When taking out a home loan, the bank would like to have collateral in return for the loan. These guarantees are intended to ensure that the bank will get the borrowed money back in the event of a loan default. The bank usually secures the house itself as security. What else is there as security for a home loan?
Real estate liens in the form of mortgage and land charge.
The latter has seen a massive revaluation in recent years, while the mortgage has lost security on home loans.
Background: While a mortgage stands and falls with the existence of the claim, the land charge can also exist without a monetary claim – for example from the house loan. A bank can therefore also use it to hedge future liabilities.
In the case of collateral in the form of mortgages, the builder should take a discount on the purchase price of the property into account. The reason: banks work with mortgage haircuts resulting from conservative valuation.
Land register of the borrower and not the bank. With the land charge, however, in the event of insolvency, the bank secures the right to auction the property and the property in order to compensate for the loss of costs.
Throw equity into the balance.
On the other hand, additional collateral increases the scope for a home loan. Here, for example, additional real assets could be used. At the same time, the assignment of claims lends itself.
- The builder took out capital life insurance some time ago. The latter can certainly be used as security for construction finance. A third option is often ignored – the guarantee.
If the default guarantee presupposes processing against the debtor, the bank can take direct action against the guarantor in the case of the joint and several guarantee.
The advantage: As a builder, assets remain unencumbered in addition to mortgages. The whole thing can develop to the disadvantage if the bank actually uses the guarante