Until recent years, credit institutions were often not given quantities beyond 80% of the appraised value of housing that he wanted to buy. But the rising price of housing has been more and more people need more of that 80%.

Moreover, household savings has declined, so that few people will have in their coffers with the remaining 20%. To which will be added expenses and taxes.

Although by definition have a mortgage as collateral the property acquired with it, banks do not want to stay in the homes of those unable to pay if they can avoid. Your profit is in charge interest as long as possible. By law, mortgages of up to 80% of appraised value will not be affected by other security than the same property.
When asked for a loan worth more than 80% of the appraised value of housing

But the circumstances previously mentioned, many people are forced to order more than 80% of the appraised value to meet the payment of housing and the costs associated with their purchase as well as furniture, appliances, etc..

In these cases, institutions ask for a guarantor to respond with their property (collateral) if the owner has not replied to credit payments. This is supposed to involve family or friends in an embarrassing situation for both. Also someone buying a second home may be required to attest that the first new acquisition.

But there are people who have no previous possessions and have no relatives or trusted people in the country that serve as guarantors, even in situations of economic solvency. This makes a lot of people could not access the purchase of a home and what banks also lost important business niche.
Unsecured mortgages over 80% of the appraised value to acquire housing

Thus, organizations can give no guarantee mortgages even if more than 80% of the appraised value of the house to buy. In fact, tend to arrive even at 120% of that value.

In return, organizations require the customer to take out insurance to cover the unpaid dues. Thus, monthly payments will consist of three added: principal, interest and insurance. This may adversely affect our future solvency level, because in exchange for not presenting guarantors will face a significant increase of quotas for the amount of insurance. Therefore the repayment terms are broad, up to 40 years, which makes payments more affordable and offset by rising insurance costs. And also this extension in time makes the operation profitable for the institution.

But there is often no guarantee mortgages as specific products widespread in all entities. Rather, individual cases are studied and their characteristics. Because even with insurance and property as collateral, banks grant loans only if they believe that his client maintains a certain level of solvency.

For example, as a rule, do not grant mortgages whose rates exceed 30% resulting from customer’s monthly income. And taking into account other loans that may be paying (car, cards, etc.).. Furthermore, it may impose certain conditions, including that the client has official or permanent contract in a medium or large, etc. If the conditions itself to mortgages tend to be stricter in the case of mortgages are usually unsecured him even more.

In any case, the usual practice of banks is to apply (rather require) a guarantor for transactions over 80% of the appraised value, rather than establish a mortgage without a guarantor but assured.