You turn to a bank for a mortgage and the staff at the counter tells you what guarantees are required: do you know what the surety is?
Knowing this concept is very important because guarantees are one of the essential elements of a loan
In general, all types of collateral are used by banks to be relatively certain of the debtor’s ability to repay the payday loan. This is particularly true in the case of mortgages, which are usually loans for the purchase of a property (here an explanation of the different types of the mortgage) and therefore provide for the payment of a considerable amount.
The most widespread form of guarantee for mortgages is the mortgage
A real guarantee that requires the borrower to use the building he is buying to guarantee repayment: in the event of insolvency, the bank will repay the house. However, there are also other forms of guarantees: for traditional financing, the presentation of the payslip or the pledge of a valuable item may suffice. For a mortgage, however, something more substantial is needed: such as the signature of a guarantor through a surety, or a guarantee.
The guarantee is the guarantee that a third party (the guarantor) insures the bank about the repayment of the loan, in the event of the insolvency of the original debtor. In this way, the guarantor will be called to intervene with his own assets to pay off the debt, with the entirety of his assets: it is a considerable commitment, so the Civil Code, in article 1938, indicates the maximum limits for the surety, which, if exceeded, render it void.
The surety must be sanctioned with a written document : this is sanctioned with the bank, but it is common practice (and advisable, from the point of view of the guarantor) that a written agreement between the guarantor (who guarantees) and the debtor, in which a the conditions of the guarantees are established, such as the maximum limits. The guarantor, or guarantor, is also committed to his heirs : in the event of death, the burden of intervening in the event of insolvency is transferred to them. It is, therefore, appropriate to consider all the consequences of such a decision.
Knowing what the surety is can, therefore, help you access a mortgage, facilitating the provision of additional guarantees in addition to the classic mortgage.