Types of Loans with a Mortgage in the Background Accounting Management

Types of loans with a mortgage in the background.


Securing the loan on the borrower’s real estate is considered probably the most reliable. The mortgage may refer to different types of loans with a radically different purpose. Not everyone knows that, so let’s discuss them briefly. See jejcrew.com for an illustration

1. An ordinary mortgage loan – when as a result of concluding a credit agreement the bank finances for the borrower the purchase of an already existing real estate like a house or flat and this is done by transferring funds to the account of the seller. Thus, the loan collateral in this case is the property that already exists. It may be the property for which the borrower borrows the loan or some other property belonging to him.

2. Construction and mortgage loan – when it comes to financing a flat or a house, and for this purpose, loan funds are allocated for a legal or natural person. In this case, the funds are launched successively with the commencement of the next stages of construction works. For the obvious reason, in this case, the obligation to establish a mortgage on the real estate is transferred and the mortgage is established when the borrower is already (usually after signing the notarial deed) full owner of at least part of the real estate being built. At that time, the borrower is obliged to establish a mortgage in the land and mortgage register of such real estate.

3. A mortgage loan – in this case, the bank does not make the transfer of funds dependent on the purpose of their destination (therefore it is a loan and not a loan), but the loan is secured by the property belonging to the borrower.

4. The mortgage collateral on the borrower’s property also includes consolidation loans as relatively high risk loans. The bank that grants the consolidation loan assumes the obligation to repay the customer’s current loan, whose repayment, due to too high installments, begins to cause trouble for the client. A consolidation loan is a lower installment, but note: therefore, it is a longer repayment period and therefore a flat cost – higher.

5. Finally, some loans offered by non-bank companies, often advertised as, for example, banks without BIK, are also eligible for a mortgage. They are not banks, and loans offered by such companies are usually very expensive, much more expensive than bank loans and loans. These companies go out with their offer to clients who do not have sufficient creditworthiness according to banks. You can also provide a private loan under a mortgage as collateral. Such loans are also often incurred by beginning entrepreneurs, due to the lack of other financing possibilities for the company’s development.

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