Mortgage rights and mortgage registration

Mortgage rights and mortgage registration

When entering into a mortgage, you give the lender the right of mortgage on your home. This is a security for the lender. More specifically, this means that if you don’t pay the interest rate or the repayment, the lender can sell the property. The sales amount can then be used to collect the claims against you as a debtor. The lender has this power up to the agreed principle sum in the mortgage contract.

What is an (increased) mortgage registration?

The aim of an increased mortgage registration is usually to save on future legal costs. An increased mortgage registration means that the mortgage amount specified in the mortgage contract is higher than the amount that is currently being borrowed.

The benefit of an increased mortgage registration is that the loan with the same lender may be increased up to the sum set out in the mortgage contract, without a new mortgage contract having to be signed.

An example to clarify:

If you have a (principal) mortgage of €250,000, whereas only €200,000 has actually been borrowed, an amount of up to €50,000 can be borrowed from the same lender without having to sign an additional mortgage contract. For example, for the renovation of improvement of your home. The notary and registry fees can be avoided.

At the same time, however, this additional loan requires a new quotation process with the lender, including the related costs (consultancy fees, appraisal fees, etc.). This is similar to the original mortgage application.

In theory, this also means that the lender can incur the loan plus related costs up to the registered amount, were you not to pay or neglect the house. Think of collection costs, and so on. Of course, a lender can never incur more costs than those actually made.

What to look for in a mortgage quotation?

  1. Mortgage interest rates
  2. Quotation validity and renewal fees
  3. Mortgage rights and mortgage registration
  4. The pledge deed