Mortgage Credit in the Bank: Calculation and Simulation of Rates

Definition

Loan whose guarantee is based on a mortgage. Mortgage credit is generally used to finance a real estate acquisition or to carry out work. Since the March 23, 2006 surety reform and the introduction of the rechargeable mortgage, it is possible to use it to secure several successive loans .

The different varieties of mortgages

The contract that binds the borrower to the lending institution falls under the conventional mortgage . It can be established only in authentic form, which explains the formalism that surrounds it and the obligation to resort to a notary.

Mortgage registration can only relate to property owned by the borrower. It is therefore useless to propose the good of a close to guarantee the loan.

The rechargeable mortgage

Introduced by the 2006 reform with the aim of boosting consumption, the rechargeable mortgage allows the guarantee to be used for new loans (1). It requires the drafting of a new authentic deed and must follow the same formalism as for any loan and in particular be the subject of a prior offer in which is indexed a mortgage situation of the building put in guarantee .

(1): It is possible to borrow from another bank than the one listed first.

 

Mortgage life loan

 

It is a very particular application of the mortgage, still quite unknown and sometimes criticized for the risks it entails. It must be said that the consequences can be disastrous if the mechanism is not adapted to the situation of the borrowers.

Principle

Principle

The particularity of the PVH is to postpone repayment of the loan on the death of borrowers. It is perfectly suited to the situation of pensioners. It should be noted that the capital may be paid in one-time or annuity form, the use of funds remaining entirely free. The risks are mainly of 2 types:

  1. A high cost of credit : Unreimbursed interest is capitalized, meaning that each year the interest in turn produces interest, magnifying the debt from year to year.
  2. Inherited heirs of a patrimony : the latter may however decide to keep the property by repaying the loan themselves. In the opposite case, the bank will proceed with the sale of the property, the balance eventually entering the estate assets.

Good to know: only a few specialized organizations such as the mortgage lend this type of financing.

Refund

It occurs when the borrower (or co-borrowers) dies. However, it is possible to repay all or part of the capital before the term. In this case, the lending institution may require early repayment indemnities, provided that they have been provided for in the prior offer.

Formalism

The contract must be authenticated by a notary, which, despite the cost of the formality, has the advantage of being advised by a public officer and being informed of the risks involved.

 

The obligations of the borrower

 

The guarantee based on the value of the property , it is obvious that the bank will ensure that the general condition of the mortgaged property does not deteriorate over time. It must therefore be maintained in such a way that its resale price does not fall.

Bonded Mortgage: Avoiding Insurance

An original alternative, the secured mortgage loan provides financing without meeting the insurance obligation. It allows to obtain a capital of up to 70% of the value of mortgaged assets over a period of up to 25 years. Unlike the PVH, the debt is repaid (capital and interest) periodically. In return, the lender imposes to subscribe to a mutual guarantee.

The lender privilege of deniers

The lender privilege of deniers

Another real security, the IPPD has the advantage of being more economical than the mortgage since it does not require land registration . However, its scope remains limited as it can only apply to existing goods. It is therefore impossible to allocate it to financing the construction of a single-family house or the purchase of an off-plan apartment.

Raised hand

Raised hand

Another disadvantage of the real securities is that they require a release in case of early repayment , which banks do not always specify when subscribing. This is a percentage that applies to the original amount. For example, count € 770 for a borrowed capital of € 150,000.