The mortgage loan

A variant of a loan is the mortgage loan. In contrast to traditional lending through collateralisation by means of monthly income, this form of credit uses a tangible asset as collateral in the form of a pledge. In this way, borrowers with insufficient creditworthiness or a negative credit rating can also obtain a loan.

What distinguishes a mortgage loan?

As a rule, real estate owners apply for a long-term mortgage loan in order to be able to carry out renovations or improvements to their house or apartment. The property can be used as a real value or pledge in the form of a mortgage or land charge. However, the real loan can also be used to increase current liquidity.
The interest rate can be either variable or fixed. As a rule, the lending limit is 60 percent of the value of the loaned property. A higher lending limit can also be applied individually in the case of mortgage credit splitting.

What is mortgage credit splitting?

A splitting of the mortgage loan is always necessary if the lending limit is to exceed the usual 60 percent and thus a significantly better risk rating is required. In practice, a distinction is made between real and unreal real credit splitting.

The real real credit splitting

Here a total of 2 loans are concluded, a so-called mortgage loan title and a loan that is secured via the land register entry. The total loan is thus “split” into two parts.

The Fake Real Estate Credit Splitting

In the case of a fake mortgage credit splitting, part of the loan is processed via a normal mortgage credit with a lending limit of 60 percent, the remaining amount is collected via a normal personal loan. In this type of lending, all the terms and conditions are only valid for one Credit agreement signed.
In order to obtain a mortgage loan, the borrower must turn to certain credit institutions, because not every financial institution grants a real loan.

Who offers a mortgage loan?

If you want to take out a real loan, you will find that not every bank offers this form of credit. In addition to special mortgage banks, the following companies also have the option of granting this special loan.
These include the savings banks, the cooperative banks, the building societies and the commercial banks. Before taking out a loan, it is essential that you inform yourself about the different conditions. This way they can save cash.

What conditions must be met by the borrower?

In order to obtain a loan that is secured by tangible assets, certain prerequisites must be fulfilled:
– The credit company must hold the licence in order to be able to grant real estate loans, i.e. a loan based on real estate.
– The value of the property must be determined by an independent expert by documentation and valuation of the current market value and the desired mortgage lending value.
– The market value of the property must be reviewed at regular intervals throughout the term of the loan. The legislator stipulates that the review must take place at intervals of no more than three years for a privately granted mortgage loan, and even within 12 months for commercially used loans.
– The borrower must have insured his real estate sufficiently high for the case of damage by a special building insurance.
– In an emergency, the lender must also be able to legally enforce the asset value.

bottom line

A mortgage loan can be a good way to make money without sufficient creditworthiness or sufficient monthly income over a longer period of time. to be able to lend. The disadvantage is that this form of credit is only suitable for owners of real estate. If living conditions change and you cannot meet your payment obligations on time, you may lose your property to the lender. The conclusion of a mortgage loan should therefore be well considered.