Mortgage or bank guarantee?
The bank that grants a mortgage is taking a risk. To protect itself, it requires a financial guarantee . This can be a deposit , a mortgage (when the loan is intended to finance the property construction) or even a lender's privilege (when the loan is intended for the acquisition of the property).
Bank security
The bank guarantee (or bank security) is provided by financial institutions, insurance companies or even professional insurances.
The financial terms which are offered vary from one institution to another and depend on the amount which is borrowed, the amount of maturities and the age of the borrower. The amounts paid by the borrower corresponding to the cost of the deposit are returned at the end of the contract by most establishments, but these amounts are not revalued, so the latter are generally obsolete after twenty years of loan.
After three or four unpaid installments, the surety pays the lender. At the same time, it approaches the borrower in order to find amicable solutions. If there is no way out possible, the bonding establishment first registers a judicial mortgage at the borrower's expense and then seizes and sells the property in order to be reimbursed.
This mechanism is extremely expensive for the borrower.
Mortgage
The mortgage is a traditional guarantee given by the borrower on his property. It must be established by the notary and published at the Land publicity service.
The mortgage registration is valid for the entire loan term, plus 1 year, but it cannot exceed 50 years. However, the mortgage is ineffective after payment of the last installment of the loan.
After this year, the registration automatically drops and disappears without any fees or formalities . The borrower can sell his property before the end of the loan. In this case, he must get the mortgage released.
In the event of default by the borrower, if no amicable solution is found, the creditor puts his guarantee at stake, by having the property seized and then sold.
- My landlord has issued me by bailiff leave for sale with indication of a net selling price. The real estate agency in charge of the sale claims me €30,000 agency commission. Do I have to pay them?
- I want to buy an apartment. My bank refused my loan. Can I ask the seller a staggered payment of the selling price?
- I buy real estate in the province but I can not, for professional reasons, be present at the signing of the sale. I wish to give proxy to represent me. [...]
- I buy a property for which the mandate of sale provides that the payment of real estate agency commission is the responsibility of the seller. Why is this commission included in the base for calculating notaire fees?