Subordinated mortgage refers to a way to use the borrower's other property as collateral to secure the repayment of the loan on the premise of the loan guaranteed by the lending bank. The following will be elaborated from the following four aspects:
1.What is a subordinate mortgage?
Subordinated mortgage is a special form of collateral that refers to the fact that in the event that the borrower is unable to repay the loan on time, the lending bank can dispose of one or more of the collateral held by the borrower to obtain funds to repay the principal and interest of the loan.
2.How to apply for a subordinate mortgage?
To apply for a subordinate mortgage, you need to go through the following steps:
1) Determine the scope of collateral: First, it needs to be clear which properties will be used as collateral. This may include property, vehicles, deposits, etc.
2) Sign an agreement: Reach an agreement with the lending bank to stipulate the rights and obligations of both parties and the specific details of how to deal with the collateral.
3) Application for appraisal: If an appraisal of the collateral is required, the application should be submitted to the relevant authority and the appraisal fee should be paid.
4) Disposal of collateral: When the borrower fails to repay the loan on time, the lending bank has the right to dispose of the collateral in the manner specified in the agreement. For example, you can sell a portion of it** or sell it for cash.
5) Recovery of the money: After the disposal is completed, the lending bank will deduct the corresponding amount from the ** amount according to the proportion specified in the agreement, and return the remaining amount to the borrower.
3.Risks and advantages of subordinate mortgages
Although subordinate mortgages can help lenders solve their funding problems, there are also some risks and disadvantages.
1) Risk: Subordinate mortgage may cause the value of the collateral to decrease, which will affect the yield of the lending bank. In addition, the disposition of collateral may not be flexible and may result in the loan not being repaid on time.
2) Advantages: Compared with traditional auction and sale methods, subordinate mortgage is more convenient and efficient;At the same time, by disposing of some assets, the burden on the borrower can also be reduced, reducing the likelihood of default.
4.Things to look out for:
1) Understand the value of the collateral: When choosing the collateral, it is necessary to fully consider its market value and liquidity to ensure the rationality and feasibility of the collateral.
2) Choose the appropriate disposal method: Different collateral may need to be disposed of in different ways, so it is necessary to carefully weigh the advantages and disadvantages of each method and make a decision based on the actual situation.
3) Timely communication and negotiation: When dealing with mortgage issues, it is important to maintain good communication and cooperation with the lending bank in order to resolve the issue in a timely manner and ensure smooth execution.