Often, we leave dreams and projects aside for lack of money. In other cases, there are so many debts that we don’t even have time to plan for the future. Know that financing a property or requesting the portability of financing can cause doubts for most people due to the fees and interest charged by banking institutions.

You may also have no idea how to make the choice among so many offers in the financial market, in the face of so many calculations and promises of benefits. But calm down! Real estate refinancing can be a solution to these problems and still open up new investment opportunities.

In this article, we will explain what real estate refinancing is and talk about the requirements and how to apply for it. Curious? Then read on!

What is property refinancing and how to do it?

In general, property refinancing is a type of loan in which a property is used as collateral. Another way of designating it is with the name of home equity. The granting of credit depends on the fiduciary sale, which is carried out as a requirement for signing the contract.

The property is transferred to the creditor until the debtor settles the debt. To obtain the loan, the client needs to go to a bank or financial institution specializing in real estate financing. Thus, when offering your assets as collateral, it is possible to obtain refinancing of up to 82% of the value of the property with very advantageous interest.

How does secured credit work?

We will understand better how this loan modality works. Although not as popular as the personal loan method, secured credit is attractive because the interest rate is one of the lowest in the market.

In addition, the ease of approval and the extension of payment terms also make the modality more advantageous. The amount available for loan is also usually higher, with a minimum value of around 20 thousand reais.

As refinancing requires property as collateral, the modality requires the consumer to have private property in his name, with proof to be presented to the bank or financial institution. In addition to being properly paid off, the property used as collateral cannot have any legal pending.

During the process, the housing can be used normally, according to the interest of the owner. However, he is not allowed to sell or transfer the property to third parties. In more practical terms, it is as if the bank or institution had indirect ownership of the asset throughout the loan agreement.

Immediately after paying off the debt, the property used as collateral is no longer sold by the institution, with the owner taking back full ownership of the equity. However, if the contracted debt is not paid off in a timely manner by the borrower, the consumer may end up losing the asset to the bank, as a way of settling the unpaid payment.

Is a home equity loan reliable?

When private property is used as a loan guarantee, it is natural that the consumer is afraid of the transaction. In fact, as interest rates are much lower compared to conventional loans, it is very likely that some institutions will not even mention the existence of this type of loan – since it is more profitable for the consumer and less profitable for the financial one.

Using a property as collateral, the consumer will have his credit approved quickly and safely, being this an ideal modality for those who need a large amount of money at low-interest rates and with long-term payment.

To give you an idea of ​​how advantageous this modality is, know that the interest rates on the secured loan vary between 1% and 2% per month, while the interest on conventional credit can reach monthly rates of up to 27%. Huge difference, isn’t it?

When is refinancing real estate interesting?

When refinancing, you need to do an analysis of interest rates, the number of installments, linked insurance and other possible charges. Although there are numerous offers to consumers, realize the ideal time to apply for credit. Several scenarios are favorable to the use of real estate refinancing. Therefore, we detail some below!

property refinancing

Debt settlement

There are times when citizens need to buy time to restructure their financial lives. In such cases, to have access to a large volume of money, it is worth refinancing your property. If this is the case, calculate what the impact of your debts is at the moment, making sure that there are no simpler alternatives to repay them.

Raising funds for reforms

Renovating a house can be as difficult as building a new one. Material and labor costs can discourage the owner. However, a troubled home loses even more market value, diminishing its expression as a financial investment.

One way to reverse this situation and preserve your assets is to refinance the property. With capital, the resident can renovate the house quickly, without dealing with the stress of seeing the work stopped due to lack of money. In addition, after renovation, the property can be sold or rented, after all, it recovers the market value, becoming an asset capable of offering profit to the investor.

Creation of a financial reserve for emergencies

There are situations that take everyone by surprise. Accidents, illness, unemployment, etc. As bad as it is to think about these matters, even more, unpleasant is not being prepared to deal with unforeseen circumstances.

Personal finance experts suggest that a person should have an emergency reserve capable of providing it for a minimum of six months. This value should be used only for that purpose.

However, collecting money is not an easy task. So, if there is a situation that frightens you, reflect on the possibility of raising funds with a property refinancing.

Investment in a second property

The real estate market remains a good way to invest your money. However, it does require high applications. In order not to lose the chance to increase your equity, the tip is to raise funds with a property refinancing. The new asset can be rented in order to repay the loan. After the discharge, the amount obtained from the sale or rent will be the owner’s profit.

Capital to undertake in a new business

Entrepreneurship is not a simple task. One of the biggest difficulties that entrepreneurs encounter is getting capital to get their ideas off the ground. One way to get enough resources to start investing in your own business is to refinance your property. After all, the property belongs to the investor and can help you realize the dream of being an entrepreneur.

Travel money withdrawal

Have you always wanted to make an unforgettable trip, but the price of packages is discouraging? Property refinancing can also be used to achieve this goal. After all, it’s about taking another chance to get credit to make your dreams come true.

What conditions is the property refinancing subject to?

Property refinancing is not granted to anyone without distinction. It is a loan, which is why the financial institution analyzes each request to see whether or not it can grant the requested amounts, regardless of the offer of a property as collateral.

Some conditions are required for real estate refinancing. Are they:

  • the property must be in the name of the borrower;
  • the property must be regularized in an urban area – with all the correct documentation;
  • the customer cannot have restrictions at Serasa / SPC;
  • the income must be compatible with the requested amount;
  • the loan usually has a limit of up to 60% of the property’s valuation.

It is worth mentioning that, even if the client has other debts – such as real estate financing  – he can still request a property refinancing. A simulation may be required before making the loan, either directly at the institution or on the website itself. This facilitates decision-making since the user is able to be aware of and plan ahead.

