If you are required to provide additional collateral for your mortgage loan, using Garantia’s guarantee may help you in achieving a quicker loan approval from your bank, as in this case the bank does not have to go through the tedious assessment and valuation process of an additional security, such as one given by your parents, for example. You can ask about the availability of Garantia’s guarantee at one of our partnership banks.
Garantia’s partnership banks and further information on the mortgage guarantee: Asuntolainatakaus.fi
Gaining a loan approval can take up to weeks
After a house viewing, the home of your dreams might be just an offer away, but gaining a loan approval from the bank can take weeks due to the need for additional collateral. What if your dream home slips away during this time? What if there was a way to get approved for a loan faster?
Sometimes, gaining a loan approval becomes a bottleneck, and especially real estate agents sometimes challenge banks to respond to customers’ needs more quickly.
The phenomenon is driven by the fluctuating demand for mortgage loans. When the housing market picks up, the number of loan applications can be so high that loan processing times are inevitably extended.
Another factor contributing to longer processing times is the increased regulation of banks, which forces banks to conduct thorough collateral assessments. If the additional collateral for your loan is, for example, your parents’ house, the bank needs an assessment and valuation of the parents’ house as well, which takes time. This naturally slows down your loan approval.
Garantia simplifies and speeds up loan negotiations
From the perspective of someone planning to buy a home, a few weeks of waiting can feel like a long time, especially if the home of your dreams has already been found and you are anxious about whether the house will be sold before the time you are ready to make your offer.
With Garantia’s mortgage guarantee, you can buy a home without needing your parents’ house as additional collateral. In practice, many time-consuming steps are avoided at the bank, as there is no need to investigate the location, value, and renovation needs of the additional collateral house, nor whether the house is pledged for another loan. In some cases, the house is still collateral in another bank, which adds to the time required for the investigation.
Often, from the parents’ perspective, it is also easier for the children to use an external guarantor, such as Garantia, when buying a home. This way, parents can more easily make changes to their own living arrangements if they wish, as their home does not need to be tied to their children’s loans.
Ville Korte
SVP, Mortgage Guarantees
The author works as Senior Vice President for mortgage guarantees at Garantia and has over 20 years of experience in mortgage lending at Garantia and in the banking sector.