When a financial institution X finances a housing execution project, in support of its investment, it establishes a mortgage. Thus, it supports the money that has been granted to the builder to make the corresponding construction.
Sign a mortgage letter of credit
Now, let’s assume you decide to buy such housing, but with a loan granted by the bank Y. The entity and can not establish a mortgage on the property, as there is one that favors the X entity. The way to resolve this conflict is for YOUR person and entity X to sign a mortgage letter of credit . This should be in favor of entity Y, which thus supports the money it grants you in the form of a mortgage loan.
Your bank has a first degree mortgage in favor
The mortgage letters of credit have their own modalities and uses, in this case the “Stand By” Letter of Credit guarantees that the apartment, the garage and the deposit are independent of that entity and can be registered with the Superintendence of Industry and Commerce, indicating that your bank has a first degree mortgage in favor.
What should I consider when applying for a mortgage letter of credit?
Cost: I left this data for last. I must explain something important: The cost of a Credit Card or Stand-by Letters of Credit can be between 3% and 5% of the value of the credit. Yes, he is tall, very tall. My recommendation is to evaluate if it is justified, doing the accounts well. If the rate offered by your bank is so favorable as to cover the value of the letter of credit, there is no discussion. It is a very good option. Otherwise, you could consider, in a few months, request a transfer of your mortgage credit and avoid the expense of a letter of credit.