Get to Know Mortgage Over Credit

When choosing to buy a secondhand house, there are a number of payment alternatives to choose from. You can buy in cash, apply for a new KPR (Home Ownership Credit), or the last option is to buy a used house by mortgage take over credit or better known as a mortgage over credit.

Minute Read

5 mins

Published

03.02.2021

Category

Lifestyle & Tips

When choosing to buy a secondhand house, there are a number of payment alternatives to choose from. You can buy in cash, apply for a new KPR (Home Ownership Credit), or the last option is to buy a used house by mortgage take over credit or better known as a mortgage over credit.

Mortgage over credit is considered as a solution for the increase of KPR Bank Interest. Simply put, Mortgage over credit is the transfer of an existing home loan at a bank to another bank. It could also switch bank credit from debtor A to debtor B. Mortgage over credit is a method of buying a house that is not yet paid off by the owner.

Purchasing a house by over credit system is regulated in the Decree of the Minister of Public Housing Number 09/KPTS/M/1995 (Keputusan Menteri Negara Perumahan Rakyat Nomor 09/KPTS/M/1995).

buying house with over credit system in Indonesia

How to do Mortgage over credit?

There are a couple of procedure on how to do mortgage over credit, they are;

1. Mortgage over credit through a bank

Doing mortgage over credit through banks is the most official method and is usually carried out through debtor transfers. The bank will analyze the credit score of the new buyer. If the over credit application is approved, the bank will make a new credit agreement for the second party. The new agreement includes a sale-purchase binding deed and a guarantee agreement.

The bank must recognize the house that is in the KPR process is no longer the right of the first buyer. Apart from being free from the obligation of KPR installments, the first party buyers also have no share in home ownership. When the last installment is paid by the first buyer, the second eligible buyer comes to the bank to finish the administration.

The flow of mortgage over credit through banks is as follows:

a) The parties, namely the seller and the buyer, go to the administrative or customer service credit department and submit the matter in question.
b) Apply for over credit which will later act as a new debtor, replacing the old debtor.
c) After the bank approves after examining the terms, the buyer will act as a new debtor and sign a new credit agreement along with the sale and purchase deed and collateral binding (SKMHT).

In addition, to over credit through banks, there are various documents that need to be completed. The following is the complete KPR over-transfer process file through the Bank:

  • Data on object of sale (land/building)
  • Copy of Credit Agreement and credit confirmation letter
  • Copy of certificate containing a statement/stamp from the bank stating that the land and building are being pledged as collateral with the relevant bank.
  • Copy of IMB and copy of SPPT PBB for the last 5 years which has been completed with proof of payment (STTS)
  • Printed proof of the last installment payment before over credit is implemented
  • The original passbook used for installment payments
  • Seller & Buyer personal data (Copy of husband & wife’s ID card, family card, Marriage Certificate and Indonesian Citizen Information or change of name)

The pros of mortgage over credit through bank

  • The house certificate can be reversed according to the name of the buyer (new debtor) although it is still a collateral at the bank and can only be taken after the home loan is paid off.
  • Buyers (new debtors) can pay in installments to the bank on their own behalf

The cons of mortgage over credit through bank

  • The process of applying as a debtor is usually more complicated
  • It takes a long time because it has to be analyzed by a bank credit analyst
  • There is a possibility that the replacement debtor will be rejected by the bank
  • The cost is relatively more expensive for the debtor transfer process, because it must comply with the rules and procedures of each bank.

Female,Customer,Filling,Information,In,The,Check-in,Form,At,The

2. Mortgage over credit through a notary

The second method to do mortgage over credit is to involve a notary. This method can be done if you and the home seller agree to do the takeover credit without involving the bank. This method is still relatively safe if you are still in doubt.

These are the steps to do mortgage over credit through a notary service:

  1. Seller and buyer come to the agreed notary with the complete house documents.
  2. The notary will make a sale and purchase certificate (AJB) on the transfer of rights to the land and building in question along with a procuration to pay off the remaining installments and the rights to take the land certificate.
  3. The seller signs a notification letter to the bank regarding the transfer of land rights in question.

The main point in doing mortgage over credit through a notary is to clarify that since this transfer, because the rights have transferred, even though the installments and certificates are still in the name of the seller, the seller is no longer entitled to pay it off by themselves and cannot claim the original certificate that becomes the guarantee for the loan.

Make a copy of the certificates that was made by the notary, then the seller and buyer would have to go and submit to the bank a copy of the certificates listed in point 2 and the notification letter in point 3.

The pros of mortgage over credit through notary

  • Making an over-mortgage transaction by transferring land rights before a notary is a faster and easier process
  • The costs incurred are relatively cheaper than making mortgage over credit request directly through the bank.

The cons of mortgage over credit through notary

  • The house certificate is still under the name of the seller and is still a guarantee in the bank
  • The buyer will pay installments on behalf of the seller
  • If the process of transferring over home loans is not known by the bank, then at any time, the seller can pay off their own installments and take the house certificate that is no longer their right. Therefore, it is obligatory to notify the bank as the current owner of the guarantee.

There are three things to notice before you agree on house over-credit;

First, ensure that the cost of managing over credit is cheaper than the increase in installment due to increased mortgage interest. Especially for those whose loan period is still long. It is necessary to calculate correctly because the fines that must be paid are certainly not small.

Second, the over-credit process can be carried out well, especially regarding the repayment process and the time for submitting the certificate to the new bank if you are choosing a different bank from the seller.

Third, the bank approves the over credit application submitted by the prospective debtor.

As long as the above three things are in accordance with our expectations, the mortgage over-credit process can be carried out.