The granting of a mortgage loan is always a risk: for any reason, you may find it difficult to repay your monthly payments.
In order to minimize the risks, the banks ask for guarantees, even if your borrower profile is excellent. The choice is usually made between mortgage or bank guarantee. But what are these two guarantees? And how do you know which solution is the best? Retail review.
What is a mortgage?
The mortgage is the most common guarantee in the context of a mortgage, and it is certainly the one that your bank will offer you automatically. Its operation is simple: if it is faced with a default of the borrower, so if you can no longer repay your monthly payments, the lending institution reserves the right to seize the property and put it on sale (auction , most often) to recover his bet.
The mortgage is not exercised until the principal has been repaid in full. If you decide to resell the mortgaged real estate, you can simply pay off your loan with the proceeds of your transaction, or ask for a mortgage transfer on the home loan you want to buy next. This solution is to be preferred, because the steps of mortgage lifting are expensive!
In most cases, the mortgage relates to the property purchased through the amount borrowed. But be aware that it is possible to mortgage another property that you would own, for example for an investment. This is called “mortgage loan”.
What is a bank guarantee?
Although the bank guarantee is not the most frequently chosen option, it is clear that it is gaining ground against the mortgage. This guarantee is close to the rental deposit: as a borrower, you ask a specialized institution (financial institution, mutual insurance company, insurance company …) to vouch for you. Thus, if you are no longer able to repay, it is this intermediary who will do it for you.
The particularity of the bank guarantee is that you do not choose your guarantor: it is he who chooses you! In fact, you must file an application with a surety and hope that he agrees to cover you. The decision is made based on your borrower profile and the criteria specific to the institution.
If you are a civil servant, please note that there is a very advantageous employee mutual guarantee, which can even, in certain circumstances, guarantee your mortgage at no cost.
Mortgage or bank guarantee: how to choose your mortgage loan guarantee?
So, should we prefer the mortgage or the bank guarantee? The answer is not easy, because in both cases, the costs are your responsibility and are substantially the same at the start (between 2 and 3% of the total amount borrowed). The difference lies mainly in the final cost and in the mechanisms that are put in place in case of failure.
On the one hand, the mortgage generates a variety of fees, whether it concerns the land registration tax, registration fees, notary fees or release costs if you intend to lift the mortgage before the end of the year. maturity of the loan. On the other hand, even though the cost of the bank guarantee is very close to that of the mortgage, you should know that:
1. The bond does not require registration of a notarial deed (which saves money);
2. On the whole of the contribution, a part is returned to the borrower once the capital balance. In some cases, this “party” can even rise to 75% of the departure bond!
In addition, the procedures relating to the deposit are less strict and less radical than those involved in a mortgage. In case of default, the surety agency will offer you alternatives (and amicable) before embarking on the pure and simple seizure of real estate.
For these two reasons, the deposit is more and more often chosen by the borrowers. So, between mortgage or bank guarantee, it’s up to you to select the most adequate guarantee … and the least expensive!