Is a Private Loan Secured Against Real Estate Secure?

 

Borrowing money always involves risks.

Borrowing money always involves risks.

And this is for both the institution that lends money to us and for the person who needs extra money. The lenders must take into account that the loan or loan will not be repaid and they will have to try to recover their receivables on the debt collection path. However, the borrower does not know until the end how his financial situation will look in a few months and therefore whether he will be able to pay back the debt within the time limit. And if he does not do it, he will have to incur certain costs associated with the recovery of the debt by the lender. And usually he tries to secure the loan in the best possible way, so that the money can be recovered as soon as possible. What’s more, he usually checks what the applicant’s financial situation looks like in order to be able to decide whether it is worth trusting him and transferring the requested amount to his account. And that’s why banks sometimes refuse a loan application. They simply believe that the client is not credible enough to give him a loan.

private loan secured against real estate

private loan secured against real estate

The companies or natural persons who provide loans look somewhat milder about the ability and credit history. However, in exchange for this, often the cost of their loans are higher than a bank loan, and we also need to guarantee them a very good loan security. Even with relatively small amounts, they often require a mortgage on real estate, as it is considered one of the best loan collateral. For lenders, it is also a good idea on the one hand, but on the other hand, it involves a lot of risk. The upside is that we do not have to look for a guarantor, which is not so easy. On the other hand, the downside is that we must incur certain fees related to the mortgage entry, and secondly, we risk that if we do not pay back the debt, our apartment will be taken over by the lender. And often even with a loan that is much lower than the value of the property. Therefore, one should be very careful and think well before such a step.

Does this mean that you should not use private secured property loans? Of course not. It is a product like any other, and with all precautions we can borrow as much as possible. But let’s think about it before. Above all, if we can not get a loan from the bank. Secondly, will we be able to settle our liabilities on time? If we have any doubts about it, let us just let go and let us not borrow, because we will lose our property only. A loan agreement is also very important. It is best to ask for one copy of the contract before signing it, so that we can get acquainted with its content, or if we can consult its content with a professional credit advisor. Of course, we should sign such a contract in the presence of a notary public, which will only confirm her power. Before we use such a private loan, please also ask for a lender. Let’s check whether it is not on the lists of warnings presented by the Polish Financial Supervision Authority, or whether on the credit forums customers themselves do not warn against its offer. And of course, before starting the loan, do not pay any advances or commission, nor do we send expensive SMSs, to the numbers that the lender will provide.

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