In this article we will try to explain to you in a summary and clear way what a mortgage guarantee is and in which cases your bank may ask you for it when buying an apartment in Roses or another type of property. Also the obligations involved in providing a mortgage guarantee.

What exactly is a mortgage guarantee?

To explain it simply, a mortgage guarantee for the purchase of a home is a way for the bank to guarantee the payment of the loan and its installments. Let us remember that a mortgage is a loan that must be repaid, and if the bank believes that with the current situation, it runs some risk in having all those installments paid as stipulated in the contract, it is logical that it ask for extra security in the case of non-payment. .

This mortgage guarantee will be offered by a third person who will respond directly with their assets if there is a default. This person who offers to deal with possible non-payments is the figure we know as the guarantor. For example, let's imagine that a couple wants to buy an apartment and the bank considers that they can afford the mortgage, no guarantee will be requested. On the contrary, it may be that they do need it and turn to their parents or a family member to guarantee the payments with other property or their assets in the event that there is a problem with payment obligations.

We also see this in the case of rentals. Many times a person can afford the rent, but if he loses his job, someone has to guarantee payment of the installments.

In what cases can the bank request a guarantor/mortgage guarantee for the purchase of an apartment or other property?

Each bank does its studies to ensure payment of the mortgage payments, so it is good to know various options and see what requirements are requested.

Banks usually request a mortgage guarantee in the following cases:

- When the mortgage payment exceeds 30-35% of the total income of the person or persons requesting the mortgage.

- When the mortgage applicant cannot demonstrate sufficient regular income.

- When the buyer or buyers do not have saved, at least 20-30% of the appraised value of the apartment or house they want to buy. These savings or amount can be contributed by a third party.

- When the buyer is elderly. For example, a 60-year-old person takes out a 30-year mortgage. It is assumed that he will finish paying off the mortgage at age 90, a risky age. When the payment of the last installment exceeds the buyer's age of 70-75 years, it is considered risky and a mortgage guarantee will be requested in most cases.

-If he or the buyers are on a list that considers them at risk of non-payment, such as a list of defaulters, for example.

When will the bank not request a mortgage guarantee?

- When the applicant is young.

- When the mortgage applicant or applicants have adequate income to cover the payments and only need 80% or less of the appraised value of the apartment or house they are going to buy.

- A stable job and salary. People with work and an indefinite contract or in cases of self-employed people who have been working for many years and can prove their income.

Other options

Sometimes and depending on each bank, you may be offered some products that, when contracted, do not require you to provide mortgage guarantees.

For example:

- Life insurances

- Home insurance

- Credit cards

- Payment protection insurance

What responsibilities has a mortgage guarantor?

Mainly you will have to face the mortgage debt in the event that the buyers do not comply with the stipulated installments. The guarantor will have the same payment responsibility as the home buyer.

The guarantor must pay the fees in case of non-payment with his income, payroll.

On the other hand, it should be noted that the guarantee can be given as a debtor guarantor or as a non-debtor mortgagee. We find this last case when another property is provided as collateral. Only part of it and not in its entirety.

At PROCASA we can guide you about purchasing your new home, apartment or house in Roses that interests you in our properties. Do not hesitate to contact us.

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