The mortgage works like a conventional loan. First, it is accessible for both an individual and a professional, provided you own at least one property. This type of loan is useful for financing new projects or new purchases.
Also, it can be used to repay an existing loan. That said, mortgage credit can be granted for a mortgage, a consumer loan, a personal loan, a car loan or even a loan repurchase.
The procedures to be followed to be eligible for a mortgage
The terms of the mortgage loan are very similar to those of a conventional loan. Thus, it is possible for the borrower to make all the prepayment. He can also adjust the monthly payments according to his possibilities. However, the mortgage rate can be variable or fixed.
For example, in the event of sale of the mortgaged property, the credit may be settled in advance. But you should know that it is also possible to make a substitution mortgage on another property.
Points on the duration and amount of the mortgage
The term of a mortgage can be short or long term. It is determined according to the applicant’s debt ratio. Indeed, this rate calculation must take into account the income of the applicant in relation to his expenses.
In principle, the duration of a mortgage loan is longer than a conventional loan. This is established mainly between 20 and 25 years. Speaking of the duration of the credit, the only restriction is that the last monthly payment must take place before the 90 years of the borrower.
Regarding the amount of the mortgage, this is calculated according to the value of the mortgaged property. The latter is generally determined by real estate appraisal. Once the value of the mortgaged property has been determined, the amount of the credit is established between 50 and 80% of the net worth.
The different reasons for using a mortgage
For a mortgage loan reserved for professional purposes, it essentially contributes to the financing of a working capital requirement. This credit also makes it possible to develop a new patent and at the same time finance the distribution of an original product.
The mortgage loan can also be used to acquire shares while carrying out a capital increase. Thus, the applicant will have the opportunity to acquire commercial premises or a business.
Finally, you should know that the mortgage also allows you to settle certain unforeseen tax or social charges. For individuals, this type of loan gives them the opportunity to give a boost to their children or other. The use of a mortgage loan in a personal context therefore concerns the following elements:
- financing a cash payment in a divorce or an estate to avoid selling personal property.
- funding for children’s higher education
- financing exceptional family events