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Real estate mortgage refers to a way to borrow money from financial institutions or other lenders using real estate as collateral, which can be used to solve capital needs or invest in financial management.
There are mainly the following channels for handling real estate mortgages:
Banks: formal, safe, and low interest rates, but strict approvals, complex processes, and long cycles;
Microfinance companies: flexible, fast, and low threshold, but with high interest rates, high risks, and insufficient supervision;
Internet platform: convenient, transparent, and innovative, but with high credit requirements, limited quotas, and insufficient legal protection;
Individuals or intermediaries: simple, convenient, and free, but unregulated, unsafe, and unreliable.
A mortgage is a way to borrow money from a financial institution or other lender using a property as collateral. The borrower of a mortgage on a property can be the owner of the property, a co-owner of the property or another person with rights. The collateral for real estate mortgage can be various types of real estate such as residential, commercial, and industrial buildings, but it must have a complete title certificate and related procedures.
There are two main purposes of real estate mortgage: one is to solve the financial needs, such as car purchase, decoration, education, medical care, tourism, etc.; The second is investment and financial management, such as buying other real estate, etc. The advantage of real estate mortgage is that it can use idle real estate assets to increase liquidity and improve the return on assets; The disadvantage is that you need to bear the risk of the property being auctioned or encroached upon, as well as the pressure of repayment and the burden of interest.
There are mainly the following channels for handling real estate mortgages:
Banks
Banks are the most common and formal channels for real estate mortgages, and there are generally two products: one is housing mortgage, that is, a kind of credit loan that uses the house as collateral to apply for a loan from the bank; The second is a mortgage loan, that is, a kind of secured loan that uses the house as collateral to apply for a loan from the bank.
The advantages of banks are safety, reliability, low interest rates, and long terms, which can generally lend up to 60%-80% of the value of the house, and the term can reach more than 10 years. The disadvantages of banks are that the approval is strict, the process is complex, and the cycle is long, and it is generally necessary to provide complete information and proof, such as real estate certificates, ID cards, income certificates, credit reports, etc., and the approval time may take more than a month.
Microfinance companies
Microfinance companies are another common channel for real estate mortgages, which are generally a kind of non-bank financial institutions that provide loans to individuals or enterprises with private capital as the main body and houses as collateral. The advantages of small loan companies are that they are flexible, fast, and have a low threshold, generally only need to provide real estate certificates and ID cards, the approval time only takes a few days or even a few hours, and the loan amount can reach 80%-90% of the value of the house, and the term can be negotiated freely.
The disadvantages of microfinance companies are high interest rates, high risks, and insufficient supervision, and the general interest rate may be as high as 15%-30% per annum, and the repayment methods may not be standardized, such as monthly interest payment, principal repayment at maturity, or high handling fees and deposits charged in advance.
Internet Platforms
The Internet platform is an emerging channel for real estate mortgage, which is generally based on Internet technology and uses housing as collateral to provide loans to individuals or enterprises. The advantages of the Internet platform are convenient, transparent and innovative, generally only need to upload the real estate certificate and ID card through the mobile phone or computer, you can apply for a loan, the approval time may only take a few minutes, the loan amount can reach 70%-80% of the value of the house, the term can be flexibly selected, and the repayment method can be diversified, such as equal principal and interest, equal principal, first interest and then principal, etc., and you can also enjoy some preferential or value-added services, such as interest-free period, early repayment, points exchange, etc.
The disadvantages of Internet platforms are high credit requirements, limited quotas, insufficient legal protection, generally need to have a good credit record and stable income**, the loan amount is not as high as that of banks or small loan companies, the term is not as long as that of banks, and if there is a dispute or controversy, there may be a lack of effective legal channels and guarantees.
Individuals or intermediaries
Individuals or intermediaries are a relatively informal channel for real estate mortgages, which are generally a private lending method that uses individuals or intermediaries as borrowers and houses as collateral to provide loans to individuals or enterprises. The advantage of an individual or intermediary is that it is simple, convenient and free, generally only need to sign a loan contract to realize the loan, the approval time may only take a few hours, the loan amount can reach 90%-100% of the value of the house, and the term can be determined according to the agreement between the two parties.
The disadvantages of individuals or intermediaries are not standardized, unsafe, unreliable, generally without any qualifications or certificates, the loan contract may not have legal effect, the interest rate is as high as 40%-50% per annum, the repayment method is changed at will, such as raising the interest, shortening the term, requiring other guarantees, etc., if there is overdue or default, facing the risk of real estate being transferred or occupied, and may even involve fraud or extortion.