Do you want to realize a life project, whether it’s renovating your home, taking a big trip around the world or investing in your own business?
So you may need a long term loan with high value and the lowest possible interest. Understand more about secured home loan as it may be your best choice.
Property-backed credit is still little known in Brazil, but it should not. Unlike in developed countries, where this is one of the first options for financing the population, here consumers still see the sport as the last alternative.
What can or cannot I do with my credit?
There are extremely indebted people who end up losing their assets for lack of knowledge. In certain cases, using the property as collateral to pay off more expensive debts is better than selling the property at any price.
The scratch, of course, has to be placed at the tip of the pencil. As it is an asset of yours that is at stake, you need to be informed and know all the details of the process. And before you get this type of loan, you have to check if it meets your needs and possibilities.
Here’s what is myth and what is true about collateral loan.
TRUTH: Interest rates are lower
One of the main advantages of collateral credit is the interest rate, which is much lower than in other modalities such as personal loans, overdrafts or even payroll loans – the latter is offered only to employees of private companies. , public servants and retired by the INSS .
Look at the average monthly interest on collateralised credit operations and compare with the rates charged on other loan modalities, according to Central Bank figures.
MYTH: The bank wants to take my property
No, the bank’s goal is not to take people’s property. The property for the bank equals the net for the trapeze artist. He wants to have it there, just to be sure, but he doesn’t intend to use it.
This is because the property for the bank represents cost. Already the loan means profit (even with the lower interest rate). When the customer does not pay and the bank has ownership of the property, he automatically becomes responsible for the maintenance costs of the property, such as property tax and condominium, if it is an apartment.
When the customer is in default, an auction of sale of the property is held. If he succeeds, the bank will have the remaining amount for the debtor to repay the debt and the rest will be left to the former owner. If the auction is not successful, there is a second attempt. And if neither attempt results in the sale of the property, the property becomes 100% of the bank.
TRUTH: Even with the warranty property, I must prove income
This is a common mistake when thinking of getting a collateral loan: thinking you don’t have to prove income. In fact, it will be, yes. Bank transaction may be filed via statements, pay stub or income tax to prove income.
TRUTH: More than one person can compose income for assessment
One of the advantages of this type of loan is that it can involve more than one person to compose income for evaluation in credit analysis. Proof of income from other proposers facilitates approval to obtain the desired resource.
MYTH: I cannot sell property that was used as collateral
If you place the property as collateral for a loan, it does not necessarily mean that it will be impossible to sell, but the process will be different from the conventional one.
These are two operations that occur concurrently. First you negotiate the sale of the property with the buyer and clarify what part of the value will have to be used to settle the debt with the bank, which is guaranteed by the property itself. The buyer pays off the outstanding balance and expects the bank to write off the chattel mortgage. The buyer can then pay the rest of the value of the property to the owner and pass the property to his name.
It is important that parties involved in the transaction seek legal advice to make sure that all steps are followed. The owner of the property will not be able to sell it in any way without first settling his debt with the bank and without the term that proves this payment.