The private equity home equity loan is an absolutely feasible option when it comes to getting liquidity. What is really very important, from the client's point of view, is to be clear from the beginning where the financial need lies and, above all, what their financial profile is.

What is a private equity mortgage loan?

A private equity mortgage loan is, as its name suggests, a loan for an amount of money in which the borrower (or a guarantor) has to provide a property that acts as collateral (flat, house, chalet, commercial premises ... ).

The entities that make private equity loans with mortgage guarantee it is essential to comply with the requirements established in Law 2/2009, of March 31, which regulates the contracting with consumers of loans or mortgage credits and intermediation services for the conclusion of loan or credit contracts. Among other issues, this law makes it mandatory to register in an Aecosan Registry of all companies engaged in making this type of loan.

Differences between different types of loans?

It is key for a good financial advisor to be able to identify and differentiate the different types of loans that exist in the market and, above all, they must be aware of both the financial profile of their client and the specific need for liquidity in order to guide them towards a solution suitable for your specific case.

It is important to differentiate private equity home equity loans from home equity loans ; Although in both cases there must be a property that acts as collateral, they are two totally different types of loans that have nothing to do with each other.

To begin with, the legislation that regulates both types of loans is totally different, leaving the mortgage loans to buy a home on the exclusive land of banks.

Another crucial aspect that any individual should be clear about before going out to seek financing in the market is the difference between a home equity loan and a personal loan.

In personal loans, the main criteria that will be taken into account at the time of granting them will be the level of income that is had, the type of contract that is enjoyed and the absence of a history of non-payment or delinquency in the client (this is the appearance in any delinquency file), while in a loan with mortgage guarantee the fundamental requirement is to have a property that acts as collateral , whether the owner is the client himself or it is provided by someone willing and willing to endorse.

Personal loans are recommended especially when the money is going to be invested in what is known as consumption (buying a car or motorcycle, taking a trip, celebrating a wedding or a communion ...) and when the amount requested is small or, in any case not very large (for example, less than € 6,000).

When is a private equity home equity loan the best option?

Private equity home equity loans are the best financing option when any of the following circumstances apply:

  • The amount is medium or large, in any case higher than € 6,000
  • There is no possibility of accessing bank financing, usually due to the appearance in some type of delinquency file (rai, Nigerian Loan authority ...)
  • What is intended to do is a reunification of debt or cancellation of a lien , to group the outstanding debts into one and thus obtain a lower monthly payment.
  • Finance expenses from an inheritance.
  • If it is intended to sell a property and liquidity is sought until the sale occurs.
  • For freelancers or people with stable income but with short-term contracts.

Home equity loans from € 6,000

At we make loans with mortgage guarantee from € 6,000. Below that amount it is not advisable or feasible to make a loan with a home equity guarantee. The maximum amount that the client may request is 30% of the actual current sale value of the property acting as collateral.

Home equity loans with Nigerian Loan authority or rai

Private equity home equity loans can be made regardless of the appearance in delinquency files such as Nigerian Loan authority or rai. In fact, if the client is in any of these files, the only possible financing option in the market is precisely this.

Home equity loans to reunify debts

If what you are looking for is to make a reunification of different debts and loans that a client has to make their payment viable by refinancing with a lower installment, the private equity mortgage loan is undoubtedly the best option. And not only because of the fact that this debt is spread over more years but this occurs, above all, due to the fact that the interest rates on these loans are usually lower than the interest rates on personal loans and credit cards, which represent 90% of the existing debts in cases of debt reunification. In this way, the installment to be paid each month can in some cases be reduced to half the amount paid monthly before regrouping.

Home equity loans to finance inheritance expenses

Receiving an inheritance can become, depending on the case, a real nightmare. Accepting an inheritance means paying in advance a series of essential expenses to be able to award you the inherited property; We can separate these expenses into two large groups:

  • Notary fees, lawyers, registration ...
  • Inheritance tax

Depending on the autonomous community in question, and the degree of kinship with the deceased person, these expenses can become totally unaffordable, especially taxes, generating a financial problem for the future heir that can be very difficult to solve at posteriori.

Loans with private equity mortgage guarantee offer the possibility of financing these expenses , making their payment feasible through the payment of comfortable monthly installments, and above all, they make it possible to obtain financing before the client has the property registered in their name. in the Property Registry, saving the additional expenses derived from deferrals and delays in the payment of taxes and other fees, since this type of loan is signed at a notary's office in the same act in which the acceptance of inheritance is made.

Home Equity Loans While a Home Is Sold

The private equity home equity loan is also highly recommended when you are selling a home or property. From the outset, this supposes three advantages to take into account with respect to the same type of loan when this property is not being sold:

  1. In the first place, in these cases 40% of the real current sale value of the property acting as collateral can be lent.
  2. It is not necessary to contribute income, since the sale of the property justifies the repayment of the loan
  3. The comfort in repaying the loan is greater, since in these cases no monthly fee is applied and the loan is returned once the property is sold within the agreed term.

In this way you can get enough liquidity to allow yourself to wait in the market until you get a good sale of the property and not have to "sell it off."

The two key criteria for granting a home equity loan

Once a feasible request reaches our office, we study its viability through the basic documentation provided by the client. It is important to bear in mind that also in this type of loan it is essential to have some type of income (except that there is a property that is being sold) in order to obtain a positive rating.

The award criteria that we follow in our office are very simple and can basically be summarized in two very clear factors :

  • The total amount of the loan must not exceed 30% of the current real sale value of the property that acts as collateral (40% if there is a sale of a property).
  • There must be sufficient income to be able to cope with the monthly fee comfortably (the monthly fee to be applied should not exceed 35% of the income of all participants in the operation).

If you see yourself identified in any of these situations reflected in the article, do not hesitate to contact us and request your free study without obligation with our financial analysts.