A mortgage loan guarantee is a legal and commercial mechanism that binds a lender to a borrower and allows the lender to obtain a partial or full repayment of the loan amount in the event of default by the borrower.
In France, when buying a property , the banks that finance the acquisition can ask the borrower for guarantees of various kinds. Thus, in case of non-repayment of the loan by the borrower, the banks will have solutions making it easier to recover the funds they have advanced.
To guarantee the loan, several choices are possible.
This is a traditional guarantee that entails certain costs (notably the land registration tax and the mandatory use of a notary to register for mortgage retention). The mortgage involves a release , which may incur additional costs if the property is resold before the loan expires.
Privilege Listing of Denier de Deniers ( IPPD )
This is a traditional guarantee only for old goods. It is cheaper than the mortgage (no land tax). The IPPD involves a release , which may incur additional costs if the property is resold before the loan expires.
The banks have created bonding companies , which, like a bail for a lease, provide repayment of the loan in the event of non-payment by the borrower. The surety company then has recourse against the borrower. Unlike the mortgage and the lender’s lien, the bond, although limited, does not result in registration fee for the conservation of mortgages or notary fees . The deposit does not require a release . This is a private deed that has no legalformalismparticular. It is offered by the banks according to the amount of the loan and the personal contribution for the purchase of the property. The best known of these surety companies is Crédit Logement .
Security “mutual servant”
This is a particularly good guarantee for civil servants and for certain specific activities (research …).
Joint guarantee of a particular
This is a guarantee similar to that made in the context of a consumer credit . However, it is rarely used in the case of a mortgage , banks preferring a bank guarantee or registration. In the case of acquisition of real estate by a small legal entity (for example a real estate company), banks almost systematically require a joint and several guarantee of all partners.