What is the mortgage?
If you have turned to the bank to apply for a loan to purchase a property, you will certainly be wondering about the operation of the mortgage loan which provides, in fact, the registration of a mortgage on the house you are buying. In a similar way to other procedures, such as the guarantee, the mortgage constitutes a form of guarantee for the bank, which in this way will be encouraged to provide the loan. The mortgage is the most widespread form of guarantee and is often recorded directly on the building subject to the loan agreement. But is it correct to say that the bank can rely on the house if the borrower does not pay regularly?
Certainly, the idea of a mortgage is precisely the possibility that the credit institution has a claim on the property in the event of the insolvency of the borrower. However, this does not happen automatically. The mortgage constitutes a pre-emptive right in favor of the bank that provided the loan. In the event of the debtor’s insolvency, the house may also become the property of the bank (the hypothesis currently being examined in Italy is that the attachment will take place after 18 unpaid monthly payments). However, the possibility is more widespread that the mortgage translates into a pre-emption when the home of an insolvent payer is sold: in that case, the bank will take precedence over the other creditors. This happens, however, if the mortgage is first-rate, as is often requested by the banks themselves as a condition for disbursing the loan. A second degree mortgage will be met at a later date, if possible.
The mortgage is usually set up before the loan is granted, through its registration with the Real Estate Registers with the presentation of the title (the loan agreement) and a double copy signed by the applicant. The note must contain some fundamental elements, such as the title to which it refers, and the indications of the registration, of the immovable property and of the credit to be guaranteed (the amount of the loan).
To answer the question “what is the mortgage?”, However, we must also consider the practical aspects: among these, we point out that it covers not only the house, but also any appurtenances, such as a garage. Furthermore, the guarantee constituted by the registration of the mortgage does not only concern the loaned capital, but also the interests , including those in arrears in the event of late payments, insurance premiums, tax and notary fees, in addition to the court costs incurred by the bank in case of credit recovery. This means that the bank makes sure of paying all the mortgage loan expense items on the home .