In the same way as the mortgage, the guarantee of the lender’s lien allows the bank to ensure against an individual asking for a mortgage. What is the lender’s privilege? How does it work if the debtor fails? What are its advantages and disadvantages? And what is its cost?
The guarantee of the lender’s privilege
This guarantee is similar to a mortgage. Nevertheless, it adds a priority to the lender on the guarantee taken. If the property is seized and sold, the creditor will then be paid first rank in front of the others. This act must be registered with a notary. This necessarily leads to costs relating to the establishment of mortgages.
This guarantee can only be chosen for old property or land, but never for property under construction. The privilege of the lender of money, therefore, gives priority to the creditor who has lent “his money”, thus funds, for the acquisition of real estate.
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The guarantee of the lender’s privilege works in the same way as a mortgage, the guarantee will occur in case of default of the debtor. When a loan is no longer reimbursed, the bank is obliged to activate the guarantee by selling the property it has financed. Once the sale has occurred, and in the event that the amount obtained covers the debt, the bank will liquidate the debt. In the event that it does not cover the debt, the difference will be borne by the borrower.
What are the advantages and disadvantages?
The lender’s lien guarantee is significantly less expensive than a simple mortgage. This guarantee gives a lien to the lender, which strengthens the negotiation in the granting of a mortgage. Upon registration, the borrower will be exempt from real estate advertising tax.
On the downside, the disadvantage of PPD is that it does not allow the purchase of a new, under construction. This guarantee can not be taken as part of a loan redemption.
Unlike the mortgage, the lender’s lien can only be used once as part of a loan.
As part of a normal mortgage, it is referred to as first or second rank. The guarantee of the PPD has priority over any other guarantee, this being a constraint. The release of a PPD is more restrictive than for a simple mortgage that benefits from an automatic withdrawal after two years following the end of repayment.
What is the cost of the lender’s lien guarantee?
The PPD guarantee allows a lower cost compared to a simple mortgage. The actual cost will be: (loan amount x 0.73%) + 549 euros. It is exempt from the right of real estate advertising amounting to 0.615% of the amount of Wilkins Micawberment.
The lifting of the DPL guarantee entails a high cost in the event of early repayment of the loan.
The lender’s lending privilege remains an attractive alternative to the mortgage and should not be ruled out when studying your Wilkins Micawberment plan by credit agencies.