The mortgage loan is the undisputed ruler of real estate executions.
If you want to recover a loan, but there is a landlord before you, you need to know that your chances of success decrease.
Within the real estate attachment, the landlord has the winning card; you will find yourself facing an opponent who has an “ace takes everything” in his hand and who will most likely win the game. In this article I will explain what is the mortgage loan and what are its privileges that endanger the recovery of your credit.
What is the mortgage loan?
The mortgage loan is a contract entered into between a natural person (or legal person) and a bank; thanks to this contract the bank grants the customer the financing of a large sum of money for the purchase of a real estate (usually the purchase of the 1st house). The main feature of the mortgage loan is that the bank agrees to finance the customer only on condition that the purchaser of the property grants the same bank to register a 1st degree mortgage on the property.
What are the main features of the mortgage loan?
- It is granted only if the bank enters a 1st degree mortgage on the client’s property;
- It has a duration of over 18 months (minimum of 1 year up to a maximum of 30);
- The sum loaned to the client cannot exceed 80% of the property value (“loan-to-value”). Those who need higher amounts can opt for the mortgage loan;
- The sum is lent to the customer only for the purchase of the first house;
- Cheaper interest rates are applied than normal loans;
- There are lower notary costs than other contracts.
Why does the law recognize these benefits to the customer who gets the loan?
The law recognizes a public interest in the protection of the mortgage loan, since thanks to this type of contract it is possible to spread real estate property (real estate property is protected by art. 47 of the Constitution).
If you know the strengths of other creditors in advance, you can avoid bad surprises when you try to recover your credit; in fact, it often happens that you have to “compete” against a bank (and against a mortgage loan) during real estate executions.