A mortgage loan is a loan that typically lasts between 5 to 30 years and is normally used for the purchase, construction or renovation of a building. The customer agrees to return the amount borrowed to the bank in installment payments, of either changeable or consistent amounts, consisting of a principal and an interest portion, under the terms of the contract. The loan is called a mortgage because the payment of installments is secured by a mortgage on a property. If the customer does not return the loan, the Bank has the right to claim the property itself. The bank, in keeping with its credit policy, may also request other warranties, including a surety.
To understand how much the mortgage will cost in full, the customer must factor in other elements (not solely the interest rate), contained in the Bank’s mortgage policy. For example, the tax, 0.25% of the loan in the case of a first home, 2% if it is the second house, the cost of inquiries, the cost of consultancy, the cost of fire and explosion insurance fee, notary costs for the conclusion of the contract and the registration of the mortgage. It is important, therefore, to evaluate the APR, which is a summary of the total cost of the loan including interest rates and other items of expenditure.
If the installments are not paid on time, the Bank may charge interest for late payments in addition to the total amount due. In extreme cases, and as determined by law, the bank can dissolve the contract. If the bank dissolves the contract, the customer must immediately return the remaining debt. If the customer can not pay off the debt, the bank can foreclose on the mortgaged property and put it up for sale at an auction. If the customer is incapable of making mortgage payments in a timely fashion, they should contact the bank to find a solution. One of the solutions a bank may offer is the temporary suspension of payments during a difficult financial time for the customer. It’s also possible to renegotiate certain terms and conditions without the intervention of a notary as long as the original mortgage remains valid. A mortgage is automatically terminated on the date of the last payment is received