Blox Logo
You haven’t selected any properties.
Please select minimum 2 properties to compare
Discover. Experience. Buy.
Get Personalized experience
by logging in
Sign Up
  • building-primaryProperty Listings
  • developer-primaryDevelopers
  • users-primaryAbout us
  • blogs-primaryBlogs
  • pressmentions-primaryPress Mentions
  • phone-primaryContact Us

Everything You Need To Know About Usufructuary Mortgage

Blox Social
Posted on
May 9, 2023

Usufructuary mortgage, an intriguing term in real estate finance, holds immense potential for borrowers seeking innovative ways to leverage their property while retaining its use and enjoyment. 

In this comprehensive Usufructuary mortgage guide, we will unravel the intricacies of this lesser-known concept. 

Whether you're a curious homeowner or an aspiring investor, knowledge and insights will help you understand and navigate the world of usufructuary mortgages.

What does Usufructuary mortgage mean?

A usufructuary mortgage, also known as a "usufruct mortgage" or "mortgage by conditional sale," is a unique legal arrangement that allows individuals to borrow money while retaining the right to use and enjoy their property. Unlike traditional mortgages, where borrowers relinquish possession, usufructuary mortgages enable borrowers to continue living in and utilising their property even after pledging it as collateral for the loan.

How Does it Work?

Let's walk through the process step by step:

Step 1: The borrower approaches a lender for a loan, offering their property as collateral.

Step 2: The lender assesses the property's value, the borrower's creditworthiness, and the loan amount requested.

Step 3: If approved, the borrower and lender execute a usufructuary mortgage agreement.

Step 4: The borrower receives the loan amount and retains possession and use of the property.

Step 5: The borrower is responsible for property maintenance, paying property taxes, and meeting other obligations outlined in the mortgage agreement.

Step 6: Repayment of the loan occurs over a specified period, typically through regular instalments of principal and interest.

Step 7: Once the loan is fully repaid, the usufructuary mortgage is discharged, and the borrower retains complete property ownership.

Advantages of Usufructuary Mortgage:

Continued Use of the Property: One of the significant advantages of a usufructuary mortgage is that the borrower can continue using the property for their benefit. This primarily benefits borrowers who need funds but do not want to lose possession or control over their property.

Flexibility in Repayment: Usufructuary mortgage offers flexibility in repayment as the borrower can repay the loan using the income or produce generated by the property. This allows the borrower to structure the repayment plan based on their financial situation and the property's income potential.

Lower Interest Rates: Since the lender has the right to collect the income or produce from the property, usufructuary mortgages often come with lower interest rates compared to traditional mortgages. This makes it an attractive and appealing option for borrowers looking for more affordable financing.


While usufructuary mortgage offers several advantages, there are a few concerns to keep in mind:

  • Limited Ownership Rights: While the borrower retains possession and use of the property, the ownership rights are transferred to the lender until the loan is fully repaid. This means that the borrower may have limited control over the property until the mortgage is discharged.
  • Income Generation: The success and viability of a usufructuary mortgage heavily depend on the income or produce generated by the property. Before opting for this type of mortgage, borrowers should assess the property's income potential and ensure it is sufficient to repay the loan.
  • Legal Formalities: Usufructuary mortgages involve legal formalities and documentation to ensure the rights and obligations of both parties are adequately established. It is essential and advisable to consult legal professionals to understand the legal implications and obligations associated with this type of mortgage.

Final words

In conclusion, a usufructuary mortgage provides borrowers with an opportunity to secure financing while retaining possession and use of the mortgaged property. Its flexibility in repayment, continued use of the property, and potentially lower interest rates make it an appealing option for many borrowers. However, it is also equally crucial to carefully consider the legal implications and income potential of the property before opting for a usufructuary mortgage. Consulting with legal and financial professionals can help borrowers navigate the process and make informed decisions regarding their mortgage options.

Remember, understanding the terms and conditions of any mortgage is essential before committing to it. The usufructuary mortgage may not be appropriate for everyone, but for those who meet the qualifications and have the appropriate property, it can provide a distinct option that allows for borrowing and continued use of the property.

Finance & Legal