Banks always grant a loan if it is surrounded by sufficient collateral. As a borrower, you must provide this security. With small loans, it is usually sufficient if you have a good Credit Bureau and a fixed and high income. However, if you want to draw on a large loan amount, it is not enough if you have a good income and a positive Credit Bureau. Here you have to be able to provide more security, which can also reach into the material or financial area.
A loan with real estate as security – only with a real estate loan?
When a loan is taken out with real estate as collateral, most consumers always think that it must be a real estate loan. After all, it is well known that banks and savings banks are happy to have themselves written into the property register once they have granted a loan to purchase them.
But this way of thinking is wrong. Because a loan with real estate as security can also be considered for any other loan. It is only important that such a high level of security is really needed.
When is a loan with real estate as security worthwhile?
A loan with real estate as security should always be a question of “must” and never of “ability”. Because a property should only be used as security if it has to be. Never offer your home carelessly as collateral for a loan. If there are complications with the repayment, you can get rid of your roof over your head faster than you would like.
Real estate is only sensible as security if you have to secure a large loan amount with a long term. For example, a large installment loan, a renovation or renovation loan or just the classic – the real estate loan. You should never secure consumer loans, car loans and small loans of all kinds with your property. You are risking too much and risking more than is actually necessary.
When can the property be used as security?
If you want to include a property in a loan as security, you must ensure that you own the property 100 percent. So you may not only be a partner or the like, but owner and therefore have the authorization to sell the property as you please.
In addition, your property must have a certain value in order to be recognized as security by the banks. A small old garden shed is not a property that has value. A large single-family or multi-family house in good condition and in an exposed location has something to offer.
Many banks always ask for an expert opinion before you recognize a property as collateral. On top of that, you have to be able to provide documents that identify you as the owner, name the possible value of the property and show that the property is not already for sale. Only then will it serve as collateral and secure the desired loan in such a way that it can be taken out on good terms and in the desired form.