Real estate financing is one of the most common ways to achieve the dream of buying a home. Financing is nothing more than borrowing money from a financial institution to buy a property. This loan is made from a contract signed between the buyer and the lender, and its terms may vary.
Whenever a bank makes a loan, it charges a fee to make up for the period it will run out of that money. This is the interest rate and its value is influenced by a series of factors, such as the basic Selic rate.
As real estate financing usually involves high values and long terms, the bank can grant the loan with the financed property as collateral – also called fiduciary sale or Home Equity – to minimize risks.
What happens when mortgage installments are not paid?
In the fiduciary sale, the financial institution holds ownership of the property upon contracting the credit until the outstanding balance is extinguished. However, the borrower still owns the property and can use it normally while paying the installments. Once the debt is cleared, he becomes the owner.
In case of default, the bank can file a lawsuit to keep the property, which is auctioned, pursuant to Law 9,514, which addresses the sale and provides for the option of taking the defaulter’s property to auction.
According to Art. 26 of the law, after 30 days of the maturity of one or more installments, the bank can start the extrajudicial execution procedure in the contract, notifying the debtor and giving up to 15 days for the payment of the debt.
The contract with the bank must stipulate how many installments in arrears the bank can initiate the extrajudicial procedure for repossession. In addition to this, other information must also be described:
– The principal amount of the debt;
– The term and conditions for repayment of the trustee’s loan or credit;
– The interest rate and charges incurred;
– Clause ensuring the buyer, while defaulting, the free use, at its own expense and risk, of the property object of the chattel mortgage;
– The indication, for the purpose of sale in public auction, of the value of the property and the criteria for its respective review;
– Clause providing for the auction procedures.
Mortgage: what is it, how does it work and when to use it?
Alternatives to avoid default
According to Law 9,514, after 30 days of the maturity of one or more installments of the program, the bank can start the extrajudicial execution procedure. So, before reaching the deadline, it is possible to evaluate some options.
The first is to try to negotiate the fees directly with the lender bank for the payment of outstanding installments.
In case of delay, it is important to pay attention to the fine and interest charged each month. The fine paid cannot be greater than 2% of the total debt. Interest per month of arrears cannot exceed 1% of the total debt.
Another option is to consult other financial institutions to carry out credit portability, which can be advantageous in this current scenario of lower rates and a solution to avoid default.
Using the FGTS is a way to get more money to deal with the financing. The important thing is to pay attention to the number of installments overdue, to be able to plan in time. Some institutions allow three or more installments in arrears to initiate legal actions to repossess the properties.
How portability works
The portability of real estate financing is the transfer of an operation, at the client’s request, from one financial institution to another. Before choosing to transfer debt, it is important to know all the costs involved in your current contract, the Total Effective Cost (CET).
All about Real Estate Finance Portability
How to get all these values? Just contact the bank and request the CET of the loan. No institution can deny this information and, furthermore, it has the obligation to provide it clearly. If there is resistance, the Consumer Protection Code guarantees that “every consumer who purchases a financial product has the right to transfer debt from one financial institution to another”.
It is important to highlight that the new bank can deny portability, as if it were denying a loan. However, the original institution cannot deny the request. If there is a refusal, the Central Bank advises you to contact the Customer Service (SAC) or the Ombudsman of the original financial institution. If the situation is not resolved, the complaint must be filed with the Central Bank.