The bank agrees to finance the purchase of your property. This is a good start! There is however a counterpart... It requires a guarantee called conventional mortgage. Stéphanie Swiklinski, notary graduate, gives us some explanations.
What is a conventional mortgage?
A conventional mortgage is a guarantee that is most often requested by your bank in exchange for financing the purchase of a house or an apartment, for example.
In law, it is a "real security" that can only be taken on real estate. You are of course the owner of your house but it is encumbered by a mortgage. This constitution of a mortgage can only be done by notarial act. You will therefore have to go to your notary.
In practice, on the day you sign your deed of purchase, you will also regularize the loan deed by your bank and the taking of the conventional mortgage. Article 2416 of the Civil Code states that "the conventional mortgage can only be granted by notarial act". It is a solemn act that must be done in the required form because it commits the debtor's assets. Very often, in the context of a real estate loan, it is the person's main residence that is given as security. By drafting this act, your notary ensures the validity and legal security of the mortgage. He thus protects your interests.
What are the effects of this mortgage ?
In order for the mortgage to be effective, it must be advertised at the land registry office by the notary who received the deed. This legal obligation ensures that the mortgage is enforceable against third parties. An unpublished mortgage is therefore without effect. When a bank takes a conventional mortgage on your property as a guarantee , this means that in case of non-payment of the loan instalments, the bank will have recourse against you. Your property can then be seized. The bank can also have it sold at auction and be paid from the sale price. The number one advantage for your banker is that with this guarantee, he can be paid in priority (it is the right of preference) on the sale price of the property compared to your other possible creditors.
What happens if I sell my house and it is encumbered by a mortgage?
In general, the mortgage taken will be for the same duration as the loan granted by the bank. It automatically ends one year after the end of the loan (fully repaid), without any formality or cost. On the other hand, in case of early repayment of the loan, repurchase of the loan or sale of the property (while the loan is still in progress), it will be necessary to obtain the " release" of the mortgage. In order to lift this registration, you will have to ask for your bank's agreement and then make the request to the land registry service, by drawing up a deed with your notary.This deed will obviously incur costs: notary's fees, land registration tax, real estate security contribution and drafting and formalities costs.
Stéphanie Swiklinski