Mortgage guarantee
What is it?
It is a real right that is established on a real estate property (usually a property) as collateral to secure the fulfillment of a financial obligation, such as a mortgage loan. This guarantee provides security to the lender, ensuring that in case of default by the borrower, the lender can enforce the guarantee and sell the property to recover the loaned capital.
In a mortgage operation, the borrower transfers to the lender the right to enforce the guarantee if the agreed payments are not made. Unlike other types of loans, the mortgage guarantee offers the lender an additional layer of protection since the property typically holds significant value.
Key aspects to consider
The main feature of a mortgage guarantee is the security it offers to the lender, as in case of non-payment, the lender has the legal right to recover the loaned money through the sale of the property. Key aspects include:
- Real estate as collateral: The borrower offers a specific property (such as a home or commercial property) as collateral for the loan.
- Controlled risk for the lender: By having access to the property in case of non-payment, the lender reduces their risk of loss.
- Enforcement process: If the borrower fails to make the payments as agreed, the lender can initiate a legal process to take possession of the property and sell it, thus recovering the loaned money.
This type of guarantee is common in mortgage loans, which are used to finance the purchase of homes, commercial properties, or other real estate. While it benefits the lender, it also offers advantages to the borrower, as it allows access to credit under better terms, given that the debt is backed by a tangible asset.