Mortgage insurance to go to more than 80% valuation
This insurance, offered by insurers such as Good Finance, is a product whose beneficiary is the Bank, but is actually paid by the mortgage client, which guarantees up to 20% of appraisal to the Bank in case of default.
It is insurance that many times the client does not just understand (or is not explained correctly). It becomes a substitute for the figure of the guarantor with ownership.
Some financial institutions
For example Bancaja, approve 100% mortgages without the need for this insurance, simply with the endorsement of the parents (if they have a property free of charges or with a small mortgage).
Others, many more, require a second guarantee for the excess of 80% (that is, if a mortgage of € 200,000 is requested and the appraisal comes out for € 200,000, € 160,000 of the house that is purchased is mortgaged and € 40,000 is mortgaged from the house of the guarantors). In this second case, the requirement of the Bank is greater, since it guarantees the payment of the mortgage through two buildings with a real guarantee, which is the mortgage.
Guarantors has been appraisal insurance
A third option that many entities have used to replace the absence of guarantors has been appraisal insurance (not to be confused with home or life insurance). This insurance, which the customer pays (and ranges between about € 1,000 and € 6,000 depending on the percentage of appraisal needed), assures the financial entity that, in case things go wrong and the customer does not pay, they will charge of the insurance 20% of the appraisal (and it is assumed that the rest will be charged by executing the mortgage).
It is a mechanism, in my opinion, very interesting for clients who either do not want to mix their parents in the mortgage or cannot (because the parents have other children or do not want to, for example). The cost overrun is significant, but it allows you to buy who in other circumstances could not (for not having enough money saved).
When having to insure the mortgage
This operation goes through a second filter: That of the Insurance Entity. It can happen (and in fact happens) that the Bank approves the mortgage, appraised and leaves an appraisal to 97%, and when the documents of the client are sent to the insurer, this one denies the insurance. The client, whom the Bank assured that he financed 100% without guarantors, is faced with a problem that he will hardly understand: That an approved mortgage falls because of the criteria of an Insurer that he does not even know.