Mortgage credit allows you to obtain a loan from a financial institution using real estate as collateral. The most common case is that of a home loan to buy real estate: the latter will serve as collateral for the lender.
This means that if the monthly payments are not paid by the due date, the lender will have the right to claim this guarantee and become the owner.
However, as long as the borrower repays his monthly payments, he continues to dispose of his property as any owner (same thing for property rented). There are several types of mortgages that will be more or less suitable depending on the case. Here they are in detail:
Credit with a mortgage
This is the most common case that we describe in the introduction. The borrower contracts a loan and puts a mortgage on a property belonging to him. The latter will serve as a guarantee to the lender. This type of credit is particularly interesting for people who can not have sufficient proof of solvency. In this way, the lender is reassured and the borrower can continue his project. However, it is important to be sure of your repayment capabilities at the risk of losing everything. It is important to note that, like any credit, an interest rate, the amount of which will vary according to the percentage negotiated, will be added to the amount of the loan.
Mortgage life loan
The mortgage life loan is an interesting solution for people over 65 who are refused a loan, but also for people with a disability or serious illness (a condition that can be prohibitive when a request for credit from a banking institution). With the mortgage life loan, these people will be able to borrow a certain amount (calculated according to the life expectancy and the value of the mortgaged property) for a particular project or just to raise their monthly budget and have nothing to repay while alive. It is at the time of death that the lender will seize the property to repay. It is also important to specify that the heirs are protected during this type of loan. If, on the death of the owner of the property, the sum obtained on the sale of the property exceeds that of the loan, the heirs will benefit. On the other hand, if it is insufficient, they will not be subject to indebtedness.
The conservatory judicial mortgage
This type of case is often the one used in an emergency. When the lender realizes that the borrower can not repay his credit or will have obvious difficulties in paying his monthly payments, he can take legal action to set up a conservatory judicial mortgage. However, this type of mortgage is not granted lightly, the creditor must justify the amount due and prove that the borrower may not meet its obligations. Once the application has been submitted, the property selected may be seized in the event of non-payment by the borrower.
The rechargeable mortgage
Little known French, this type of loan is widely used abroad. How many times have we heard in an American film “I already have two mortgages on the house” without really understanding what it was? It’s a rechargeable mortgage. The latter makes it possible to contract a new loan with mortgage according to the amount already refunded to the first credit contracted. An example to better understand: You borrow 200 000 € to buy a house through a mortgage loan. The house is therefore subject to a mortgage. A few years later, you have already repaid a quarter of the loan, or € 25,000 and want to build a pool. You will then be able to apply for a loan of up to € 25,000 to the organization that loaned you the original amount or to another and your house will be subject to a second mortgage.
This is a good example, because when it comes to making improvements to a mortgaged property, the value of the asset increases, and banks are more likely to provide a rechargeable mortgage. That said, you can take out a second mortgage to finance a project that will have nothing to do with the property in question.
The various mortgages are therefore quite possible solutions when one is old or sick with the mortgage life loan, but also when one is sure of its ability to repay, without being able to justify them with the credit matching a mortgage and the rechargeable loan. Attention anyway, if you miss your obligations, your creditor could resort to a judicial conservatory mortgage. So no matter what type of credit you would contract, make sure your repayment capabilities and do not hesitate to call for the purchase of mortgage credit.