June 16, 2021

Socioherald

Best Business Blog

Thinking of using credit with property guarantee? Find out how it works!

Property-backed credit is one of the types of credit granted to customers of financial institutions. However, as it involves the property, many people believe that this modality is more risky than the others. Is this really true?

 

The truth is, no. Just like any other loan category, secured credit, whether new or used, requires the user to be careful when borrowing capital – you can’t borrow money unnecessarily, can you?

If this care occurs, the chances of this loan being cheaper for the consumer are very high – and we will explain why in this article.

What is home warranty credit?

It is a type of loan in which the borrower of the capital offers his property as guarantee of payment. By offering this asset as a guarantee, the security of the transaction increases and the bank can offer it more affordable payment terms, such as a longer payment period and lower interest rates. This makes the cost of credit less and reduces the chances of default.

In developed countries, home equity loans are one of the most popular options for granting credit, precisely because of the excellent cost-benefit ratio.

What documents are required to purchase the credit?

It is necessary to prove basic information through personal documents. Are they:

  • RG;
  • CPF;
  • Marriage Certificate or Stable Union (with the prenuptial agreement);
  • Birth Certificate (if single);
  • Proof of address;
  • Proof of income (pay stubs, bank statements, etc.).

In addition, you will need to provide information about the property, such as:

 

  • Property registration number;
  • IPTU booklet;
  • Negative Statement of Condominium Debts.

 

People who have a financed property can also use credit with a property guarantee, as long as they have already paid more than 50% of the property value.

Mortgage credit is a mortgage?

No, because they are different financial products. The big difference between them is in the contract. The mortgage process usually takes a long time for the bank to take possession of the property, in case of default, which made this type of credit unattractive for banks, since there was a high legal cost in this process.

 

On the other hand, in the event of default in credit with collateral for property, the process is usually quite fast. So stay tuned to the contract and know exactly the deadline for making payments and to be notified, in case the installments are delayed.

How to take advantage of this loan?

 

First, have a financial plan to understand if you really need to borrow money or if you can reorganize your finances in another way, such as selling the car, cutting expenses, etc.

 

Then, research what are the best credit conditions with property guarantees in different companies.