An alternative for those who need to get money a little quickly is to go to a mortgage bank. The big advantage of borrowing from a mortgage bank is that it is the question of a secure loan.
First, you must have something of value that you can offer the mortgage bank as collateral. This gadget that can be anything from jewelry, a painting or anything else of value will be the security of the loan. What makes it risky to borrow from a mortgage bank is that if you do not redeem the item, the mortgage bank will take this item as payment for the loan. Of course, it may not be the best from an economic perspective, but it is also totally risk-free.
A regular loan from a mortgage bank usually extends over four months.
This means that you who borrow something has this time on you to redeem your pledged items. If you redeem the item within this time, you will have to pay a certain amount that will generate profit and cover the costs of the mortgage bank. It is also often possible to extend the term for a small fee.
If you do not redeem the item, the mortgage bank has the right to sell it. Should the pledge go on sale at an auction, any surplus should be returned to you as the lender. If there is a deficit at the auction, you as a borrower are in no way liable for this.
Advantages and Disadvantages of Mortgage Bank Loans
If you look at the advantages and disadvantages of borrowing from a mortgage bank, the big advantages are that it is safe and easy to borrow. Surely, as we have explained, there is no risk that you will be liable for anything extra. You only risk the item you have left as a mortgage. It is easy to borrow as there is no greater risk for the mortgage bank, even when they have a security. This means that virtually anyone can borrow money from a mortgage bank only if they have something of value that can be offered as a mortgage. For example, payment remarks are no obstacle.
The disadvantage of a loan from a mortgage bank is that the interest rate is quite high. It is often around 3% per month, which is almost 43% per year. Furthermore, you must also have something of value that can be offered as collateral for the loan. There is also a risk that this item is valued low, as the mortgage bank does not want to take an excessive risk. If it goes to auction then there is also nothing that says that you get the real value of the item.
Overall, a loan from a mortgage bank is an interesting alternative for those who want to borrow a smaller amount of money. After all, the biggest advantage is that it is completely risk-free, something that can not be said about, for example, micro loans or private loans where you can get into financial trouble if you do not repay. Then you have to consider the cost.