The non-debtor mortgagee

Understanding the Non-Debtor Mortgagee: A Safe Way to Guarantee Debts

Ever heard of the non-debtor mortgagee? It’s a clever concept that lets someone guarantee a loan without risking all their assets.

Here’s how it works: Let’s say you want to help a friend or family member get a loan, but you don’t want to be on the hook for the whole amount. That’s where the non-debtor mortgagee comes in. You offer up part of your property as collateral for their loan, but you’re not responsible for paying it back.

So, if the borrower can’t pay, the lender can only go after the property you put up as collateral. They can’t touch your other assets. This makes it much safer for you than being a guarantor, where you could be on the hook for the whole debt. That is, you would be liable with all your present and future assets, placing you in a position similar to that of the original debtor.

As non-Debtor Mortgagee, we are obligated to retain ownership of the property. Specifically, we must ensure that it is insured, with the financial institution as the beneficiary of the insurance policy.

A crucial distinction is that the status of a guarantor can be inherited, so we could find that, when receiving an inheritance, we also receive the obligation to face a debt, if the debtor does not respond to it.

For example, let’s say your son needs a loan for a house, but he can’t get approved for the full amount. You offer to use part of your property as collateral. If he stops paying, the bank can only go after that portion of your property, not your other assets.

This makes the non-debtor mortgagee a smart choice for anyone looking to help out without risking everything they own. It’s a win-win for everyone involved.

Should you have any inquiries regarding the content of this article, or any other questions relating to mortgages in Spain, please do not hesitate to reach out to us for further information.

Patricia Nadal:
The non-debtor mortgagee