Posted by Brian Mason on December 2, 2019
The secured property loan is a credit option in which you offer a property as collateral. Interest is lower and longer terms.The modality, little known to Brazilians, is widespread around the world and is indicated for the financing of large projects such as the purchase of a second property, the payment of the study of children, the realization of a trip, opening a new business or holding a wedding party.
Learn more about the secured loan and find out if this credit option makes sense to you:
Secured loan: How does it work?
Also known as a mortgage, this type of loan allows the person to obtain money not only for the purchase of a new property, but also for any purpose, such as renovation, construction, investment. , new business, studies, among others. The big draw is interest rates, which are often much lower than other credit lines.
Another attraction is the term of up to 30 years to repay and the high limit of the loan amount. But you need to be aware of the risk: in the event of default, the borrower may have to surrender his or her home to the bank.
Who can make the secured loan?
Physical people with real estate in their name. Before you have access to the credit, your property will be assessed by bank-accredited companies. As the good is pledged, this type of credit is much cheaper than overdraft, personal credit and even payroll deductible credit.
Interest rates on secured loans range from 1% to 2% per month. But beware: in case of default, the property is auctioned to settle the debt assumed.
The risks of having the property as collateral
Very common in the US, mortgage refinancing can have serious consequences if the debt is not paid. An example of this is the housing crisis that occurred in 2006 in the United States and triggered the 2008 world economic crisis. At that time, credit institutions in the United States were lending. we are high on families, taking their property as collateral.
The problem is that often the amount of credit granted, however, was beyond the ability of some families to pay, which eventually failed to meet the payments. Many had their property taken back, but with the bursting of the housing bubble (the falling real estate price), some banks eventually collapsed because they could not get back their mortgage money.
Therefore, be careful not to let the parcels delay more than 30 days, because your property may risk alienation. In practice, the bank creditor may apply for the transfer of real estate tax to the notary and ask for the realization of the property, followed by the auction to pay the debt. life without having to go to court.
Another precaution to be taken by anyone who is interested in making a secured loan is the improper collection of fees for credit analysis. Question the need for advance payment, as this is not a common practice.
Only then, with the approved credit, will it be necessary to pay a fee for appraising the property by an engineer. In this case, yes, the banks usually charge a fee that varies between 400 and 2 thousand dollars, depending on the institution.