What is a secured home loan? Can I lose my house?

A number of financial institutions are currently focusing on collateralised lending as their primary credit product, particularly home equity or home equity.

But do you know how this type of loan works? Do you understand such property sale? Secured credit is a financing option where the customer gets better terms such as lower rates, lower installments and longer terms by placing a collateral as well.

It sounds complicated, but in this text we will explain everything you need to know about it so that you are not unsure when deciding.

What is property alienation?

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Disposal of property or chattel mortgage is a legal remedy used to transfer ownership of an asset, in this case a property, to a financial institution during a credit transaction. The collateralised operation allows the institution to provide loans with much lower interest rates and longer terms.

While the contract is active and there are installments of the loan to be paid, the financial institution has indirect ownership of the property and the customer has direct ownership and usufruct, ie can continue to live or rent the property. With the repayment of the installments and the consequent end of the contract the property returns to the owner.

The customer may also sell this property for the duration of the contract, provided that, with the sale amount, the debt is settled with the institution that provided the loan.

The chattel mortgage was instituted in 1997 with Law No. 9,514, which simplified the process and reduced bureaucracy, which encouraged banks to continue to carry out this type of transaction.

How it works?

How it works?

Although simpler and less bureaucratic, the process for lending is similar to other forms of lending. In this case, a credit analysis is also done to prove income and to make sure that the customer can afford the installments.

Presenting a security as well does not guarantee that the loan will be released. The guarantee is for banks and financial institutions to offer lower interest rates and longer terms on credit operations, which reduces the possibility of default.

It is usually recommended that loan installments do not commit more than 30% of the client’s monthly income and, by law, institutions may lend up to 60% of the property’s value.

But after all, can I lose my home?

But after all, can I lose my home?

Repossession is an extreme measure in cases of persistent delinquency, but this is a very expensive process for the bank or finance company, which still runs the risk of not recovering the full amount borrowed.

The property taken over by the bank in cases of non-payment goes to auction and the sale value is used to repay the debt. The excess amount is returned to the customer. In these cases, the institution only recovers the amount it gave as credit, has no profit from the operation.

What are the advantages of this type of loan?

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The biggest advantage is the much lower interest rates compared to the rates offered on other loan arrangements.

Another big advantage is the much longer lead times. In this modality it is possible to install the financing up to 180 times, which allows a greater release of funds with lower monthly installments.

While studying credit alternatives, simulate and compare the amounts paid per month and the debt amounts in different categories such as Secured Credit, overdraft, personal loans and payroll loans.

What you need to know when making a loan at a pawnshop?

Quite often, the word “pawnshop” is associated with a very difficult financial situation. Because there is nothing more terrifying than having to hand over your laptop, antique furniture or family jewelry that has been passed down to descendants of your kind for decades.

However, if you follow all the rules set by the pawn shop, then you can establish a normal mutually beneficial relationship with him.

Minimum requirements!

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The main difference between a bank and a pawnshop is that the latter will never require you to have a registration, a payroll and a positive credit history. This is the main advantage of any pawn shop. The borrower only needs to provide some valuable collateral, which can be realized very quickly if the debt is not repaid in a timely manner. Documents required to obtain a loan – code and passport.

Another huge “plus” pawnshops – there very quickly draw up documents and hand out cash on credit. The decision to grant a loan is made directly on the spot. The pawnshop employee does not need to consult or seek permission from senior management and ask for information about the borrower’s identity with the credit bureau.

The decision and the amount of the loan are announced immediately. However, the pawnshop is taking a serious risk by issuing loans as a security, as a result, the loan rate is high there, and the pawnshop crediting period does not exceed 2 months.

What do they accept as collateral in Ukrainian pawnshops?

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The most popular and most often seen as a pledge are articles and bars of gold, silver jewelry and silverware.

Gold. Almost all pawnshops accept gold as collateral. Every piece of jewelry is a piece of metal, and it is more of a luxury than a thing that you cannot do without in everyday life. Moreover, it is the pledge in the form of gold that gives you the opportunity to get the maximum loan.

