In simple terms, Real Estate Mortgage (REM) means securing your loan using a specified real estate property as a collateral.

Loan applications under the REM provision requires the buyer to have at least 20% of the equity into the property. Which means, borrowers can loan up to 80% of the property's current market value.

REM is an accessory contract for the banks to have a property to pursue if the borrower defaults on their payment. To be legally binding, the title of the property (TCT or CCT) needs to be annotated with the Registry of Deeds. This is the reason why it is important for buyers to execute the title transfer to their name/s once the Letter of Guarantee (LoG) is issued to the seller.

Example scenario: A client (buyer) wants to acquire the condo of his friend (seller). After paying the 20% equity to the seller, he decided to apply for a bank loan to settle the remaining 80% of the property price. Once the loan application is approved and the LoG is issued to the seller, he/she needs to execute the CCT transfer as soon as possible and submit it to the bank. The bank then verifies the title transfer and gets it annotated with the Registry of Deeds. If all's good, the bank issues the cheque to the seller.

Note: A property title under the Seller's name should be clean and no annotation.