Do you own real estate and need liquidity to finance a project? Renovations, wealth transfer, support for a relative, or professional financing: the mortgage liquidity loan can represent an interesting financing solution when you cannot use traditional loans.
Still little known to the general public, this device is gradually appealing to owners who want to mobilize a portion of the value of their real estate heritage without selling their home. However, the property directly serves as collateral with the bank. Before you embark on this, it is therefore essential to understand how it works, its advantages, but also the associated risks.
What is the mortgage liquidity loan?
The mortgage liquidity loan (PTH) is a credit granted by a bank in exchange for a guarantee on real estate owned by the borrower. In concrete terms, the lending institution records a mortgage on the dwelling to secure the financing granted. The loan amount primarily depends on the value of the real estate that must be free of mortgage (in most cases: between 30% and 70% of this value).
The PTH remains relatively technical and still is not widely offered by traditional banks. In this context, turning to a specialized intermediary like Partners Finances can facilitate your démarches.
When and why to resort to the mortgage liquidity loan?
This solution can be used in many situations: financing major works, settling inheritance rights, providing financial help to relatives, financing studies, acquiring real estate, or investing in a professional activity. Some borrowers also use it to obtain temporary liquidity without having to sell their property in an emergency.
The PTH can also play a bridging financing role. When a owner plans to sell a home, but the transaction takes time to materialize, this credit allows you to have a cash advance while waiting for the final sale.
Senior profiles also represent a substantial portion of requests. After a certain age, access to credit becomes more difficult. With a mortgage loan, the presence of a real estate guarantee reassures the bank more, which can make financing more accessible for older borrowers who possess solid assets.
Finally, the PTH is also an alternative for certain atypical profiles (self-employed, business owners, or people with irregular income).
What are the advantages and risks of the mortgage liquidity loan?
Advantages of the mortgage liquidity loan
- Accessible to all : The loan primarily relies on the value of the real estate offered as collateral. Criteria related to age, income stability, or debt ratio can therefore be more flexible than for a traditional loan.
- High amounts and longer terms : The amount granted depends directly on the value of the real estate, allowing for substantial sums, sometimes difficult to access via consumer credit. Moreover, it is possible to obtain longer repayment terms, similar to those of a mortgage, thus offering tailored monthly payments and greater financial flexibility.
- Flexibility : Some solutions may offer different repayment modes: amortizing loan, interest-only, bridge, or mixed formula depending on the borrower’s needs.
Risks of the mortgage liquidity loan
- Risk of losing the real estate : Since the property serves as collateral, a prolonged default can lead to a foreclosure procedure.
- Underestimation of ancillary costs : The total cost of financing is not limited to interest. You must also take into account notary fees, processing fees, the cost of real estate appraisal, mortgage-related fees, as well as the possible remuneration of the intermediary.
- Poor estimation of the value of the property and need to recalibrate the loan : The value of the property is generally determined by the lender, so there is a risk of a discrepancy between the client’s estimated value and the expert’s. An initial overestimation can force a revision of the financing plan or a reduction of the borrowed capital.
Our recommendations for using the mortgage liquidity loan effectively
Before taking any steps, it is essential to precisely define your financing need to avoid borrowing an amount that would unnecessarily increase the total cost of the loan.
You should also assess your long-term repayment capacity. Even if access criteria can be more flexible, the monthly payments must remain compatible with your overall budget.
It is also essential to carry out a realistic appraisal of your real estate. An overly optimistic view of your asset’s value can complicate negotiations with the bank and delay the project.
Finally, comparing several offers remains an essential step, because a difference in rate, even small, can amount to several thousand euros over the total duration of the loan. The support of a specialized intermediary provides access to a network of specialized lenders capable of studying more varied profiles and offering solutions tailored to your patrimonial situation.
Attention! A loan costs money and must be repaid. No payment, of any kind, may be demanded from a private individual before obtaining one or more money loans.
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