What is a mortgage?

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What exactly is the term mortgage? How does this warranty work and what are the costs?

The conventional mortgage, a guarantee for the lender

When you buy an apartment, you usually ask a bank to lend you a portion of the money you need in the long run.

The bank, or the lender, can then take a guarantee on the real estate you buy and for which it has granted you the credit: it is a mortgage. This guarantee allows the lender to guarantee its risk, and to sell the real estate purchased if you do not repay the maturities of your loan.

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When the mortgage is voluntarily granted by the purchaser of the property (the borrower), it is called a conventional mortgage. The guarantee is materialized in an authentic deed (before a notary), and it is registered for the conservation of the mortgages of the place where the property is located.

In concrete terms, when the borrower can no longer pay, the property is seized and then sold to court; the bank, or the lender, repays itself with the proceeds of the sale. If you want to know mortgage in detail visit KPT Homes .

The legal mortgage and the judicial mortgage

We speak of a legal hypothec when the guarantee is granted by the law to certain creditors: for example, there is a legal mortgage between the spouses which provides that each of the spouses guarantees the debts of the other spouse on his own property.

The judicial mortgage is a mortgage ordered by a court decision.

The operation of the mortgage

The financed apartment serves as a money-back guarantee to the lender, the bank. The latter must therefore know the price of the real estate so that the mortgage can be granted up to a certain amount, recorded in the notary’s deed.

If the buyer of the real estate can no longer pay its loan installments, the bank may order the seizure of the mortgaged apartment, and its forced sale to court.

The bank then enjoys a preferential right, that is to say that it will be paid first on the sale price of the property, before any other creditor. On the other hand, the bank can also avail itself of a resale right: if the borrower sells his property before paying his debt to the bank, the bank can seize the property and dispossess its new owner.

How much does a mortgage cost?

The mortgage must be registered in the mortgage registry: it is subject to the land registration tax (0.715%), and the borrower must also pay the costs of registration in the land registration service.

On the other hand, the mortgage must be taken before a notary; the buyer should not neglect the remuneration of the latter (proportional to the selling price of the property).