Electronics and Technology. This mortgage is in second place by popularity. Most online pawnshops in Ukraine are easy to accept as collateral, equipment and electronics, so it is very easy to secure money on their pledge.

A personal car. In recent years, car pawnshops have been increasingly opened in Ukraine where the borrower can obtain credit by leaving his car as collateral. Only the owner of the vehicle can get money at the pawn shop. Most often, the car is transferred to the pawnshop and is stored in the parking lot, for which the borrower must pay an additional 300 UAH / month.

In some pawn shops you can take out a loan secured by a car with the right to use it. Such a loan is issued within a maximum of 2 hours – if there are no questions about the technical condition of the vehicle and all necessary documents. The loan rate and its amount will depend directly on the class of the car, the year of its issue and the market value.

Pawnshop loan secured by real estate

Pawnshop loan secured by real estate

Today, it is still difficult to find a pawn shop in Ukraine that will be able to issue a loan secured by real estate. It is quite difficult to issue such a loan, as this will require a certain amount of additional action. The pawnshop and the borrower must conclude a special agreement.

Then the data must be entered in the state register of mortgaged real estate. If the real estate loan is not fully repaid, it cannot act as collateral. Another nuance of such a loan – the property owner must insure it and provide the pawnshop documents that can confirm it.

What is the best loan?

There are those who run out of loans, paying everything in cash. Others, on the other hand, live on credit and accumulate debts in various options.

Neither extreme nor the other: for sound financial management, you need to rely on loans at the right time, choosing the option that offers the best repayment terms to help fulfill dreams like buying a house, starting a business or a new vocational training.

How to know which loan is the best?

How to know which loan is the best?

When you need credit, you should look at some points to understand if that option is right for you. These include the amount of the installments, the payment term, the maximum amount to be released and, especially, the interest rates charged.

It is the interest that defines whether a debt is expensive or cheap, that is, its potential to multiply over time. Lower interest rate credit options are ideal so as not to hurt your financial organization.

The Loan Villains

The Loan Villains

Among the credit options available in the market, there are some of which you should flee as they only hurt your finances. Know what are the villains of credit!

Credit Card Revolving

He is undoubtedly the biggest villain for Brazilian finances! If you use your credit card revolving every time you opt for the minimum bill payment, you need to be careful not to become a snowball. The problem is that interest rates are the highest among the types of credit available on the market, exceeding 400% per year.

Overdraft

Another big villain among credit options is the overdraft, pre-approved amount used every time your account goes negative. Interest rates are around 13% per month. That is, even if you use credit for a few days, it will have a significant impact on your finances.

Personal loan

Your bank has certainly offered you a pre-approved personal loan, right? So don’t be tempted to accept it without first analyzing the conditions very well!

This type of credit is often among the worst you can count on when you need money. In any case, it is always possible to negotiate the reduction of values ​​with the financial institution.

Credit for negative

This has been a popular credit option for the unemployed or retired, as there is no restriction on those who have a dirty name or have difficulty proving income.

Interest rates, however, are quite high due to the high default rate. And the possibility of your debt multiplying is very big in this case!

What are the best options for those who need credit?

What are the best options for those who need credit?

Don’t worry, if you need a loan to make a dream come true or even to get rid of the most expensive debts, there are good options you can count on.

Guaranteed Credit

Without doubt, this is the best credit option available on the market today. If you own a car or property in your name, you can contract this mode in which your property serves as collateral for the loan.

Due to this collateral the monthly interest rates for Home Secured Credit are around 1.14% per month plus IGPM, and auto refinancing at 1.95% per month.

Real estate or car financing

For those who buy a good, different financing is usually the best option. The higher the value of the entry, the better the payment terms. Also remember to consult different banks and modalities as there are important differences between them.

Small Loan – how it works?

