MORTGAGE LOAN

A mortgage loan is better known as a loan in which a property or real estate belonged to the people who want to borrow the money is used as collateral. The borrower normally enters into an agreement with the lender (usually a bank) in which circumstance that the borrower receives cash upfront then continues to make installment payments over a set time span until he manage to pay back the lender in full.

Mortgage loans are commonly being entered into by home buyers who are having not enough cash on hand in order for them to purchase the home. They are also used to borrow cash from a bank for other projects by using their house as collateral.

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Usually there are several types of mortgage loans and buyers should really assess carefully what is best for their own situation before deciding on one. Types of loans are basically being characterized by their term dates (usually from 5 to 30 years, while there are some institutions now can offer loans that are up to 50 year terms), interest rates (some of them may be fixed or variable), and the amount of payments per period.

When we talk about mortgage you have to know that there are two different types of mortgages where the first one would be the fixed rate while the other one would be the variable rate mortgage.

Fixed Rate Mortgage

  1. Open – 6 months and up to 5 years. Prepay all or part of the mortgage without interest rate penalty
  2. Convertible – 6 months up to 1 year. Can be converted at any time a closed term without penalty
  3. Closed – 1 to 10 years. Fixed interest rate for the length of the term you choose.

Variable Rate Mortgage

  1. Variable Open – Interest rate changes with the fluctuation of money
  2. Variable Convertible – Interest rate changes with the fluctuation in the money market
  3. Variable Protected – Rate is being capped for term of the mortgage.

There are many advantages that you will get from entering a mortgage loan and among them will be discussed in the paragraphs below:

A mortgage makes home ownership affordable:

Buying a home will be like your biggest purchase that you’ll ever make and a mortgage will be one of your largest debts. Because there is an ability that you can spread the repayments on your home loan over so many years, the amount that you will be paying back every month is occasionally even more manageable, and still affordable!

A mortgage is a cost-effective way of borrowing:

Interest rates from mortgages normally tend to be quite lower than any other form of borrowing because the loan is being secured against your own property.  This means the bank or building society now has the security that if it everything goes wrong and it ends up that you can’t repay it there is still something valuable which is your property for them to sell to pay back some, if not all, of the mortgage.

Besides than Mortgage Loan, you may be interested in other loans services such as Personal Loan, Business Loan and SME Loan.