It is possible to get a loan with a mortgage guarantee
Many companies, and also individuals, consider guaranteeing a loan with a property , especially when financial institutions do not want to grant any type of credit for risk reasons.
Generally, this financial solution arises when a difficult financial need is experienced and a specific injection of capital is required to obtain liquidity or to solve an urgent debt such as a tax debt or a lien.
When this situation occurs in which banks deny credit to obtain liquidity, the best option is to quickly turn to a specialist in private financing to request information about a home equity loan or a loan with the guarantee of a property.
What is a home equity loan?
Mortgage - backed securities loans are loans that a property is used as security to support an operation in the event of default.
In order to understand this type of loan well, you have to understand what a guarantee means . A guarantee, in this type of loan, is the asset that serves as a guarantee before the real estate lender in the event that the company or individual that has received the financing does not return the installments and cover the outstanding debt.
This property that will be used as collateral does not necessarily have to be a home; it can also be:
- A business premises
- A ship
- A land
- A real estate promotion
In addition, several properties can be used to guarantee the operation, it does not necessarily have to be exclusively one per loan.
You also have to know that it should not be confused with the mortgage loan , which we explained in a previous post. The purpose of the mortgage loan is to buy a home, while the loan with a mortgage guarantee , or the loan with a home equity guarantee, the purpose is indifferent. The final destination of the loan can be any and is used for whatever you want.
What is it usually used for?
The most common reasons for using a home equity loan are the following:
- Get liquidity . In case the company has to make an urgent payment or needs to get out of a critical moment.
- Pay debts . For example, if we have to cancel a garnishment order or pay a tribute quickly.
- Reunify debts . If we have many debts with different creditors and we want to reduce everything to a single installment and pay less in total; if you have a property free of charges, or with very few, it can be achieved.
- For inheritances . If you need to pay inheritance and gift tax to accept the inheritance of a property, the inherited property itself can be used as collateral.
These are the most common reasons but, as we have said before, home equity loans do not have a single purpose. It can be used for whatever you want.
How much can you get?
The maximum amount you can get a home equity loan is around 40% - 50% of the appraised value of the property and subtracting the outstanding mortgage and other other charges that are on the property.
Although this loan is the fastest way to get financing, and the most accessible, the appraised value of the property and the charges attached to it, such as if for example there is a mortgage to pay, will mark the amount that can be obtained with a loan with mortgage guarantee.
In addition, each private financing entity establishes some requirements, most of them are common, such as having financial solvency to be able to repay the loan. If you do not have short-term solvency, you can also return the long-term loan by making the necessary deficiencies, if the purpose is the sale of a property or real estate project.
Benefits of loans with a mortgage guarantee
Mortgage - backed securities loans seem very restrictive, but it is a type of loan recurs frequently by companies and individuals who own property and have no liquidity. In fact, it is one of the most used credits in the world and, as we saw in the alternative financing post , it is a source of financing that in the future will be more used in Spain.
The home equity loan or home equity loan is the easiest, fastest and most accessible way to get financing . In fact, if you have property without a mortgage, the requirements are simple and the process to get the money can take a few days, compared to bank loans that can take weeks.
In addition, it must be taken into account that it is the only option to obtain financing in difficult economic situations.
How to get a loan with a mortgage guarantee?
To access a loan with a mortgage guarantee, it is necessary to go to private capital, or private financing, through a real estate lender .
It is very important to note that you have to work with financial companies that are regulated by the Bank of Spain and that comply with all the law, as indicated on our website, in the legality section .
Private equity finance companies do not care about the purpose of the loan or the client's delinquency status. To start the operation, the most important thing is the value of the property that supports the operation , the location and that it has the lowest possible charges. If these requirements are met, the viability of the operation can be studied and the loan can be granted as soon as possible.
In summary, these are the main requirements to access a loan with a mortgage guarantee:
- Be of age.
- Contribute property , be it personal, a relative or an acquaintance.
- This property has to have the minimum possible charges.
- Carry out an appraisal of the property and be able to analyze the simple note.
- In the case of a company, the appropriate reports will be requested.
Difference between mortgage guarantee and mortgage guarantee
A mortgage guarantee is made on your own equity, while in a mortgage guarantee a third person can intervene who answers for you before the financial institution. The guarantor is the person who is responsible for facing the debt in the event that the previously agreed payments are not made.
If you want more information and you want to go deeper into what a home equity loan is , you can access our post.