What can be done with a small Caloper loan

What can be done with a small Caloper loan

Thanks to this financial product, it is possible to liquidate all or part of the amount made available to the credit line on one’s account, then spending the cash to make a wish rather than a project that is particularly important. Starting from a trip, passing through the satisfaction of family needs such as expenses for the home or perhaps the purchase or advance of a car, up to the sustaining of an expense that regards the working environment.

The credit line is linked to the account of the holder and its repayment takes place gradually with monthly installments as it is usual with a revolving card, therefore it allows the immediate support of an expense and the possibility of repayment staggered over time, knowing already in advance when you go shopping and therefore without unwanted surprises.

How the Small Caloper Loan Works

How the Small Caloper Loan Works

This credit line makes available to the customer an amount equal to 1,500 USD, which can be spent at any time for the needs deemed most appropriate. Once affected, this reserve must then be replenished by reimbursing the portion of capital used, i.e. by paying a fixed installment to be paid each month and the amount of which changes in relation to the debit balance, being 50 or 100 USD in any case. The first amount is applied when there is a debit balance between 0 and 1,600 USD, the second for amounts greater than 1,600.01 USD.

The installments are always under control, because they are the same over time and therefore allow the customer to better plan what they will spend, without finding any nasty surprises. Minicredit can be requested, following a traditional investigation, by going to any branch of the Caloper group.

Example of use and refund

Example of use and refund

The credit conditions of 1,500 USD provide an annual fee available from the first year of 20 USD, a maximum APR can reach 23.30% (including 16 USD of stamp duty due and 1 euro for sending paper mailing costs. periodic communication) and a TAN amounting to 16%. Having said this, let’s see a concrete example of the use and reimbursement of the credit line to fully understand its operation.

By using 500 USD to pay for a purchase, the customer will have a repayment plan with 12 monthly installments, in this case the sum of each remuneration to be paid amounts to 50 USD in the first 11 months, while it is 27.14 USD for as regards the twelfth installment, for a total refund of $ 577.14. This sum arises from the use of the credit line and the structured costs as explained above.

Conclusions

In support of the analysis of this financial product, we can say that it is particularly interesting, but before proceeding to its use, an adequate understanding of the operating mechanisms is necessary. In addition, the costs involved are quite high, as always happens with revolving cards, because in essence this is what it is.

In conclusion, when it is necessary to make the purchase of a consumer good, it is preferable to resort to a personal loan or as an alternative to a finalized one, this by virtue of the fact that the interests are generally much lower and therefore the costs to be incurred are more downs.

Consumer Loan – What Should the Future Borrower Know?

Over the last 10 years there has been a surge in consumer lending in Ukraine. Many people have enjoyed the opportunity to buy goods by returning the money for them in parts. After the 2008 crisis, such a rush has subsided, as many people have problems with debt repayments.

As a result, banking institutions have become picky about lending. Over the past few years, the situation has stabilized, so people are once again taking the opportunity to buy goods this way. What should a person in need of such a loan option know?

Making Money on Credit: Basic Options

Making Money on Credit: Basic Options

You can take out a loan for a variety of purposes, as banks do not particularly restrict customers. This is the purchase of goods, repairs in the apartment, training, furniture and other options. For such loans, it is usually necessary to visit a banking institution to receive money. But when it comes to buying home appliances or other goods, you can get one at a particular store.

To obtain a loan from a banking institution, the borrower must provide a package of documents that will prove its solvency. If you wish to purchase goods or services on credit, prepare an invoice to be issued by the store. Your loan application will be reviewed within 3-4 days. If you decide to take an urgent express loan directly from the store, you will only have to spend a few hours waiting.

There are banks that are partners of various centers selling various products. You will be able to know in advance whether an institution can give you credit for their purchase at a particular store. Be sure to check out the financial institution’s personal page, because that’s where the partner store master data is.

Often, such a loan can be issued even at the cashier of the store. Larger centers almost always hire representatives of a particular bank who will arrange a loan for you right on the spot. You need to specify in advance which bank cooperates with the store. Also, learn the basic terms of a loan to find the best option for you, focusing on your options.

They issue credit through the cashier and transfer them to the seller’s account. You can choose the right option for you to be comfortable.

