When you decide to buy real estate and take out credit with your bank, they will ask for guarantees. In the event of non-payment on your part, the banks will then be able to finance themselves. There are several types of guarantees today.Guarantee, a means of protection for banks
The surety is an advantageous guarantee for the borrowers on the one hand, but also profitable for the banks. Indeed, the banks have created surety bonding companies, thus making it possible to pool risks and guarantee the payment of a debt linked to old or new real estate .
The principle is simple: once the credit funds are released, the borrower will have to pay a sum proportional to the total amount of his credit , composed of:
- A commission definitively acquired by the surety body;
- A contribution paid to the mutual guarantee fund.
At the end of their credit, the borrower may be partially or fully reimbursed for these costs.
Unlike the mortgage or the lender’s privilege , the surety does not generate any notary or release fees.
However, let’s not forget that the borrower has to pay an amount proportional to the total amount of his credit, which may turn out to be higher than for a mortgage guarantee . The most well-known surety company in France today is called Lite lender.
The “mutual official” surety
There is a specific bond called a “civil servant mutual”. Only officials or specific activities can take advantage of it and therefore benefit from a free guarantee . The best known surety today is called Casden.Depending on your professional situation, remember to check with your bank to obtain the most advantageous guarantee there is.
It is a traditional guarantee and today well known to borrowers. If the borrower can no longer repay his loan, his property will then be seized by the bank and sold at auction .
The mortgage is generally used in the context of financing construction work or renegotiating a loan . It is important to know that the mortgage is the subject of a notarial act whose registration takes place at the mortgage office, in the city where the property is located.
The mortgage generates a number of costs for the borrower, namely:
- Mortgage costs (salary of the mortgage registrar, notary’s fees, VAT, etc.)
- Land advertising tax
TO REMEMBER !
- You will be obliged to guarantee yourself in the event of granting a mortgage
- The bond is an easier guarantee to set up for the borrower
- The mortgage is subject to a certain formalism to be respected