A loan without a mortgage cannot be compared to a normal consumer loan. This loan is used for real estate and home ownership. With real estate loans, there is basically no mortgage-free loan.
However, if it is a property that is already owned, it looks very different. A loan without a mortgage can then be taken out, for example, for renovations or modernizations. In this case, the loan amount is less than 50,000 USD, so that the house can be modernized or renovated. Many providers nowadays refrain from having the loan registered in the land charge, which actually serves as security. Instead, earnings statements are taken as security.
Who can take out a loan without a mortgage?
Those who have a secure and correspondingly high income can take out a loan without a mortgage. It is important that it is discussed in advance that the loan will not be entered and that the mortgage will no longer be pledged. Not every bank grants this loan, so some providers have to be asked.
For example, the applicant should pay particular attention to providers who do not make an entry in the land register. Other collateral should be given, such as a guarantor or life insurance. This type of collateral is well known to banks and is accepted for many loans. Since the land charge is waived, the Credit bureau is questioned. No other loans should be entered there, because then the loan may be rejected.
What are the advantages?
A great advantage of a mortgage loan is that the costs for a notary will not be incurred. This must be commissioned when a loan is granted, where it is entered in the land register. In addition, a loan without a mortgage is granted much faster because the processing time is shortened enormously.
The most important point, however, is that the property remains debt-free and can still be taken as security for further loans. In any case, the property remains in the possession of the borrower. In the case of a mortgage, there is already a hand on the house and if the debt cannot be repaid, old-age security can be lost, the property.