The borrower can constitute for the benefit of the lending bank a mortgage on the apartment, house, land, or any other real estate that the loan finances. When you give a mortgage, you agree in advance that the property can be sold by the bank if you do not pay your repayment due dates. Everything you need to know about mortgages.
What is the purpose of a mortgage?
No guarantee, no real estate credit. Certainly, the death and disability insurance guarantees the lending banker that it will be paid if the borrower becomes disabled, medically unable to work, or dies. But it does not guarantee him that he will collect his due if by any chance the borrowing client lets the unpaid debts accumulate as a result of unemployment, financial difficulties, or, rare but it does exist because he is openly living beyond his means. Prudent, the banker will thus require guarantees to be sure that the real estate loan will be repaid in all cases
Today, only 12% of borrowers agree to give a mortgage to secure their real estate loans. The others resort to less expensive and less cumbersome forms of guarantee: the privilege of a money lender or the guarantee of a specialized company, for example, CréditLogement or certain public sector mutual insurance companies, this last guarantee being by far the least expensive and the least burdensome for the borrower because it is established by private deed, without fees or taxes, including on the resale of the real estate.
What is a conventional mortgage?
In real estate law, we say that a mortgage is a security interest in real property. It relates to a real estate property, whether built or not. A mortgage related to a real estate loan is called a conventional mortgage because it is granted by an agreement, a contract, but in practice, it is known by its common name: mortgage.
This formula consists of voluntarily giving the apartment, the house, the land, or any real estate property as a guarantee to the bank which grants you the financing to realize your acquisition. The presence of a mortgage does not affect your prerogatives as an owner in everyday life: you can live in the apartment, rent it out, carry out work on it, sell it. In the same way, the fact that there is a mortgage on a land financed on credit does not prevent you from building the house of your dreams or other premises but, it is logical, a mortgage given at the time of the purchase on the credit of the land automatically extends to the construction that you will carry out there
Compulsory notarial deed
Giving a mortgage, which is legal language is called constituting a mortgage, is a step in the form of an authentic act, which must be drawn up by a notary. The contract constituting a mortgage is, in fact, a monopoly entrusted exclusively to notaries. A mortgage granted without a notarial deed is sanctioned by absolute nullity: it has no legal value.
The notary in charge of the sale of real estate draws up the deed of hypothecary security by which the borrower-buyer, the settlor in the jargon, consents to give a hypothec to the banking institution (the creditor) that lends him the money to finance his real estate acquisition. The notary then asks the land registry office (formerly the mortgage registry) of the place where the property is located to register this mortgage to make it enforceable against third parties and, above all, to prevent the property from being sold without the knowledge of the institution that lent the funds.