As far as housing loans are concerned, the house or apartment purchased is usually the guarantee of debt. A guarantee or commitment to a home loan by an external individual is a “guarantee of default.” If the debtor does not repay the loan, the principal of the loan can only be recovered by the guarantor or lender if the debtor`s house or home, which serves as collateral, is not sufficient to repay the entire debt. The purpose of a guarantee or collateral for a loan is to guarantee repayment of the loan to the lender, i.e. the lender. Although the loan decision is based primarily on the solvency of the applicant, the guarantees provided as collateral for the repayment of the loan are also important. A private client applying for a loan to purchase a home that he or she is using himself can also obtain a state guarantee for the loan. Intergovernmental guaranteed banks linked to their housing lending decisions. A government-guaranteed real estate loan must not exceed 85% of the purchase price of the house or dwelling or the estimated cost of building a detached house. Consider the following before committing to make a guarantee or commitment: When issuing a guarantee, the surety assumes responsibility for a loan or an amount agreed with its personal assets. If the guarantee is directly enforceable, the creditor can collect the debt directly from the security.
With respect to collateral, the debtor or any other person indicates his assets as collateral for a loan. If the loan is not repaid, the creditor can sell the listed assets as collateral and use the proceeds of the sale to repay the loan. There may be several sureties, in which case each guarantor is jointly responsible for the debt. Payment of a defaulting debt may be required by each of the guarantors. When the surety must pay its debt, it has the right to receive from the debtor an amount paid to the creditor on the basis of the guarantee. The surety has the same right to other common bonds and several, depending on their per capita shares in the debt, when it has paid an amount of outstanding capital greater than its own quota. For example, the bank assesses the security value of real estate or residential real estate shares by deducting a certain margin of security from its market value. This ensures that if the market value of an asset declines, the repayment of loans is not compromised. However, the bank cannot require additional guarantees from a private customer due to a normal depreciation of collateral. The creditor independently determines the value of assets that are declared as collateral for a loan.
The value of the security does not correspond to the market value of the assets. In addition to the shares of the housing company and real estate, banks accept for example deposits and shares listed as guarantees. In general, the security value calculated by the bank for these types of assets has a margin of safety determined on a case-by-case basis and deducted from its market value.