Who takes part when a mortgage agreement is signed?

People who sign when buying a home and the price of the home

That special day has finally come — the day your sign your mortgage agreement: you are actually going to buy your own home.

Usually, the mortgage agreement is signed on the same day as the deed of sale of the property, in the notary's office. All the people who are going to transfer or acquire a right are going to be there at the same time; in other words: the sellers and buyers for the deed of sale; and for mortgages, and the borrowers, lenders and guarantors (or guarantors).

Although they are signed on the same day, however, the mortgage agreement and the deed of sale are quite different. And that is why they are read separately. The notary, the borrowers, the lenders, the agency (even if they don't have to sign), and the possible guarantor will all be there when the mortgage agreement is read and signed. And the notary, the seller and buyer, and real estate agent (who will not sign either) will be there to sign the deed of sale.

In more detail: who takes part when a mortgage agreement is signed?

First of all, we, as the owners of the property and borrowers (in other words, the persons who have to repay the mortgage loan). Under prevailing laws, the property mortgaged must belong to whoever is taking the mortgage.

Marital status, the marital property arrangement, age or legal capacity; if it is a primary residence — are other considerations in signing this agreement. Sometimes, spouses or other persons who have to give consent, even if they are not going to be owners, may also need to be present.

If any of these parties is unable to be there, they will have to send a representative with a power of attorney, and, invariably, with a valid identity document.

Second, the lender or creditor, which grants the mortgage loan and which we have to pay the monthly instalments. It will usually be the bank, savings’ bank or financial institution that has carried out the loan feasibility study. Although it is not an owner of the property, it may apply to become one if we fall behind in our repayments.

There is also sometimes a guarantor. The guarantor will have to cover the mortgage payments if the borrower falls behind. Banks are becoming more and more demanding when it comes to granting a mortgage, so it is quite helpful to have the extra guarantee which the guarantor gives.

We have the notary, a public officer who attests to the constitution of the mortgage (which, in fact, has the status of a public deed). The borrower is entitled to choose the notary, and will have to inform the bank of its choice. The notary not only has to witness the constitution of the mortgage at the time of signing, but also advise the signatories, who may ask for further information about any of the clauses in the agreement: general and special conditions, liabilities, obligations, etc.

Next we have the registrar. This is another public official that registers the mortgage agreement in the Property registry.

The agency also takes part in the process; although it might not sign, it will do a lot of paperwork before the agreement is signed, and will then register it at the Property registry. It will ask for a deposit to pay the notary's fees, the property registry, to settle taxes, etc., and also to cancel possible previous charges.

If the property has been bought through an estate agent, then usually the agents will be there.