What is a mortgage?
Generally there comes a time when we many think about buying our very first home but we have an issue: how to finance it? A home loan may be your best choice.
You might have already been paying rent and now you need to start investing the money of this rent in the payment of your house. It could also be which you have decided to leave your parents’ house and are seeing exactly what options you have to make your own home.
Whether you have decided to purchase land, a house or a flat, it will help you to know that your options to finance the next dream is to apply for a home loan.
What is a home loan?
A mortgage loan is really a type of credit granted simply by financial institutions so that people can get, expand, repair or develop a home. It can also be granted to ensure that people can buy land.
The financial institution grants the particular loan for the amount you require and receives your property because collateral. In this way the bank guarantees compliance with the payment from the credit through the mortgage of the property.
Each time you need money you can eliminate the amount that the financial enterprise decided to provide you, as long as the quantity you are using does not go beyond the credit limit they given you.
Features of a mortgage loan:
- The term of transaction of the debt is usually moderate and long term. In Colombia, the terms of this kind of credit can be up to fifteen years.
- Depending on your credit profile, your earnings, the amount of money you need and other aspects, you define the interest price that will be charged for the credit score.
- The property you will definitely buy or any other residence you have is taken as security.
Exactly why is it better to use a home loan and not a personal loan?
These types of credits are usually less expensive than personal loans. For example , the eye rate on your credit card may differ between 26% and 56% per year, but mortgage loan prices can vary between 6% plus 15% per year.
Why is a mortgage loan less expensive?
A mortgage loan is usually cheaper because the home you wish to buy is given since collateral. The acquired real estate is mortgaged in favor of the financial institution until the 100% of the mortgage is finished. Then in case the particular payment of the mortgage payments can not be fulfilled, the bank can suitable the property.