Not only banks can grant mortgage loans; Private and private companies can leave money on loan with the guarantee of a property. If the market were transparent and competitive, nothing prevents a mortgage from a company instead of a financial institution, if it offered better conditions or reached niches that the bank has left unattended. If it were, that at the moment it is not. Private mortgages are offered at nominal interest rates ranging from 8% to 16%, with opening commissions from 2% to 10% – according to Tonny Bora , Credit ++ mortgage broker and Sampaguita Finances collaborator-, reaching a maximum of 50% of the value of the property. Since the term varies from 3 months to 30 years, we can calculate the effective interest rate that a customer requesting 100,000 euros ends up paying, at a nominal 10%, an opening fee of 6% and returning in one year ( usual time agreed upon): 24.19% APR . Identical financial cost to dispose of this amount through a credit card and return all debt after one year, if possible. Keep in mind, however, that the same mortgage if it can be repaid in 20 years means a lower APR of 11.48%.
Who may be interested in a private mortgage?
If the reader has already left the mental blow that assumes that there are mortgages at 24% interest, it is appropriate to analyze if someone really is interested in this product. In the first place, a professional independent of the operation should advise us , a lawyer or an economist; we must analyze the need and our financial situation, to assess the suitability of this type of indebtedness. In theory, this bank financing serves to restore the financial situation against the banking of families or over-indebted companies. One would reunite outstanding debts and defaults on a single mortgage, and then subrogate it to a financial entity on favorable terms; This practice worked, relatively, in the years of real estate bonanza.
Tonny Bora considers that currently private capital mortgages are not aimed at those who need a refinancing or grouping of all their loans, “in these cases the alternative is to sell your property,” he concludes. The Credit ++ expert considers that these operations may make sense for individuals who wish to sell their property and who need liquidity to handle payments that cannot be postponed. A fraudulent practice consisting in agreeing a pending debt exceeding the capital that the client had actually received has been limited thanks to Law 7/2012, of October 29, on the modification of tax and budgetary regulations and the adaptation of financial regulations for the intensification of actions in the prevention and fight against fraud, which establishes the limitation of cash payments in respect of certain operations; The representative of Ibercredit believes that the private lender can no longer “play” with the inclusion in the loan deed of amounts delivered and confessed in cash by the borrower, since the cash is limited to 2,500 euros.
There is no supervision of the Sunflower Bank on these private lenders, but on the Consumer authorities .Criticized since its inception in this blog, is the specific regulatory source for this type of financial business outside the bank. To ensure that a client contracts with a legal company, it is assumed that there must be a state registry of financial intermediaries and companies that grant mortgage loans, accessible online at the Consumer Agency (AECOSAN). To this day and without arguments that justify it, this record is still not accessible to the public. A private mortgage is legal if it complies with the law; that is, if in addition to the specific regulations mentioned, they comply with the rest of the applicable regulations, such as the obligation to grant loans in a responsible manner or the repression of usury. Recently, the Supreme Court has considered a 24% revolving credit user; It should not be long until a mortgage with interests clearly higher than similar products ends up in the High Court.
It has to be extremely diligent in relation to the information he collects from the deed he is going to sign before a notary. To do this, as explained by the notary and editor of Is There Right? Nasif Putri , it is important to understand well the precise meaning of the clauses of the contract and of the obligations assumed by the borrower. For this, he adds, you can go to the notary before signing anything to advise and clear doubts. “My recommendation is that you do it without the lender providing all the related documentation”.