What is Stratum Title and Is It Acceptable Security?
Lenders expect home loan applicants to provide a 20% down payment. The down payment ensures the applicant places their own funds in the pot. They’re less likely to walk away from the home if things get tough. Financially adept individuals request loans, too, but they bring other forms of collateral to the home loan application table.
Some individuals offer property titles as security against a home loan. The stratum title is one that lenders will consider as collateral. While it may be accepted as security, a lender may offer up to 85% of the property’s value, not 100%.
The stratum property is owned by one individual, preferably the one applying for the loan. However, the common areas associated with the stratum property pose a conundrum. The owners of the properties that share common spaces form a company. When it comes to decisions for those spaces, everything is put to a vote. Voting on maintenance, insurance, and expenses becomes tedious from the lender’s perspective.
A lender holds the title in case the applicant cannot fulfill their financial responsibility. The lender isn’t in the business of becoming a voting member of the properties they hold.
Stratum Title and Home Loan Security Conclusion
Mortgage House accepts several types of property titles as security for a home loan. The stratum title gets tricky because many members make decisions for the common areas of the property. Our loan specialists are available to speak with individuals seeking a mortgage and other loans, such as a car loan. If the stratum property doesn’t work out security, we offer alternative solutions.