A mortgage is a document that is used as security by, above all, private individuals who are interested in borrowing money, usually to a home.
For example, if you want to buy a house, it will be difficult to hand the house over to the bank, hence a legal document is needed that handles the security. The mortgage deed acts as proof that you have mortgaged property as collateral for a loan.
The pledge letter describes in detail how a home is mortgaged and at which bank. The pledge letter thus creates security for both borrowers and lenders.
Mortgages will accompany the new owner
When a property is sold, existing mortgages accompany the new owner. If the previous owner has a loan on the property, there may be existing mortgages that pass to you.
The mortgage deed then serves as collateral for your loans and you do not need to contact the Land Survey to carry out a new mortgage deed for a fee.
This requires that the existing mortgage bond is mortgaged for a smaller amount than you plan to lend. If you plan to borrow more money than existing mortgage deeds are mortgaged, you must apply for a new mortgage deed from Good Finance for the remaining amount.
Security for the bank
The pledge letter linked to the Enrollment Authority at the Land Surveyor proves that the borrower owns the property. If the borrower cannot presumably repay the loan and the house must be sold, the owner of the mortgage (usually the bank) will have the priority to get the money from the sale.
Thanks to the mortgage, the bank has the opportunity to demand that you sell the property if you are unable to pay interest and amortization.
Calculate the cost of a mortgage
The Land Survey helps to issue new mortgage deeds for a fee. A new mortgage bond costs 2% of the loan amount. In addition, Good Finance charges processing fees which currently amount to USD 375 per mortgage letter.
Example: You buy a villa for 3.5 million women with a cash contribution of USD 0.5 million. You, therefore, need to borrow USD 3 million, which means a cost for the mortgage letter of USD 60,000. This requires that the property does not have a mortgage certificate before. On the other hand, if there is a mortgage letter of USD 2 million, your cost will only be USD 20,000.
It is therefore important to check if the property has any existing mortgages before a property purchase. If you are planning to buy a house, you can ask the broker what mortgages are on the house. The broker must know if the mortgage deed is available and what amounts it amounts to.
Mortgages on high amounts are an advantage
If you are planning to buy a villa, it is common for there to be a mortgage letter before. You do not have to worry about there being a mortgage on high amounts, this is only an advantage for you as a buyer because a high amount means you have the opportunity to borrow more money with the villa as collateral. A mortgage on a high amount means that the bank has given a high valuation of the house.
For example, if you buy a villa from an owner who has lived in the house for decades, there is a high chance that the mortgage deed will have a low amount, unlike a newly built villa that is only a few years old.
If you are planning to buy a villa that has a mortgage with a low amount, it is important to remember that the cost of a new mortgage is 2% of the loan amount that exceeds the existing mortgage.
Housing rights do not have a mortgage
As a condominium is not counted as real property, it cannot be pledged. If you live in condominiums, you, therefore, do not need a mortgage. On the other hand, the right to tenant rights can be pledged to be used as collateral for a mortgage.