välisikkatsed

Välisikkatsed refer to a type of loan transaction in Estonian, particularly in the context of real estate transactions. The term is derived from the Estonian words "välis-" meaning external and "sikkatse" meaning to pledge or to mortgage.

In a välisikkatsed arrangement, an individual or entity (the "pledgor") pledges an external asset, typically a financial guarantee or other type of collateral, as security for a loan taken by the recipient of the loan (the "borrower"). The borrowed funds are then usually used for the purchase or renovation of a property, thereby creating a secondary mortgage.

A distinguishing feature of välisikkatsed is that the pledged security is not directly linked to the property being purchased. Instead, the external asset serves as collateral for the loan, which can be used for various purposes, such as funding business activities or personal consumption.

Välisikkatsed transactions are typically arranged between two parties, with the lender (the party providing the loan) requiring a guarantee from the borrower. This guarantee can be in the form of a separate financial instrument or an asset pledged specifically for the loan.

The use of välisikkatsed loan arrangements is not unique to Estonia but is also observed in other countries, often under various nomenclatures. Välisikkatsed serve as a mechanism to facilitate access to credit for individuals or entities by using external assets as collateral, thereby reducing the risks associated with large financial transactions.