Did you know that the mechanisms to obtain financing in our country are increasingly rigorous? That's right, due to the current situation, financial institutions have chosen to protect themselves from uncertainty, which is why some important aspects of obtaining loans have undergone certain variations.
For example, the interest rates of some banking institutions are progressively increasing due to the potential risk of non-payment by applicants, which is understandable, but also detrimental for people who require liquidity for their personal or business projects, especially , for micro, small and medium entrepreneurs.
But not everything is bad in this situation because if you are one of those people who apply for personal loans, you should know a financing option with fewer restrictions and more benefits. We refer to mortgage loans, learn more about them in the following note.
Home Equity Loans
Home equity loans are a type of loan with which you can access large amounts of financing as collateral for a property in your name. With this type of loan, there is a support for the financial entity that grants the loan with respect to its fulfillment through a mortgage.
In this way, the entity you work with will have a great reason to grant you the credit you need. First, said institution reduces the risk of non-payment by having the applicant's property as collateral. The attractive thing for the applicant for mortgage-backed loans is that by having a property as backup, the institution grants you good financing conditions.
Benefits of home equity loans
- You can give any type of use to these loans, since they are freely available.
- You manage to get high amounts of financing, since the entity has a property as collateral.
- In the vast majority of cases you can access up to 60% or 80% of the value of the property put up as guarantee and in a short time.
- You can access more accessible and better interest rates than in a normal loan
- You get multiple payment options, since financial institutions offer you better cancellation conditions with this type of loan.
What can I request mortgage loans for?
Now that you know its advantages and disadvantages, it's your turn to assess whether its conditions suit your needs. In general, mortgage loans are used for the following purposes, although you can request them for whatever you want:
- To refinance your debts. If you have many credits and it is difficult for you to pay them, you can group them into a single mortgage loan to pay a single, lower fee.
- To finance the acceptance of an inheritance. Imagine that you inherit a house and you do not have money to pay inheritance tax and other related expenses. If you request one of these loans, you can mortgage the inherited home to finance all costs and taxes.
- To reform a property. You can also use these credits to pay for reforms that cost a lot of money. For example, to update a house that you have inherited and that is in very poor condition.
- To undertake. If you want to start a business, it will be very difficult for you to get a bank to lend you money, because it is very risky. On the other hand, if you mortgage a home or premises you own, you will be able to obtain the financing you need to start your business.
- To stop an embargo. If your home is going to be seized due to debts with the Treasury or for any other circumstance, you can request a loan with a mortgage guarantee to settle those debts and stop the procedure.
What entities grant loans with mortgage guarantee?
Do you think these products can help you? Well, now you will have to go to the entities that grant loans with mortgage guarantee. They are the following:
- Private lenders and financial intermediaries: they are private non-banking companies that are dedicated to granting this class of products. They will offer you worse conditions than banks (higher interest), but with much more lax requirements. In addition, they are totally safe entities, because they are supervised by the Bank of Spain.
- Banking entities and financial credit establishments: although it is unusual, you can also request a loan with a mortgage guarantee from a bank or a financial credit establishment, which are the most conventional entities. It is very difficult for them to approve it, because their requirements are tough (they do not lend with ASNEF or without proof of income), but if they do, they will offer you better conditions.
