Mortgage guarantees

Banks usually require a collateral for your entire loan amount. The home that you purchase will qualify as collateral up to 70-75% of its fair value. A guarantee is needed, when the required loan amount of exceeds the collateral value and the borrower does not have additional collateral or savings available to satisfy this need.

By utilising a guarantee, the home buyer can also draw a larger loan and leave any savings and investments untouched for a rainy day.

The mortgage guarantee is a financial guarantee, by which Garantia guarantees the repayment of your loan to the bank, up to the guaranteed amount. Through the guarantee, the bank gets the additional collateral it needs to secure the mortgage loan. The borrower gains the needed extra collateral required and does not have to seek third-party collateral from family or friends or accumulate a larger downpayment for qualifying for the loan.

If the borrower is unable to repay his or her loan to the bank, the bank will make a claim to Garantia based on the guarantee. After settling the bank’s claim, Garantia has, as a guarantor, the right to reclaim the paid amount from the original borrower.

Purchasing the mortgage guarantee is easy as it can be done as a part of your standard loan approval process in one of our partner banks. Just ask your bank for the possibility to apply Garantia’s guarantee as a supplementary collateral. The bank will then assess the suitability of the guarantee and will inform you of the terms and fee of the guarantee.

The guarantee fee depends on the purchase price of your home, your bank, and the required guarantee amount.

Example of guarantee pricing:

If the debt-free purchase price of your home is 200,000 €, your required loan amount is 180,000 €, and your guarantee need is 40,000 €, the one-time guarantee fee is approximately 1,800 €. Please ask our partner bank whether a mortgage guarantee is available for your loan, and the bank will then provide you with a detailed guarantee offer.

The guarantee is not limited to first-time homebuyers, it is also a good option for buyers seeking to buy their next home.

Yes, Garantia offers a version of the mortgage guarantee product that is applicable for investment properties. Please see further information on guarantees for investment property.

The mortgage guarantee is not limited to situations related to home purchase – you can use it to relieve third-party collaterals and guarantees from your existing loans.

No, the mortgage guarantee fee is paid up-front and is non-refundable in whole or partially, despite the guarantee becoming unnecessary later.

The guarantee in itself does not forbid longer loan maturities or interest-only periods, but these aspects should always be agreed upon with the bank.

There can be various reasons. Please consult your bank on this.