Basic lending programs

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“Loans” and “mortgage” are the most popular lending programs. In the second case, you will have to pledge your valuable property (real estate). You can get money for repairs on the premises, for the purchase of expensive goods, for treatment, for business development, etc. Your valuable property should be worth 30-50% (determined by the bank) more than the total loan amount. Usually clients are offered up to 500,000 UAH. Money can be obtained for a maximum of five years. The collateral must be insured, but some banking institutions require you to purchase life insurance.

If you have opted for a “product on credit”, then you do not have to pledge property. The loan can be obtained for a different period of time: from one month to several years. If you suddenly need a large sum of money, you have to look for a guarantor. Some banks require the product and your life to be insured.

There is a certain interest rate on consumer credit. It depends on many factors: from the down payment to the age of the borrower. In most cases, it is necessary to repay the loan in equal installments within the prescribed period, which will be calculated by the bank. However, some banks offer options where early repayment can be made with a reduction in the interest rate on the body of the loan.

Basic requirements for the person who takes the loan

Basic requirements for the person who takes the loan

One of the main requirements of any financial institution – the solvency of a potential borrower – because without this there is a risk of not getting back their money.

There must be a stable income in excess of the total amount of the loan payments. To confirm your solvency, you can provide a certificate of income, for private entrepreneurs – a tax excerpt from the tax report, or in the case of unofficial employment contact colleagues who can telephone to confirm your employment. Borrowers who have been in business for over a year are welcome. In addition, you must live and work in the territory where the banking institution is located.

First home loan: how does it work, fixed or variable rate?

Features

Features

What it is: the mortgage for the purchase of the first home is a loan that allows you to have a certain amount of money intended exclusively for the purchase of a first home that can be both new and old. As the name implies, this type of loan is not intended for the purchase of second homes or holiday homes, but only for the home which will represent the applicant’s home and residence.

What it foresees: since it is granted for the purchase of the first home, this type of mortgage has reduced interest rates, especially if the person making the purchase is under 35 years of age. It is not uncommon, however, that even those who exceed this age limit can benefit from a very low fixed or variable rate, compared to personal or finalized loans.

Requirements for obtaining a mortgage for the purchase of the first home

Requirements for obtaining a mortgage for the purchase of the first home

In addition to being of legal age and having residence in Italy and given that it is a long-term financial transaction, to obtain a mortgage intended for the purchase of a first home, you need a stable and high enough income to allow you to repay the installments without too many difficulties. Well, if you think you meet these requirements, we can proceed and see together how a mortgage works, how to simulate the amount of an alleged installment and how and based on what to choose between a fixed rate or a variable rate mortgage. Enjoy the reading!

List of documents and requirements:

  1. Documents that attest to income, if you have other loans in progress and buy the first home with your wife, the bank may ask both of you to take out the mortgage.
  2. The first home loan is granted to those who have a job with a permanent contract, to self-employed workers and to self-employed professionals with bank history and with at least 2 tax returns that attest to creditworthiness in the years preceding the request.
  3. The documentation of the property you intend to purchase, in particular: technical appraisal, purchase proposal between private individuals or through an agency.
  4. Finally, if you do not have an account with the bank to which you are applying for the mortgage, you will surely have to open one in which to pay the monthly installment.

How the First Home Mortgage works

How the First Home Mortgage works

The structured mortgage for the purchase of the first home has a similar conformation in all banking institutions, although sometimes there may be specific benefits, such as those that exist for the first home loan dedicated to young people. In general, the bank can finance a maximum of about 80% of the value of the property that is about to be purchased. The remaining 20% ​​instead must be covered by the mortgage applicant.

When we talk about mortgages paid with 100% of the amount for the purchase of the first home, we generally refer to those accessible only to young people under the age of 35. In fact, in order to facilitate their purchase, some banks offer them sums equal to the entire value of the home they are about to purchase.

