Guarantees when borrowing from a bank

You have taken the plunge and wish to borrow. You will then need to use the services of a bank. Most of the time you will need to propose a guarantee to prove your good faith and the security of your loan. An essential condition for the bank to accept your loan request and provide you with the funds you need. In this article, we will discuss the different forms of guarantees that exist, to help you choose the guarantee most suited to your project.

The mortgage

The first solution available to you is the choice of a mortgage. The mortgage is the traditional form of guarantee used for purchasing new-build property. However, it has numerous drawbacks, such as notary fees: if you wish to mortgage a property, these are relatively high and thus impose additional costs. It is also registered for the entire duration of the loan plus an additional year, which again generates further costs. You must therefore be cautious and choose this option only with full knowledge of the circumstances and if you have no other options available to you.

The privilege of money lender

The privilege of money lender is a guarantee method similar to the mortgage with a few differences. It can only be used for purchasing older properties, that is to say properties at least 5 years old. Less costly than the mortgage, it nevertheless still imposes additional costs, especially if you wish to sell your property before the end of the loan. This can be a problem, unless you are totally certain of your investment.

The surety or guarantee

The surety or guarantee is the easiest and also the least expensive method if you wish to purchase a property with a loan from your bank. Essentially, you must prove that you will be able to pay each month what you owe, or else designate a person who is responsible for paying on your behalf if necessary. This is the best guarantee method.

It is indeed the most widely used method in France. It incurs no additional costs, requires no legal contract or other documentation, which is always a major advantage.

The credit housing guarantee

This is the final guarantee method, which allows you to be supported throughout your loan and provides you with a guarantee for purchasing your property. The credit housing guarantee is also a sensible and easy method.