A surety company is a corporation created by a bank in order to reduce the surety fees for individuals (no mortgage registration fee , no notary fees ), in the case of a purchase immovable. This type of guarantee is advantageous for customers and also profitable for banks .
The bond has the advantage of not requiring a release since it is a private deed that has no particular legal formalism . This advantage is particularly important in case of housing change . The advantage is that the formalities are simple, small and fast.
The surety company undertakes to replace the debtor in the event of default. In return, the borrower must pay the bonding company, as soon as the release of funds, a contribution proportional to the amount of his loan.
However, if it has to pay, the guarantor will have the opportunity to turn against the borrower and proceed with a seizure-execution on any asset of the debtor.
The secured loan is quick to put in place and subsequently ensures better protection for the borrower.
This sum is composed of:
- a contribution to a mutual guarantee fund, which can sometimes be partly paid back at the end of his credit if there has been no problem (such as Crédit Logement for example), or definitively acquired by the surety organization ( case of banking organizations);
- a commission, definitively acquired by the surety organization.
- It is therefore necessary to compare the initial cost and the final cost between surety organizations such as Crédit Logement and those of the banking type . This contribution varies proportionally according to the amount of a loan (in practice from 0.5% to 2%).