What is a real estate mortgage?
Mortgaging a property is a very common line of credit in the United States, but it hasn't worked very well here in Brazil.
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In Brazil, there are many different loan models; usually, the most advantageous are those where the applicant can offer something as collateral for the debt, for example, a house or vehicle.
These loan models have a lower interest rate and better payment terms.
Therefore, it is common for people to prefer to resort to secured loans; in fact, in today's text we will talk about... mortgage of real estate: What it is, how it works, and much more!
Be sure to read on to clear up any doubts you may have about the subject! See below what awaits you:
- What is a real estate mortgage?
- What are the advantages of fiduciary alienation?
- How does a mortgage work?
- Which bank offers this line of credit?
- Conclusion.
What is a real estate mortgage?
You've probably heard the word in some American movie, series, or television program.
That's because, mortgage of real estate It's a very common line of credit in that country. In Brazil, the term hasn't become very widespread; in fact, this line of credit is similar to a home equity loan.
In fact, in our country, banks have replaced mortgages with secured loans, as they involve fiduciary alienation, making them safer for the financial institution, more profitable, and involving fewer legal hurdles.
Wait a minute! Do you know what fiduciary alienation is?
Although the name is complicated, it's easy to understand what this term means.
This term refers to a guarantee in a transaction for the purchase of goods. It functions like financing.
For example, you apply for a loan and put one of your assets in the lender's name until you pay back the requested amount; this measure is taken to guarantee repayment of the debt.
To be even clearer, let's dissect the term:
- To alienate = to transfer an asset to another person + fiducia = trust, that is, to transfer ownership of an asset to another person with or in trust.
Is that clear?
Therefore, a secured loan is more advantageous for the institution, since the asset is transferred to its name until the loan amount is paid off.
What are the advantages of fiduciary alienation?
Well, although it's a bit daunting to transfer such an important asset into the name of a financial institution.
Fiduciary alienation has its benefits. The main advantage is the reduction in the interest rate. The interest rates for this line of credit are much lower compared to other models.
Furthermore, it's possible to obtain higher amounts, but with excellent payment terms.
Since there is a guarantee, the approval process is also simpler; there aren't many requirements for credit analysis, such as a clean name and a high credit score.
A fiduciary transfer of ownership can also be used to acquire other assets, not just loans secured by real estate.
Now that you understand what fiduciary alienation is, we will return to discussing real estate mortgages.
How does mortgage financing work in Brazil?
In this line of credit, the applicant uses the property as collateral to obtain a loan, thereby securing larger amounts, longer repayment terms, and lower interest rates.
That's because if he doesn't pay the debt on time, the bank can use the property he owns to settle the debt.
However, as previously mentioned, Brazilian banks no longer offer this line of credit; in fact, it has been replaced by personal loans secured by real estate.
The main difference between these lines of credit is that, in a mortgage, there is no fiduciary transfer of ownership, meaning the property remains in the debtor's name.
So, this is more damaging to the institution, because if it tries to use the asset to pay off the debt, should it not be paid, it will face many difficulties.
Another characteristic of mortgage of real estate The debtor can also negotiate the sale of the property with another person, or even with institutions, to obtain another loan.
However, if the homeowner does this, the mortgage expires, and they will have to pay the full amount at once.
These were some of the reasons that led Brazilian financial institutions to stop working with mortgage loans and adopt personal loans secured by real estate, as it is much safer for them.
Which banks offer mortgages for real estate in Brazil?
As already mentioned, it is very rare to find a bank that offers mortgages on real estate in Brazil.
However, if you are looking for a favorable line of credit where you can use your property as collateral, check out the list below with the names of some banks or banking correspondents where you can apply. Personal loan secured by real estate:
- Credits;
- Santander;
- Cashme;
- Inter Bank;
- Bank of Brazil;
- Serasa;
- Itaú;
- BV Financeira.
As you can see, there are excellent financial institutions that offer this type of credit here in Brazil; you just need to compare them to see which option is most advantageous.
Conclusion
Mortgaging property is no longer a commonly offered type of loan in Brazil, due to the disadvantages it presents to financial institutions.
However, they ended up adopting a similar loan that is advantageous for both parties: a loan secured by real estate.
If you want to know more details about this loan model, you can find some related content here on our blog. Be sure to take a tour of the “Loans and "News".
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