A mutual agreement is defined between two parties. In the agreement one party lends money to the other and the latter undertakes to repay it. The first part is defined by the lender law, and must be a legal person qualified to lend money. The second part is called a borrower: it can be either a natural person or a legal person. If this is the definition present in the Civil Code, in practice the loan ends up in a financial loan .
Guarantees and interest on mortgages
Among the most significant elements to consider in a mortgage are guarantees and interests. Usually in a loan the guarantees are divided into real guarantees and personal guarantees. The real guarantees are those for which the creditor, in the case of non-payment, can make up, having precedence over any other creditors, over the asset pledged as security for the loan. Personal guarantees, on the other hand, allow the creditor to use one of the assets owned by the debtor, up to the point of relying on his entire assets. Among the types of guarantee required in a mortgage the most used is the mortgage, which is usually imposed on the asset that is intended to be purchased through the loan and, in the case of a property, also on the land on which it is based. The mortgage is canceled when the repayment is completed. In addition to the mortgage, the promissory note, the bond and the guarantee are also used. In particular, the surety is the most common personal guarantee as well as being the most important and is regulated by the Civil Code.
Types of mortgages
A mortgage can be medium or long term. The minimum repayment period is 18 months. The maximum repayment term, depending on the provider, is 30-40 years. Furthermore, the types of loans are distinguished by the interest rates applied. Therefore a mortgage can be at a fixed or variable rate, at a mixed or subsidized rate, or at two types of rates. A fixed-rate mortgage has an installment that remains unchanged for the duration of the repayment. Usually, this type of loan has a higher interest rate because the provider is afraid that the cost of money will increase over time and therefore decrease its profits. In the variable rate loan the repayment rate varies according to the financial market trend. On the other hand, in the mixed rate mortgage, the repayment rate varies according to the contract. On the other hand, in the low-interest loan, interest is partially repaid by a public body. In the two-rate loan, a part of the repayment of the loan with a fixed rate is envisaged, the other with the variable rate.
The repayment of the loan
The loan is repaid in monthly installments. The installment has a principal and a share of interest. The first counts the sum disbursed the second the amount of interest. The scheduled repayment of the loan is defined as an amortization plan.