Also known as real estate refinancing, chattel mortgage or home equity, the secured home loan is one of the personal loan options offered by banks for those who need to obtain lower interest rates and longer terms.
Usually sought by those who want to group all debts into one, as well as investing in personal projects, renovation or construction, acquisition of goods, among others.
The guarantee, as the name implies, is the property of the person requesting the resource and the amounts released are higher than that of a conventional personal credit. Usually the minimum value is 60 thousand and can reach up to 60% of the property’s market value.
Very strict criteria are used to release the resource in this modality, because taking the customer’s property is not advantageous for the bank, and it may be proposed to renegotiate the debt or the term to avoid the sale of the asset, in cases where the customer is no longer able to bear the parcels.
Who can apply for the secured home loan?
This type of loan is intended for individuals who own their own property, and can be a house, apartment or commercial room (provided it is in a commercial building). Some banks also serve legal entities.
There are cases in which the owner may grant his property as a guarantee for third parties, but this issue must be in accordance with the policy of each financial institution. If the bank you are negotiating with approves the loan in this condition, it will work as follows:
You have income approved by the bank and want to obtain resources to invest in your own business but do not have property in your name. If any family member (preferably a father, mother, siblings or children) has their own property paid off and agrees, you can offer it as collateral for your loan.
In this case the owner who agreed to grant the property as collateral will be called intervening guarantor or surety solidarity.
Real estate loan steps
After consulting the trust bank and simulating the amounts and installments, your loan request with a property guarantee will go through the following steps: Credit Analysis, Legal Analysis, Property Valuation and Contract Signing.
In this step, the information will be verified to prove income, payment capacity and eventual pending issues, according to the parameters and internal policies followed by the bank.
Property Valuation and Legal Analysis
As from the credit approval, a specialized company will be asked to inspect the property (object of the financing), with the purpose of verifying, with precision, the market value and the structural conditions of the property.
In the legal analysis, the property documents will be analyzed: registration, property tax and property appraisal report, as well as the existence of pending issues on the property.
The operation is carried out through the signature of all parties involved in the contract. This is forwarded to the registry office where the property is registered in order to register the transfer of the property to the creditor (bank) in the property registration certificate.
This notary procedure takes around ten working days and the resource is released to the client after the bank’s conference.
For the analysis steps, you will need to submit the following documentation to the bank:
- Property Registration Certificate: document containing the property registration in the client’s name
- IPTU (Urban Territory Tax) cover: where the address and areas of the property are listed
- Negative Certificate of Real Estate Taxes: document provided by the city that guarantees regular payment of taxes.
- RG and CPF
- Birth or marriage certificate
- Proof of address
- Proof of income (pay stubs, bank account statements or complete income tax return)
Conditions for your property to be accepted as a guarantee
For a property to be accepted as collateral by the bank, it must obey the following main points:
- Property value (the minimum varies between $ 150 thousand and $ 200 thousand)
- Property type (residential or commercial)
- Construction material (masonry structures only accepted)
- Location (I accept only properties in urban areas)
- Having no outstanding debts (IPTU, condominium)
- Have regular documentation
- More than one property built on the same land will be subject to analysis, as it consists of a multifamily
- The property composed of residence and commerce is generally not accepted, as it is a mixed property
In summary, the property to be pledged must be free of restrictions in any area: mortgage, pledge, surety, lawsuits on the property of any nature, among others.
In addition, even if its documentation is in order, the property must be in good condition, located in urban regions and completed.
My property was not accepted, now what?
If you need a loan and your property was not accepted as collateral, there are other loan options that can help you. Here on the blog we already talked about payroll loans and personal loans .
And if you work as a maid or have a registered maid asking for a loan, we have the perfect solution!
Visit our website and check out our credit solution for domestic servants from all over the country.
Interest rate and payment term of the secured home loan
One of the main advantages of the loan with the property guarantee is the lower interest rates , because the client gives the property as collateral.
The approximate percentages currently practiced by the market in this modality are below 2% pm + IPCA (Consumer Price Indices) while, in other modalities, such as overdraft, the effective interest rate may exceed 10% pm.
The payment term is longer and varies from bank to bank, ranging from 36 to 240 months, so that, due to the high value of the transaction, the borrower can have installments that fit his long-term budget.
And here’s a tip that can be used for any credit application, regardless of the modality: observe the fees charged by each bank and see if it is in accordance with the market.
It is also very important to take into account the Total Effective Cost (CET) because, in addition to interest rates, it includes all other costs that involve the operation: contracting fees, taxes, insurance and others.