Security and guarantees — glossary

A bank's obligation to pay a specific amount to the beneficiary upon meeting the terms of the guarantee. It is used to secure the fulfillment of the bank client's obligations.

In practice: The terms of payment depend on the content of the document and may differ from the guarantee. The guarantee usually involves a commission and a risk assessment. Payment by the bank does not necessarily release the payer from settling accounts with the bank.

Security for receivables on real estate or a specific right, disclosed in the land and mortgage register. It enables the creditor to seek satisfaction from the encumbered asset under the terms specified by law.

In practice: Establishing a mortgage does not transfer ownership of the apartment to the bank. Failure to repay the loan does not mean automatic foreclosure of the property. The scope of security, priority of entries and the proper procedure for recovering receivables are important.

A public register showing the legal status of real estate. Contains, among others: property designation, ownership rights, specific claims and restrictions, and mortgage information.

In practice: When purchasing, check not only the entries, but also the mentions of submitted applications. The book number allows you to read its contents in the official system. It is worth entrusting the analysis of a complex legal situation to a specialist.

The ratio of the loan amount to the value of the property accepted by the bank, expressed as a percentage. For example, a loan of PLN 400,000 with a collateral value of PLN 500,000 means LTV of 80%.

In practice: LTV helps assess the level of security and the required down payment. The value accepted by the bank may differ from the sales price. The parameter affects the assessment of the application, and in some offers also the costs and additional conditions.

An undertaking by a guarantor to perform a specific obligation of the debtor if the debtor fails to do so. It may constitute security for a loan or credit.

In practice: This is real financial responsibility, not just a recommendation from the person submitting the application. Check the maximum amount, liability period and conditions for claiming payment. The guarantor should also understand the impact of the obligation on his or her own financial capabilities.

A solution in which an additional person assumes responsibility for an existing debt on a specific basis. The existing debtor does not have to be released from the obligation to repay.

In practice: This is an important commitment, and not just an indication of a contact person. The scope of responsibility must be read from documents and regulations. Distinguish accession from surety and assumption of debt; similar terms may have different effects.

Determining the security for the waiting period for the mortgage to be entered in the land and mortgage register. In practice, it may involve an additional cost provided for in the terms of the mortgage loan.

In practice: It is not the same as home insurance. Check the date of mortgage entry, the deadline for submitting documents and the rules for settling additional costs. The applicable rules also depend on the laws applicable to the contract in question.

A security containing a formal obligation to pay a specified amount. It can be used as security, taking into account legal and consumer protection requirements.

In practice: Be particularly careful when dealing with a blank promissory note, the content of which may be supplemented later under certain conditions. Before signing, check the bill of exchange declaration, the recipient's rights and the method of returning the document after repayment.

Funds or approved asset that the client commits to the financed project. In the case of a housing loan, it covers part of the investment value beyond the loan amount.

In practice: The bank determines what it considers a contribution and how it should be documented. Not every borrowed amount can replace it. In addition to the contribution, it is worth keeping a reserve for purchase costs, fees and unforeseen expenses.

A person concluding a loan agreement together with another borrower. Its income and liabilities may influence the assessment of the application, and liability arises from the contract and the law.

In practice: In many contracts, liability covers the entire debt, not only the privately agreed part of the installment. Separation or splitting of expenses does not automatically remove a person from the contract. The release requires appropriate consent and changes to documents.

A solution intended to increase the possibility of recovering receivables, e.g. mortgage, pledge or surety. The type of security affects the rights of the parties and the consequences of failure to repay the obligation.

In practice: Check the scope of liability, the value of the collateral and the conditions for its release after repayment. The collateral itself does not replace creditworthiness assessment. It may also result in costs of establishing, appraising or deleting an entry.