Maximum Mortgage, a guarantee for business relations

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Large commercial operations open up a world of opportunities for companies, but they also imply the assumption of risks which, on many occasions, are linked to the collection of the services rendered and even more so if, in order to offer the contracted service, it is necessary to make significant disbursements. It is in this context where the usefulness of the maximum mortgage stands out as it is capable of covering this risk and facilitating the acceptance of the commercial operation.

The maximum mortgage is a figure, not widely known, that allows a commercial operation to be guaranteed through a property, without the need to resort to other formulas that involve higher costs, such as the discount lines offered by financial institutions.

Let’s use an example. An important hotel chain is planning to open a new hotel complex in one of the most popular tourist areas of our country. The opening of this new hotel will be followed by the opening of two more, located in different coastal areas of high tourist affluence.

Our hotel chain decided to contact its trusted supplier to take charge of the production of a large volume of lamps that will be used to light all the rooms in the new hotel complexes.

The supplier sees this commercial operation as an important business opportunity, but the scale of the investment required to deliver the product to his client is such that he fears the risk he must take in order to provide the service.

It is then that he decides to propose to his client to take out a maximum mortgage. The hotel chain will use one of its properties, which will be previously valued, to guarantee the payment to its supplier.

This mortgage is constituted as a guarantee for the hotel chain’s present and future payment obligations towards the lamp supplier, up to a maximum limit of euros, freely and voluntarily fixed between the two parties.

It is desirable that this maximum limit coincides with the appraised value, so as not to “overextend” the risk.

In this way, if the supplier is not paid, the property would be put up for public auction and after its sale, the supplier would collect all the amounts owed.

With this formula, client and supplier avoid the costs derived from going to a bank to become the guarantor of the risk, they benefit from the speed of the management since it can be done in a week, they share the costs of carrying out the maximum mortgage and they comfortably cover the risks, strengthening their commercial relationship.

Image by Pixomar (FreeDigitalPhotos)


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