What Are the Pros and Cons of Collateral Loans?

Mortgage bank loans refer to renminbi loans in which the borrower mortgages the purchased commodity housing. The loan bank provides the borrower with a package of financial services to meet their various needs such as purchase of housing, parking spaces, large-scale durable consumer goods, automobiles and housing decoration.

Mortgage bank loan risk

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Mortgage bank loans refer to renminbi loans in which the borrower mortgages the purchased commodity housing. The loan bank provides the borrower with a package of financial services to meet their various needs such as purchase of housing, parking spaces, large-scale durable consumer goods, automobiles and housing decoration.

Chinese name

Mortgage bank loan risk

Foreign name

no

Nature

RMB loans

Features

The benchmark annual interest rate is 5.94%.

The loan period for a new house loan is no more than 30 years, and the second-hand house is no more than 20 years. The loan amount is 70% of the appraised value of the house. .

Apply for a loan

1. A natural person with the nationality of the People's Republic of China and full capacity for civil conduct; 2. A valid identity document; 3. A stable and legal source of income; 4. A mortgaged real estate with a real estate certificate, clear property rights, and can be listed and circulated; 5.Other conditions stipulated by the bank;

Personal business loans are mortgages on the property of the corporate or shareholder, and the funds obtained are used for business operations.

House mortgage loan [2] refers to a loan where the borrower uses the purchased house and other property with ownership as collateral or pledge, or a third party provides a guarantee for its loan and assumes joint liability. It is a triangular relationship connected by housing sale contracts, housing mortgage agreements, and housing mortgage loan contracts. The risks of home mortgage loans are as follows:

1.1 Default risk: Default risks include forced default and rational default. Forced default refers to the passive behavior of the borrower. The theory of payment capacity believes that the forced default is due to insufficient payment capacity. This shows that the borrower is willing to pay, but has no ability to pay. Rational default is the default of the borrower. Equity theory believes that in a perfect capital market, the borrower can make a decision on whether to default or not only by comparing the unique equity in the house with the size of the mortgage debt. When the real estate market price rises, the borrower can transfer the house to pay off the loan, recover the cost and earn a certain profit; when the real estate market price drops, the borrower in order to pass on the loss, even if he has the ability to repay, he actively refuses to default Repayment.

1.2 Liquidity risk: Liquidity risk refers to the risk that it is difficult to realize short-term deposits and long-term loans. Liquidity is an important principle for banks to ensure asset quality. At present, liquidity risk is reflected in two aspects. First, China's current housing loans mainly come from provident funds and savings deposits. The savings deposits absorbed by banks are short-term deposits, generally only three or five years, while housing mortgage loans are long-term loans. This short deposit and long loan behavior makes the bank's liquidity very low, which in turn brings liquidity risk. Second, asset claims held by banks are not easy to realise, which can easily lead to liquidity risks. As a result, banks may lose more favorable investment opportunities in financial markets and increase the cost of opportunity.

1.3 Business cycle risk: Business cycle risk refers to the risks that occur during the fluctuation of the overall level of the national economy. Compared with other industries, the real estate industry is more sensitive to the business cycle. When the economy expands, the income level of residents increases, the market demand for real estate increases, the realization of housing is not a problem, banks and individuals are full of optimistic expectations for the future, and the number of mortgage loans issued by banks has also increased sharply. When the economy was in recession, unemployment rose, residents' incomes fell sharply, and a large number of loans could not be repaid. Even if the houses were mortgaged to banks, they could not be realized due to the weakness of the real estate industry. At this time, the mortgage risk turned into bad debts and losses of the bank, and the bank was facing a large number of "bad and bad debts", which could easily lead to the bank's credit crisis and even bankruptcy.

1.4 Interest rate risk: Interest rate risk refers to the risk of changes in the level of interest rates to the value of bank assets. It is determined by the capital structure of its short-term deposits and long-term loans. Whether the fluctuation of interest rates rises or falls will bring to banks loss. If the interest rate rises, the interest rate of the home mortgage loan will increase as well, which may increase the pressure on the borrower to repay the loan. The higher the amount of the loan, the longer the term of the loan, and the greater the impact, which increases the risk of default. If the interest rate drops, the borrower may raise funds from the current capital market or re-borrow at a low interest rate to repay the loan in advance, which brings risks to the bank. The main manifestation is that the occurrence of early loans makes the cash flow of housing loans uncertain. It has brought certain difficulties to banks' intensive assets and liabilities.

1.The mortgage rate of commercial housing can reach 70%; 2.The mortgage rate of office buildings and shops can reach 60%; 3.The mortgage rate of industrial plants can reach 50%; 4.The longest term can reach 30 years; Mortgages include shops, office buildings, residences, villas, factories, warehouses, etc.

1. Borrower's valid ID card and household registration book; 2. Marital status certificate, unmarried person needs to provide a non-marital certificate, divorced person needs to issue a court civil mediation letter or divorce certificate (specify that he has not remarried after divorce); Requires valid identity card, household register and marriage certificate of the spouse; 4. Borrower's income certificate (local salary certificate or tax certificate for six consecutive months); 5. Property title certificate; 6. Guarantor (need to provide ID card) , Household register, settlement (un) marriage certificate, etc. 7. Proof of second residence (guarantees that the borrower will have a place to live once the auctioneer s house is auctioned) Note: 1. Mortgage is required to loan, and the loan amount and loan period The sum of interest cannot exceed 1/2 of the assessed value of the collateral; 2. There is a long-term stable source of income sufficient to pay the principal and interest of the monthly loan; 3. The guarantor; the loan needs to pay the lawyer's witness fee, mortgage registration fee, and insurance premium for the mortgaged property , Property evaluation fee, etc. It usually takes about 1 month to get a loan