaid at the interest rates provided. Once the property is mortgaged, they go for sale. The borrower may consider them lost and absent from future land assets. A seizure is very difficult to live, especially if the mortgage property is the borrower’s current housing. So be sure to think about your loan and future before being overtaken by one or more mortgages.
Borrower insurance: protection
At the time of taking out a real estate credit, insurance is offered to you. If you are in doubt about your future ability to repay and even if your current situation predisposes you to a sense of security, it may be useful to take out borrower insurance for your personal credit.