Leaving the home as collateral to get credit for repaying your debts should not be seen as a crisis in the family’s economic life.
Using a property as collateral when making a loan is common behavior in countries other than Brazil, but why? In the country, there are still some myths about this type of credit.
Unbeknownst to them, Brazilians end up assuming high debts without realizing that they can count on other alternatives, such as secured credit. Check out the demystification of four fears that surround the head of those who need money:
The intention of credit is to take my home
In the middle of 2000, in the United States, the exaggeration in the amount of credit available under the guarantees offered caused a housing bubble to emerge. Because very high debts were allowed while real estate lost value, this bubble burst. This whole scenario contributed to the bad view that many people got of the mortgage there and, consequently, of the operations involving real estate here in Brazil.
Still, 80 percent of the credit requested by Americans is backed by collateral. This may be a motivation for Brazilians seeking a loan, with secured credit. Placing your own property – where you live or not – as collateral, gives those in need, a much healthier loan: of significant volume, with much more affordable rates and long term repayment. To ensure the security of the installments and not complicate the payment, it is important that the person make a simulation, compare values and have a good financial organization.
I need to prove all income alone and as a PF
As it involves a good of very high material value, it is not always possible that a single person can prove the income to obtain the desired credit in this modality. However, one thing that people often don’t know is that there is more than one way to present income and it doesn’t have to be alone.
Some institutions are able to give greater flexibility when approving the requested money. Maria Teresa Fornea, founder of fintech Bosscredi, explains that it is common for entrepreneurs to look for this credit as a solution for their companies, so joint income is a strong reality in this environment. “People can add bidders and also use their business income to prove and acquire the money they need,” explains the businesswoman.
I cannot perform any operation with the property
The house, apartment or land chosen to be the property that guarantees the payment of installments may or may not be a place where the person resides. In addition, as the owner of this property, the person is free to perform operations such as rent, renovation and even sale. But, it is important to remember to clarify that the property is part of this type of operation.
In the case of sale, for example, the debt must be paid off at the financial institution before the process can be finalized. Another alternative is to finance the property in the same institution that is as collateral.
In addition to understanding, studying and comparing credit arrangements, it is essential that people have a good financial education. Thus, the organization of money allows risks to be better assessed.
The process is very bureaucratic and slow
Hiring a secured home loan (either for purchase or refinancing) requires a lot of documentation and this can seem like a tiring and very slow process. However, this is not always a reality.
Despite the inevitable bureaucracies, online credit hiring allows this process to be done faster in an easier way. At Bosscredi, if the contractor arranges all documents to attach to the online platform, the money could be in the account within 10 business days.
How to tell if you need CGI
People who use or are looking for credit above $ 30,000 are profiles for contractors of this modality. This type of loan is also suitable for those who have business expansion plans, renovating the house or making a large purchase, which amount to a high amount as mentioned above.
In the case of Bosscredi, the property secured loan starts at $50,000, with affordable rates and a long-term payment. The amount requested can be 50% of the value of the property that is in negotiation.
Either way, anyone who wants to apply for a credit needs to research and understand the best terms for their income and goals. This whole process also depends on an approval that happens according to the rules of each institution.
Take the opportunity to download our ebook and answer any questions about the process and the use of secured credit!