Useful tips on loan against real estate and car loans

Do you need additional funds and do you own a property or a car? A secured loan may be an offer for you.

I need cash. Where to look for her?

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When looking for financial support, you usually check loan offers first. Unfortunately, the bank – the only institution that can provide this type of financing – sometimes refuses to grant additional funds. Here are some of the most important factors that can lead to this situation:

  • you have no creditworthiness – pursuant to banking law, banks check your ability to repay a loan with interest within the prescribed period. If for some reason (presence in GFI or GC databases, large debt, late repayments) the bank finds that you have low financial credibility, the loan is beyond your possibilities. 
  • you have obtained a low scoring – the banks use algorithms that calculate your “score” based on the data you have provided. The lower, the lower the chance for a loan,
  • you don’t have an employment contract – banking institutions prefer clients with stable employment situation. Do you run your own company? Do you work on a mandate contract? Or maybe your income is generated by work contracts? In such a situation, the bank may qualify you as a person who will not grant credit.

The bank refused me a loan. Is a covered loan for me?

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If your bank has refused to grant you a loan, you may want to consider another form of financial support, that is, pledged loans. What are they and what characterizes them?

– A secured loan is a financial product offered by non-bank companies. The method of providing such support is different from bank loans. The loans have more availability, as well as a faster loan decision. They are an alternative, especially if the customer has been refused a loan – explains Sean Cole.

What is a real estate loan?

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As the name implies, a secured loan assumes that you have assets that can secure your debt. It is often a property. This type of loan is called a mortgage loan. One of the more frequently chosen options is, for example, real estate loans for 10 years.

The condition for a mortgage and a loan against real estate is to secure the debt in the form of a mortgage, i.e. a limited right in rem on the property. Establishing a mortgage allows the bank to recover money even if it is not repaid by the borrower.

Loan against an apartment without income – is it possible?

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When considering the option of a secured loan, you are probably thinking about all possible scenarios. Does the mandate agreement allow me to take out a loan against real estate? What if I lose my job suddenly? Can I apply for a loan against a flat without an income? Is there a product like real estate loans with a bailiff?

In the case of a loan against payment, you can be provided not only by the bank but also by a non-bank company. Unlike a bank, it usually does not require an income and employment certificate.

It also doesn’t check your credit history. To grant a loan against an apartment without income, you will often only need documents confirming ownership of the property.

When is a loan against a private housing possible?

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Before applying for a loan against real estate, make sure which form of ownership of the apartment you have. The two primary ones are:

  • cooperative ownership the right to housing (cooperative ownership) – it is the so-called limited property law, in which, despite a number of your rights over the apartment, the cooperative remains the owner.
  • separate ownership of residential premises (proprietary) – so-called mortgage ownership, which gives you the title to ownership of the premises, as well as the opportunity to participate in common parts of the property.

Remember!

If you own separate ownership of a dwelling (proprietary flat), you are the rightful owner of both the flat and the proportional part of the building and land on which the flat is located. In this case, it will be much easier for you to get a loan or real estate loan.

Car loan

Although in this guide we have focused mainly on the more popular and more often chosen real estate loans, it is worth remembering that there is also a group of financial products such as car loans.

– Some non-bank companies, in order to meet clients’ expectations, use loan types other than real estate. These include, for example, a third-party surety or a car lien. In order for the vehicle to provide security, the applicant for the loan must be its only owner – sums up Sean Cole.

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