What if the house you buy is old and needs renovation? In this case, banks offer the so-called mortgage plus restructuring. This form of financing allows the applicant to obtain 80% of the purchase value of the property and in addition, 80% of the budgeted amount for the renovation works is also obtained.

Applying for the first home loan and disbursing the loan is not as fast as getting a personal loan. In fact, as long as the documents are made, the bank’s approval and the loan are awaited, it is possible that this will be granted even with a waiting period of more than thirty days.

How and based on what to choose the best interest rate for you

How and based on what to choose the best interest rate for you

The choice of the type of mortgage is generally between a fixed rate or a variable rate, but which one to choose between the two? The variables in the choice of one or the other loan can be complex and often a suggestion is asked from the bank that disburses the loan, but one must always keep in mind that the same in that case is in conflict of interest, therefore delegate that decision the institution providing the loan is not the wisest thing to do.

In principle, the fixed rate mortgage is the one that is recommended the most because it does not vary over time. The fixed rate mortgage in fact provides for an installment that remains stable throughout the loan period and therefore allows you to plan the repayment plan on a certain basis – the fixed rate – as you are sure of the monthly sum to be paid to repay the loan.. However, certainties come at a cost. One of the disadvantages of the fixed rate is that this form of financing usually has slightly higher rates than the variable rate, but despite this, it is worth it, especially if the interest rates are as low as in recent years.

As regards the variable rate mortgage, this essentially provides for an installment that precisely varies over time and therefore the same is based on a different calculation: the principal portion is divided for the months of the duration of the mortgage, while the interest rate changes every month, based on the Euribor interest rate.

So what happens? In practice it happens that: one month you could pay an installment of 500 USD and the next month of 350, the installment varies continuously, based precisely on the Euribor index. An example? Here is today’s euribor index. These sudden changes can be difficult for those with a fixed salary to sustain. But what is the advantage of this financing? Many choose the variable rate because it allows you to obtain the mortgage with an overall interest rate significantly lower than the fixed rate mortgage.

In any case, even if you have a fixed salary, today you could still choose to rely on the variable rate thanks to an option that imposes a maximum ceiling, beyond which the installment cannot go up. Let’s take a practical example: suppose that the installment calculated at the beginning is 400 USD, the bank can set (even with the variable rate) that this does not rise above 500 USD. In this way it is possible to manage the variable rate even with a fixed salary. This solution could be very interesting as you can try your luck without risking – in case the rates increase significantly – to find yourself with a monthly installment too high to sustain.

Calculation of the mortgage payment

Calculation of the mortgage payment

As we mentioned for the first home loan installment calculation, you must first choose between the fixed or variable rate mortgage, but then there are many other aspects to consider such as: what is the sum financed, how old are you? decided to pay the mortgage, in which bank did you choose to apply for the loan and what are the interest rates proposed.

Today many banks to allow the customer to make a quote before making an appointment, choose to set up a first home mortgage simulation system on their website. The simulation allows you to know more or less what the monthly cost of the installment and the total interest will be based on the amount financed and the years. Of course the longer the years the greater the interest payable.

So before choosing, we advise you to do several mortgage simulations or requests for a bank quote, in this way you will be able to find out which is the best lender for applying for a first home loan.

Luxury home? Only a second home loan is possible

Luxury home? Only a second home loan is possible

The second home mortgage is provided primarily for all those who already own a property. But not only! In fact, you need to know that there are also some categories of properties that do not fall into the first home loan and therefore even if you do not have other real estate properties, you must still take out a loan for the purchase of the “second home”.

The properties that are not included in the facilities provided for the first house are the luxury apartments and villas which have a surface area of ​​over 160 square meters. In addition, all houses that are equipped with luxury elements such as swimming pools, sports fields and other extra complements cannot be purchased with the first home loan, but only with the funding provided for the second houses.

At the time of the mortgage application, in fact, it is mandatory for the borrower to bring the documents attesting to the characteristics of the home to the bank, in these it can be found what their cadastral class is, if this is included in luxury properties, you can buy it with reduced taxation, but you will have to pay it as expected for the second homes.