WHY BANKS REQUEST FUNDS FOR A MORTGAGE

How banks insure mortgage loan operations.

When applying for a mortgage, banks request a provision of funds.

It is important for users to know why banks request such funds.

WHAT FUNDS MEAN

When applying for a mortgage loan, you must take into account that this banking operation will generate expenses and commissions.

The funds assures the bank that there will be sufficient funds to meet all these expenses and commissions associated with the granting of a mortgage.

WHAT IT COVERS

There are expenses and costs inherent to a mortgage that the bank wants to ensure so that said mortgage is legally executed and registered.

It is also important for the user to have confidence that they will be able to face these added expenses when purchasing a property with a mortgage.

Some of the expenses covered by funds are:

  • Property appraisal..
  • Opening fees and others included in the mortgage loan.
  • Notary fees.
  • Documented Legal Acts Tax.
  • Property Registry Expenses.
  • Tax adviser fees.

CALCULATING THE AMOUNT

There is no fixed amount, it will depend on variables such as the bank that grants the mortgage and the type of mortgage loan.

As a general rule, what is done is an estimation between 3% and 5% of the price of the property on which the loan is granted.

This amount is blocked or withheld by the bank until the expenses are fully paid. It is exclusively for the payment of the expenses inherent to the mortgage loan.

Once all expenses have been paid, the bank will release any excess amount that may have been left.