How does a mortgage loan work?

mortgage loan
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Unlike a home loan and an earmarked consumer loan, a mortgage loan is an unearned loan .

This form of credit is made special by the fact that its beneficiary, in addition to the usual guarantees of a bank loan, gives the possibility of seizing a property of which it is the owner in the event of default of payment. Clearly, if the monthly payments are not correctly paid to the banking establishment or the lending institution, the latter then has the right to seize the mortgaged property . He can then resell it and obtain reimbursement of the credit. Mortgage loans are therefore additional loan insurance that allows a lender to protect itself in the event of default on the part of the subscriber.

It should be noted, however, that this seizure remains quite rare. In the event of non-repayment of the loan, the creditor will generally prefer to find an amicable solution. Be careful all the same, the mortgage will not prevent the subscription to insurance, especially when applying for a mortgage.

As explained above, the mortgage loan is a suitable solution for homeowners. It applies to both main residences and secondary residences , rentals, commercial premises or mixed properties. It also offers many possibilities to borrowers.

A first mortgage must also be distinguished from a second mortgage . Here, the rank defines above all a priority between different creditors. This division into first and second rank mortgages makes it possible to better distribute the risks.

In the event of default and liquidation of the property, the first mortgages will be repaid first. They are therefore generally less risky and benefit from lower interest rates from banks. Second mortgages, which are riskier for banks, often carry a higher interest rate.

What to do with a mortgage?

Access to this type of loan can be very advantageous for the individual. A mortgage loan is above all a cash loan . This form of borrowing is an opportunity for an individual holding real estate, new or old, to draw cash without having to go through a possible sale.

Thanks to this, the borrower puts himself in a position to be able to increase, in the long term, his total wealth, all without losing his acquired assets.

Contrary to what one might think, mortgage loans are not only reserved for real estate investment. They can make it possible to generate financing capacity for a multitude of projects. Whether personal or in the context of your professional activity. There are a whole host of situations where this cash loan can be a viable solution:

Repayment of debts: in the event of indebtedness, the mortgage loan makes it possible to free up a sum of money large enough to get back in the saddle.

The purchase of a car: being an unrestricted loan, the loan secured by a mortgage can very well be used

Applying for a mortgage can also be particularly profitable when you have life insurance. In this case, if you need cash, rather than digging into your life insurance, opting for a mortgage loan can be a significant solution, especially in view of the taxes that will be claimed from you.

Applying for a mortgage will then allow you to borrow up to 60% of the value of your life insurance. Here, the insurance contract is pledged up to the amount of the loan. (The pledging of a life insurance contract means the assignment of this contract as security for a debt ).

Thus, once the credit has been granted, you will be able to benefit from the cash necessary to finance your project without depriving yourself of your life insurance.

Examples of feasible mortgages:

With BoursedesCredits, it is possible to make a mortgage loan representing up to 60% of the value of the property , and this, for amounts ranging from 50 to 400,000 €.

Mr. Lefèbvre, 58, owns a building renovation company and excellent income. Soon to be retired, he wants to realize his dream and buy a house in Spain, a property in Andalusia worth 250,000 €. He asks a BourseDesCredits broker to find an adequate financing solution for his project. After surveying our partners, our brokers offer him a mortgage loan with a guarantee on a property located in Metropolitan France.

Mr. Dumont owns 50% of the shares of a computer company. As his partner prepares to take a well-deserved retirement, he offers to buy the remaining 50% of the share, up to €380,000. After trusting BourseDesCrédits, one of our partners offered him a 20-year mortgage loan, with a guarantee on his main residence.

Ms Petit is 77 years old. She wishes to obtain the sum of €50,000 to help her grandchildren. However, she does not want to strip her life insurance contract and even less pay the taxes that will be required of her. Because of his age, no banker wants to lend him this amount. After contacting us, Mrs. Petit obtains an 8-year loan secured on her life insurance for a small monthly payment , which Mrs. Petit will pay without affecting her budget too much.

How to get a mortgage?

To benefit from a solution of this type, certain conditions must be met. Initially, the individual concerned must imperatively be the owner of real estate. Without it, the lender simply won’t be able to take his property as collateral.

In some cases, the mortgage loan can also be a suitable solution for people in the most difficulty.

The mortgage loan can nevertheless concern a very varied public, ranging from the entrepreneur to the employee, including the retiree. In accordance with the legislation, the repayment period cannot exceed the 90 years of the borrower. The property concerned must also be located on the national territory and its holder must declare his income there. The mortgage loan is in fact reserved for French tax residents .

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