What steps are part of the process?

Before going to the financial institution, ask for the updated registration of the property in the Real Estate Registry, as it will undergo an evaluation carried out by an agency employee. If your property is eligible for real estate refinancing and you have already decided on this modality, be aware that this process consists of four main steps. See what they are next.

man's right hand calculating investments in the property

Credit analysis

In the first moment, doubts about the financing are removed by consulting the financial institution’s system. The person interested in refinancing provides the necessary information and presents the documents for analysis. The agents observe the income and aspects of the property to see if they fit the institution’s rules.

Legal analysis

Then, a detailed legal analysis is carried out to confirm that the documentation meets the legal requirements. The purpose of this assessment is to ensure that both parties will be preserved from future problems with the Judiciary.

Property analysis

Then, the financial agents request an evaluation of the property with the scheduling of an inspection. An accredited engineer accompanies the interested party to make sure that the informed value of the property is in accordance with the market on the application date. The specialized professional makes a detailed assessment of the situation of the asset and records it in the report.

Issuance and signature of the contract

If everything is in accordance with the requirements of the financial institution, the refinancing proposal is approved, with the issuance of the contractual instrument. A date is scheduled for the signing and registration of the contract with the Property Registry of the region.

After the completion of these steps, one copy of the contract remains with the financial institution, which releases the requested amount by depositing it in the borrower’s current account. These phases are simple. It is enough that the owner has the property documentation in hand and that the property is in good condition.

What are the requirements for property refinancing?

We will now detail each step of the property refinancing process. As we have seen, first of all, the individual must be the direct owner of the property in question. This means that it is not enough to have the property deed in hand, but it is necessary to present the housing registration number. Without this document, there is no way to prove possession.

In addition, we reinforce that the property needs to be up to date with all documentation. The borrower still needs to prove that he has enough income to meet the debt. For such proof, it is required that the loan installments do not commit more than 1/3 of the monthly income.

According to experts, this point is necessary so that the consumer does not become indebted or lose in quality of life during the contractual term. In practical terms, consider that for a monthly income of R $ 9 thousand, the loan installment cannot exceed R $ 3 thousand per month.

Among so many caveats, the good news is that even those who are negative can refinance their property. However, in such cases, it is common for financial institutions to raise interest rates as a way of backing up the risk of default. Therefore, it is necessary to pay extra attention to make sure that the interest rates of the installments really fit in your pocket.

What documents are needed?

The financial institution is responsible for asking the consumer for all the necessary documents to enter the refinancing process. The ideal is to talk in detail with the institution, as the documentation may vary depending on the case. As a rule, these are the documents requested by most banks:

  • RG;
  • CPF;
  • proof of income;
  • proof of address;
  • updated property registration.

In what situations is refinancing not the best way out?

Although refinancing is a great possibility in many scenarios, there are some cases where it is not recommended. Among the situations, we can mention people with financial uncontrollability, uncertainty for the settlement of the installments (such as temporary employment, for example), among others.

Keep in mind that default can result in the loss of the property. Therefore,  financial planning  is essential to avoid risks. As we have seen, property refinancing is yet another alternative for obtaining credits and, like any other, must be analyzed in a responsible manner.

Therefore, avoid making financial decisions at times when you are under the influence of strong emotions. This must be a practical choice. Likewise, do not be prejudiced against property refinancing, as this path can help you get peace of mind with your finances. Planning and balance are always the best ways in this case.

How to apply for property refinancing?

If you have already decided on property refinancing, you are certainly wondering what is the step by step of the process. Therefore, below, we detail how to make the request in practice, indicating what is the responsibility of the borrower (client) and what is the responsibility of the financial institution.

Start of the process

  • Client: contacts a trusted financial institution.
  • Financial institution: identifies which banks have the most appropriate interest rate for the requested credit, forwarding personalized bank proposals to the client.

Bank choice

  • Client: analyzes the proposals of each bank and chooses the one that best fits their profile.
  • Financial institution: passes on to the client the particularities of the bank in question, requesting the list of documents necessary to enter into the refinancing.

Credit analysis

  • Client: awaits the bank’s opinion while the bank does the credit analysis.
  • Financial institution: analyzes the client’s documentation to prove their financial situation and then release the loan.

Legal analysis

  • Client: begins to prepare the documentation of the property that will be used as a guarantee.
  • Financial institution: requests documentation of the property and forwards it to the legal department of the company.

Property analysis

  • Client: prepares for the inspection of the property.
  • Financial institution: schedule the inspection of the property by attesting that the property documentation is regularized.

Issuance of the contract

  • Client: carefully reads each contractual clause before closing.
  • Financial institution: after the inspection, the institution schedules the date of signature of the contract.

Registry and credit release

  • Client: takes the signed contract to the notary to dispose of the asset.
  • Financial institution: with the contract duly registered, the capital release process begins.

How to choose the best refinancing option?

The best property refinancing option can be found with the observation of some characteristics that the financial institution must present. The first of them is the market solidity, that is, she must be a specialist in real estate financing and have been in the market for at least 10 years performing refinancing to be reliable.

Another relevant aspect is the partnership with large banks. This proves the credibility of the financial company, which, in conjunction with a recognized banking institution, offers more security to its customers. But do not forget to check if the values ​​practiced are compatible with the reality of the market and with your economic conditions.

Anyway, now you know everything about property refinancing and are better prepared to join this type of loan. During the text, you were able to verify how the credit application works and how to carry it out in practice, without giving up the security and agility of the process.

Are you interested? So,  contact Sky Marketing and find out if this loan modality is ideal for your profile!