Stélio Tauzene • Head of the Credit Operations and Legal Department at FNB Mozambique
The process of analysing loan applications often requires the applicant to provide guarantees. A mortgage is one of the most important and common credit guarantees in the Mozambican and international financial markets.
Generally, mortgages relate to immovable and movable property subject to registration, belonging to the client or to third parties.
Mortgages are fundamental guarantees when analysing and pre-approving credit because they reduce the credit risk, making it more attractive to the bank and resulting in lower interest rates for the client. This type of guarantee is widely used due to its effectiveness and involves the use of real estate as collateral for the loan, benefiting both the client and the lender.
For the client, mortgages allow access to higher financing, with lower interest rates, since property is considered a stable asset with significant value, reducing the risk of financing.
On the other hand, property offers greater flexibility and can be used as collateral for a variety of loans.
Only those who have the legitimacy to sell the property can take out the mortgage, usually in the person of the owner
Voluntary mortgages are the most common, resulting from the will of the parties involved and can be formalised by contract or unilateral declaration by the owner. In the case of immovable property, it must be set out in a public deed, will or notarised private document. For movable property, the written form is sufficient.

Registration of the mortgage is essential for the deal to be valid. Only those who are entitled to sell the goods can take out the mortgage, usually in the person of the owner or an authorised third party. It is crucial that the mortgaged goods are described in detail, otherwise the mortgage may be considered void.
The mortgaged property does not make the creditor the owner of the property, allowing the owner to take out other mortgages on the same property with the consent of the primary creditor in cases where this has been agreed. Once the contracts have been signed, the mortgage must be registered with the relevant registry office.
In addition to immovable property, mortgages can be taken out on movable property equivalent to immovable property, such as vehicles, ships and aeroplanes. During the financing period, the mortgage can be reduced if the value of the property increases or if the debt is paid in instalments.
Once the guaranteed obligation has been fulfilled, the mortgage is cancelled by means of a distrate. The creditor can expressly waive the right in a signed document, and this waiver does not require the acceptance of the mortgagor in order to take effect.