Mortgage is a form of credit guaranteed in the form of property assets such as land or houses. Usually, mortgage loans are widely used as a solution to owning a house with easy installments. Then, what is a mortgage? And what are the types, schemes to examples of mortgages? Check out the full review below
What is a Mortgage?
Mortgage is a solution for those of you who need large amounts of money quickly. For example, if you wanted to buy a house where it’s impossible to pay off in cash, you’d go to a bank or other financial institution to have them issue you a mortgage, or secured loan. In this way, of course, after going through various terms and procedures, you can buy your dream home right away.
In the definition of the OJK (Financial Services Authority), a mortgage is a “debt instrument by granting a mortgage on the property and the borrower to the lender as collateral for their obligations,”.
In terms of housing matters, a mortgage or mortgage is a system that allows a prospective buyer to give his house to a bank or other lender as collateral.
That way, the lender can claim the house if the borrower is unable to continue his mortgage payments.
Basic Mortgage Law
In the Civil Code (KUHPerdata) Article 1162 it is stated that a mortgage is “a material right to immovable property which is used as collateral in the settlement of an agreement”.
Then, Article 1171 states that a mortgage is something that can only be held if there is an authentic deed, except in a number of cases which are expressly designated by law.
That is, both the creditor and the debtor have stated an agreement to bind themselves to each other in an agreement drawn up in a notarial deed.
Referring to that article, the mortgage agreement is an official deed prepared by the Land Deed Making Officer (PPAT). The following parties can become PPAT:
- Notary appointed by the Minister of Home Affairs (Mendagri)
- Not a notary but has been appointed by the Minister of Home Affairs
- Sub-district heads who are ex-officio appointed as PPAT
Referring to article 1178 of the Civil Code, mortgage execution is when the principal debt is not repaid as it should, or the interest owed is not paid, the mortgage rights holder has the right to sell the collateral assets at a public auction.
Mortgage Types
You as a debtor can choose several types of mortgages. Among them are conventional fixed rate mortgages (most common), adjusting rate mortgages, and balloon mortgages. Prospective home buyers should know which option is most suitable for them. Here are their respective reviews:
1. Fixed rate mortgage
Interest rates are usually agreed at the time of closing the purchase and are available in tenors of up to 30 years. With longer loans, monthly installments are more affordable.
2. An adjusted-rate mortgage (ARM)
This type defines that the mortgage is the interest rate paid which can be increased or decreased periodically when there is a change in interest rates.
3. A balloon mortgage
Usually the first payout is lower until it eventually grows into an expanding balloon. Usually intended for buyers with higher income towards the end of the loan period.
Mortgage Schemes
In buying property in Indonesia, mortgage is a term that has long been eroded by the term mortgage or mortgage. Even though at first, mortgages or mortgages were a system used in a residential financing program called KPR launched by BTN.
The aim of the program is to help finance the purchase of housing for the people of this country. In this case, BTN is a pioneer that has succeeded in making the mortgage system more widely known.
Then, until now the success of BTN has been followed by various other banks. The existence of this facility is very helpful for customers in buying property with collateral, which is a house certificate that is paid through the mortgage. The mortgage on the property is also inseparable from the interest and principal debt that must be paid by the borrower.
Mortgage Example
Examples of mortgages or mortgages are as follows:
Marli and Mita have finally found their dream home after months of searching. The price cannot be redeemed if they buy it in cash, which is IDR 800 million.
The two then applied for a mortgage loan at a bank. Then, after the bank has completed all the necessary procedures, a loan is offered.
Marli and Mita agreed to submit a down payment of IDR 200 million, which is 20% of the house price as a percentage. The loan issued by the bank to cover the remaining 80% is IDR 600 million. The couple would repay the loan at interest every month for the next 20 years.
Advantages of the Mortgage System
The advantage of the mortgage system is that it makes it easier for you to own a home. Because, with this system, payments can be more affordable. There are stages that must be followed, the first is a down payment followed by monthly installments.
In addition, another advantage of a mortgage is that the occupancy that is guaranteed can still be occupied. So you can say that you are like renting your own house that you will fully own after the credit agreement is successfully completed. With the potential tax benefits, your tax returns can be lighter.
There is also flexibility to transfer credit in conditions of transferring occupancy to other parties. This is of course with the provisions of the bank where you apply for a mortgage.
Disadvantages of the Mortgage System
Disadvantages of mortgages are the inconvenience of dealing with interest rates. This is because the interest rate will obviously be higher if the repayment period is long.
Mortgage loans are a system that also has the risk of losing assets if repayments fail to materialize. In addition, the value of the loan is fixed. That is, even if the decline in house prices will not have an impact on loan adjustments.
The requirements for becoming a participant in a mortgage loan are also considered difficult because it requires a track record of credit scores, certain income figures, and other checks before the loan proposal is approved.
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In the midst of increasingly expensive property prices, mortgage loans are a solution for people who want to own housing. However, make sure the mortgage you choose has guaranteed security. Prospekku has worked with various banks so that it has proven safe in providing property loans with financing features.
