Risks can occur in your life, preventing you from paying your monthly payments. If insurance can protect the borrower and his heirs in case of death or illness, the mandatory guarantees such as the bond or the mortgage reassure the bank.
What is the deposit?
A third party agrees with your bank to pay your monthly payments if you can not do it anymore. There is the bonding company, the specific bond for officials or the bond of an individual. Surety fees (contribution to a guarantee fund and commission) vary according to the amount borrowed.
What is the mortgage?
When you can no longer honor your monthly payments, the bank seizes the housing it financed to resell it judicial auction. It recovers the capital lent. You have the choice between two forms of mortgage: the lien of the lender of money (PPD), for the purchase of old housing only, or the conventional mortgage.
Deposit, mortgage: what about in practice?
Themortgage has a high cost because you have to pay notary fees, indexed to the total cost of the loan. To this must be added the registration of the mortgage, the stamps, the land registration tax, as well as the salary of the conservator of the mortgages. PPD is less expensive than conventional mortgages.
When your loan is repaid, you must pay release fees. This is also the case if you resell your home before the end of the loan: if necessary, the mortgage is still in effect after a change of ownership.
The deposit is less expensive than the mortgage, because you do not have notary fees nor release. The deposit has a more flexible operation than the mortgage. It is possible to recover some of the deposit you paid at the end of the loan.
The surety company may refuse to guarantee your loan if your profile is too risky. That's why the bond offers more security to banks and is used more than the mortgage. On the other hand, the guarantee of an individual does not offer sufficient guarantees, it is therefore very little used.