Secured loan is a form of credit in which your property comes as collateral. In this mode, the deadlines are longer. This type of financing offers many advantages to consumers, especially for those who wish to finance larger amounts with below-market interest rates.
Those who can apply for a secured loan are individuals or legal entities with their own property in their name. In cases of legal entities, real estate is also accepted on behalf of partners. As the good is given as collateral, this type of credit is much cheaper than others.
Property is auctioned to pay off the assumed debt
The interest rates on home equity loans are around 1% to 2% per month. But beware: in case of default, the property is auctioned to pay off the assumed debt.
This line of credit works as a personal loan. That is, after the request is made, your proposal will be forwarded to a financial institution. This in turn will make your credit analysis and later legal and property valuation. Generally, the credits available are between 50% to 60% of the value of the property. After stipulating the amount to be borrowed, the applicant must view the contract in order to know all the clauses and fees related to the transaction.
It is possible to get up to 60% of your property to pay in up to 20 years. As such, the Secured Loan is a means of getting high cash and paying low interest rates.
After completing the proposal and submitting the documentation, the average term for credit release is around 2 months. In some exceptional cases, the credit is released in just one month. But it is unlikely, as the credit review and analysis process is bureaucratic and may require re-reviews.
Of course you can! During the loan you can continue using or renting your property normally. This is because the transfer of the property to the bank or financial institution as collateral works in a process known as chattel mortgage. This means that the asset remains with the owner but is transferred to the financial institution or bank until the debt is fully settled.
What is the difference between secured loan and mortgage?
Mortgage also requires an asset to secure debt, but the process is far more bureaucratic. With the mortgage, the property remains in its name, making it difficult for the financial institution to repossess the property in the event of default on the debt.
As for the fiduciary sale that is also called a secured loan the owner transfers the property to the institution until the end of the contract, alienating the property the owner continues with the property in its name and the creditor institution with indirect ownership, the which will facilitate in cases where you have to take back ownership for non-payment of installments.
Can a financed property be pledged as collateral?
For financed properties, the amount already paid is requested to be at least 50% of the property. Thus, the company can perform a credit portability and assume the remaining installments. The client, in turn, will be able to use the house as collateral for a loan with reduced installments.