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Borrowing using property as collateral

  • 06-03-2019 12:48am
    #1
    Princess Consuela Bananahammock
    Registered Users, Registered Users 2 Posts: 33,754 ✭✭✭✭


    Not sure if this is in the right forum, mods feel free to love if it's not!

    Basically, as the thread states, I'm thinking of taking out a small loan of about 5000 euro in order to pay off some upcoming debts (mostly building renovations) which at the moment I won't be able to pay for. My income, although steady, is not all that high and will probably not be enough to get me a loan on its own, but I do have my own apartment (completely paid for via inheritance, no mortgage) and I'm more than likely going to be selling it in the next three or four years. This is in Berlin (I'm not sure if this makes a difference or not).

    My main account is in Ireland (AIB) and although I have a German account, I hardly ever use it. Just direct debits to pay bills. I have a pretty clean credit history, having only borrowed small sums before and paid them back on time.

    So the simple question is: can i use the apartment as collateral for the loan? And what do I need to be wary of if I do?

    Thanks for any advice!

    P.

    Everything I don't like is either woke or fascist - possibly both - pick one.



Comments

  • #2
    drunkmonkey
    Registered Users, Registered Users 2 Posts: 28,694 ✭✭✭✭drunkmonkey


    You might not need colleteral they may just give you a loan.
    Can you pay these debts via credit card, if you could and played the 0% on balance transfers you could borrow for free.


  • #3
    Big Words
    Closed Accounts Posts: 67 ✭✭Big Words


    A lego apartment won’t suffice.


  • #4
    dotsman
    Registered Users, Registered Users 2 Posts: 3,636 ✭✭✭dotsman


    To be honest, I can't see AIB (or any bank) doing this.
    • AIB typically don't look for security on such small amounts (exception being Letter of Guarantee from parents etc for students/grads etc)
    • Property is very expensive security to offer (legal fees etc). Worth it when borrowing tens or hundreds of thousands, not worth it for five grand.
    • Banks typically don't look at foreign property (not familiar with market and different legal jurisdiction etc).

    Simple solution here is to apply on internet banking or app for personal loan. In most cases, the decision (and access to the funds) is immediate. In some cases, where it requires a human to review (borderline or insufficient data etc) it can take a few hours (during working hours).

    If you are declined there, you can go in and meet someone face-to-face, but likely to be similar decision. Other than that, you can try credit union.

    To be perfectly honest, if you are declined, it usually is for a good reason (for your sake! - they are declining you because they really do believe there is a significant chance you will have difficulty repaying!)


  • #5
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,606 Mod ✭✭✭✭Jim2007


    Princess Consuela Bananahammock wrote: »
    This is in Berlin (I'm not sure if this makes a difference or not).

    Yes it makes all the difference. The banks don't have the knowledge or the experience of the German market nor is it worth their time do do so.

    If all else fails you might be able to get your German bank to do a back to back loan with AIB. This means that the German bank would put a charge on your German property and provide a guaranteed to AIB so AIB could give you a loan. Of course the German any will not do this for free, expect to pay through the nose for it, but if it ends up being your only option...


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