The loan with property guarantee, also known as property refinancing, is a practice that is gaining more and more strength in Brazil and very common abroad through the mortgage. Currently, more Brazilians are starting to consider this credit line when obtaining a loan from their financial institution.
And the good news is that this alternative is one of the most advantageous options for the contractor. This is because, by leaving your asset as a guarantee in a financial institution, it will be possible to obtain a higher amount than the values offered in other credit lines. By having a property as collateral, the bank starts to trust more the person who is applying for the loan.
This confidence generates lower rates, reduced interest rates and a greater availability of credit. However, despite the advantages, there are disadvantages and also some precautions that must be taken.
To clarify all your doubts on the subject, we have prepared a complete content that addresses the main topics about the loan with a property guarantee.
How does home equity loan work?
This credit line works like a personal loan. In order to achieve this, the contractor must have a property (such as a house, apartment, commercial room, etc.) in his name and this asset must be paid off and free of charge. When contacting the financial institution, the contractor will inform his desire to apply for the credit line. This request can be made by clicking here, making a registration directly from our website.
After registering, your request will be forwarded to a financial institution, which in turn, will do your credit analysis and then legal and property evaluation.
Generally, the credits available are between 50% and 60% of the property value. After stipulating the amount to be borrowed, the applicant must view the contract to know all the clauses and fees related to the transaction.
After signing the document, the applicant will leave his property as collateral for the loan made at the financial institution and, in the event of default, the pledged asset will go up for auction.
What are the advantages and disadvantages?
Like all lines of credit available on the market, the mortgage has advantages and disadvantages. And to help you learn more about this type of loan, we list its main pros and cons:
The main advantage related to the secured loan is interest, which is the lowest of all other lines. This is because the contractor will give a high guarantee to the financial institution, which starts to trust the contractor more.
And, because of this, this credit line offers another advantage: the high amount of credit available. This is especially good for those looking for a way to get big capital to carry out some important activities, such as buying a second property or starting a business.
Finally, another great advantage is the stipulated payment term. Generally, the contractor is given a period of 240 months to settle the debt.
The main disadvantage is the risk related to the non-payment of the debt, which could lead to your property being auctioned. Other than that, there are costs (like all lines of loan and financing) in the registry office and related to the Rate of Evaluation of Goods Received as Guarantee in order to apply for the loan.
Finally, it will only be possible to obtain the credit line if the property is paid off and in the applicant’s name.
What are the risks of this type of loan?
The main risks of this credit line are default and poor financial planning, which can lead to non-payment of the loan, which, in turn, will result in the loss of the property.
There is no specific rule, but in general, after 30 days of delay, the asset may be sold by the financial institution. In practice, the bank will be able to request the payment of the fee related to the property transfer tax and then hold an auction to settle the debts without having to resort to legal proceedings.
That is why it is very important to have long-term planning and always prioritize the payment of the mortgage so that the asset is not taken over by the financial institution.
Another precaution to be taken is with undue fees, which may be charged by financial institutions regarding credit analysis. Any fee should only be paid after the loan is approved. If the bank is charging any amount before the loan is taken, be suspicious and question it.
Who is this credit line for?
This type of credit is intended for all those who are in need of a reasonable amount of money on loan in exchange for an equally high guarantee. This type of credit is accessible to everyone who has a property in their name, whether residential or commercial (such as commercial rooms, stores, kitchenettes, etc.).
However, it is important to pay attention to some details. The first is the real need for the loan. As the guarantee for this credit line is considered high, it is important to evaluate the available alternatives until reaching this option.
As it is safer for the financial institution, this line is also indicated for those who need money to pay all their debts. This is a very common attitude among contractors who obtain this type of loan.
Finally, and not least, borrowing with a property guarantee is recommended for those who are able to afford the installments. So it is not appropriate to use the money to create more debt.
As we saw at the beginning of this article, bad debt is the main risk of this credit line. And non-payment can result in the loss of the property, even though there is the possibility of negotiating the debt with the creditor institution.
Although many banks offer a home loan, many Brazilians are still unaware of this credit line. Because it offers lower rates, reduced interest rates, greater credit, and an extended payment term, this may be the ideal option for obtaining a personal loan.
However, it is important to take some precautions and carry out financial planning so that the borrowed money is used in the most prudent way.
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