- When taking out a mortgage, a so-called land charge is set .
- The rights to a house , apartment or land are assigned to the bank . In return, the person receives a loan. The mortgage represents a hedge for the loan .
- However, many banks prefer the more flexible land charge for mortgage lending.
What is a mortgage?
Financing Home Ownership: When you take out a mortgage, it serves as collateral.
What does it mean when people take out a mortgage? This is a so-called land charge, which is particularly important in the financing of real estate . A person assigns the rights to an object to a bank . In return, the borrower receives a loan for home or apartment purchase .
If it comes to defaults on the loan, the bank can then forcibly auction the property . From the proceeds, the outstanding claims are settled. If people take out a mortgage, this is notarized and registered in the land register .
The legal basis can be found in § 1113 paragraph 1 of the Civil Code (BGB):
A property may be encumbered in such a way that to those in favor of which the charge is made, a certain sum of money is to be paid out of the property for the satisfaction of a claim to which it is entitled (mortgage).
For the loan you have to pay a certain fee to the building society or the bank – these are the mortgage rates . Their amount is mainly based on the European interest rate . However, depending on the bank, duration and other factors, the amount may vary. So it’s a good idea to make a mortgage rate comparison before you go – so you can save money on the loan. What is the best way for you to get out of debt? Check your options for free now! Online debt analysis →
Mortgage vs. Land charge – where are the differences?
The fact that people take out a mortgage is just one way to hedge a loan . There is also the option to take a mortgage . In contrast to the mortgage, this is not dependent on the claim or not limited to the loan. Even after the loan has been paid off, the mortgage remains .
Taking a mortgage with old age – this can be a good way to lower the cost of living . For persons who have high cash assets, for example after the payment of a capital life insurance policy, but still live in a rented apartment, the current low-interest phase represents an opportunity. If the saved assets are invested in a property and the remainder is invested in the bank through a mortgage loan funded, the monthly financial burden may decline.
Mortgage record: What requirements must be met?
If you want to take out a mortgage on a house, you have to meet certain requirements. This usually includes a permanent position, a regular monthly income and sufficient equity . Furthermore, banks demand a good credit rating – also called creditworthiness.
Many people wonder if they can take out a mortgage despite negative SCHUFA information . As already mentioned, the bank checks the creditworthiness of the applicant before granting credit for a property. With only slight negative features , a solid income situation and additional collateral , many banks often still have the opportunity to finance a property.
What are the costs of taking a mortgage on a house?
You can also take a mortgage on the house of the parents.
If you take out a mortgage , this will cost you a certain amount of money . These include the following items:
- Commitment interest
- Notary fees (authentication and certification)
- Cost of entry in the land register
- Costs for the valuation of the property
- Discount (deduction from the starting amount)