What is the lender privilege and what are the collateral?
The privilege of lender of money (whose abbreviation often used is PPD or IPPD for registration in privilege of money lender) is a guarantee close to that of the mortgage. Again, in the event of non-repayment by the borrower, the bank will seize the property for resale .
The privilege of money lender is a guarantee which requires certain formalities which should not be overlooked
The funds collected will then allow him to reimburse the sums due. However, this warranty only covers old goods.
In fact, this guarantee cannot be used in the following cases: works, sales on plans or even the construction of a house.
The costs of the lender’s lien are lower than those of the mortgage. Indeed, the borrower is exempt from the land publicity tax.
This guarantee is also the subject of a notarial act whose registration for the preservation of mortgages must take place within two months of the sale of the property. The privilege of lender of money is a priority guarantee on all the other guarantees taken by the borrower.
What is the difference with a conventional mortgage?
The result of a mortgage or of the privilege of lender of money is identical: in the event of non-reimbursement, the bank seizes your property and resells it, in order to recover the sums due.
In the case of a mortgage guarantee, this is not immediately lifted once the total repayment of the credit has been made. It is still worth two years after the term of the loan. Beyond these two years, the mortgage is automatically lifted at no cost. On the other hand, if the property is sold before the term of the credit, the borrower will then have to pay so-called “mortgage release” costs.
These fees can be high, which is why it is highly recommended to include these fees in mortgage cost calculations from the start.
TO REMEMBER !
- The privilege lender of money is a real estate guarantee based on the same principle as on the mortgage
- This guarantee is the subject of a notarial act
- The privilege lender of money is cheaper to set up than the mortgage