RNC Health Blog|

Banks are offered real estate’s as security or collateral security to cover a partly secured or unsecured advance. The banks should take some precautions while accepting real estate’s as security. A prudent banker always scrutinizes the financial soundness of the borrower and the viability of his business enterprise for which a loan is to be advanced. He should be satisfied about the capacity and competence of the borrower to return the borrowed money from his own resources. The banker should refer to the documents of title to property of his lawyer, to ascertain whether the mortgager possesses absolute and undisputed title to the property and also the right to pret immobilier it.

It is also essential for the banker to ascertain whether the property, offered as security, is encumbered and without having any previous charge in favour of any other party. Valuation of property must be undertaken by the banker very carefully. The value of real estate also depends on ownership right whether freehold or leasehold. The market value is ascertained by capitalising the rental value of the property at a reasonable rate of interest and further simulation pret can cut down interest rates. The mortgaged property must be insured.