The housing loan is offered by companies specializing in the granting of mortgage loan guarantees distributed by banks to individuals. It is based mainly on the solidarity of each borrower to feed the common guarantee fund. What are the advantages and disadvantages of housing loans? What is the cost for the borrower? How does this guarantee work?
What is the housing credit?
An alternative to mortgages, housing loans are offered by a specialized company of the same name or by organizations that position themselves as subsidiaries of banks.
The guarantee is taken in the form of a contribution paid into a common guarantee fund.
A portion can be repaid at the end of the loan in this case. It can also exist in the form of an insurance contribution. The housing loan company will then bail the borrower as part of his mortgage.
Attention, housing credit is in no way borrower insurance.
The advantages and disadvantages of bonding
The bond is less tedious than a mortgage: it does not require any formality. The guarantee fees are not lost, some of which can be refunded. There is no penalty for early repayment of the loan, contrary to the lender’s lien guarantee. Bonding companies give way to dialogue with borrowers in case of difficulties. This act does not require passage in front of a notary and is, therefore, free of related costs.
The constraint is, therefore, the responsibility of the debtor, since the surety will turn against him in case of default. The company may take recourse action against it. As a result, the borrower has a legal responsibility, even if the debt is liquidated.
The cost of the home loan guarantee
Taken as a contribution, the housing loan is broken down into:
- A commission paid to the surety organization (remuneration of salaries, management, etc …);
- A contribution to the FMG (Mutual Guarantee Fund).
The calculation is made from two scales:
- The classic scale eligible for all borrowers;
- The Initio scale is eligible for borrowers under 37 years to pay the commission at the end of the loan and not the establishment.
Example: for a loan of 200,000 euros, a borrower on a conventional scale will pay 400 euros commission and 1950 euros participation FMG. For the Initio scale, reserved for borrowers under 37, the cost will be reduced by commission costs.
The putting into play of the guarantee of a housing loan
In case of default of the borrower, from the third deadline of unpaid loan the mortgage company replaces it. If the bank pronounces the forfeiture of the term, a mortgage will be put in place and the property sold as soon as possible.
The primary interest of this type of organization is always to find an amicable solution.
Housing loans, therefore, remain a very interesting alternative in the case of home loans, since they are intended for any purpose other than construction.