Home Equity, loan with property in guarantee or, simply, refinancing of property is one of the types of credit that offers greater volume of money for a lower interest rate.
Anyone who owns a residential or commercial property can use it as collateral when contracting credit. This reduces the risk of default assumed by the credit institutions. On the other hand, the conditions offered are more advantageous than other lines in the market.
Property refinancing works as an excellent alternative to reorganize personal finances, invest in your own business or fulfill dreams that are on paper. Learn more about this modality and what it can do for you!
How does property loan refinancing work?
Refinancing is a way of obtaining a loan by offering collateral. As it is a credit linked to equity, interest rates are better and the amount available is higher. Thus, both creditors and debtors obtain more benefits in this modality.
The first rule, in the case of property refinancing, is that the credit applicant is the owner of the property, which can be residential or commercial. It is common that in view of this rule and the characteristics of this type of loan, the question arises: will the property be in my name or that of the financial institution?
Do not worry. The property is yours, even when it is placed in guarantee. But the fact that he is alienated from the creditor institution must be well understood by the borrower.
In short, the owner links the property to the payment of the debt. Another name used to define this practice is fiduciary alienation. The borrower remains the holder of the asset, that is, the possession and use of the property remains in his name.
The risk of losing the property only occurs when the debtor fails to honor the payment of the credit. Therefore, it is essential that the obtaining of the loan is carefully evaluated and planned.
Check how your budget is, what your debt capacity is (ideally, do not commit more than 30% of your debt income) and do simulations to calculate calmly and in advance how much you will pay and for how long.
Fiduciary disposal allows the financial institution to offer higher value credit at a lower interest rate. To grant the loan, first, the documentation of the owner and the property are checked. The patrimony must be free of debts and encumbrances. Likewise, the applicant cannot have credit restrictions.
Property refinancing has a slightly higher process than vehicle refinancing, for example. This is because the procedures take longer. In addition to analyzing the documentation, the finance company will also inspect the property. Only then will the formalization of the operation be documented. For this reason, the granting of credit takes a little longer, and may take between 15 to 60 business days for the request.
There are solution options that make it possible to refinance your property in just four steps:
- online registration of the request;
- analysis and collection of documentation;
- inspection of the property;
- signing the contract and receiving the resource.
Advantages of property refinancing?
Due to the specific characteristics, we can list five main advantages of this type of secured loan:
- higher volume of credit granted;
- lower interest rate;
- extended payment term;
- negative goodwill in advance of installments;
- free use of credit.