Everything you need to know about mortgage loans

 Everything you need to know about mortgage loans

There are times in life when we urgently need money. In such situations, home ownership proves to be a boon as you can easily mortgage your home for the necessary funds. The biggest advantage of a mortgage is that you don't have to inherit ownership of the property and you can get the loan at very low-interest rates, unlike most other loans. Here's everything you need to know about mortgages. What is a mortgage loan? A mortgage is simply a loan taken out on real estate that you own. The property in question can be your house, a business, or even non-agricultural land. Mortgages are offered by banks and non-bank financial companies. The lender provides you with the principal amount of the loan and charges you interest on it. You can repay the loan in affordable monthly installments. Your property serves as collateral and remains the property of the lender until full repayment of the loan. As such, the lender has legal title to the property for the term of the loan and if the borrower fails to repay the loan, the lender has the right to confiscate it and auction it off. Types of Mortgage Rates


You can repay your mortgage at a fixed rate or at an adjustable rate. Let us understand the meaning of both. Fixed-rate - As the name suggests, a fixed rate stays the same for the duration of the loan. If you choose shorter terms, you can opt for a fixed rate. If you are looking for a longer-term home loan, you may not be able to take advantage of a fixed-rate mortgage. Variable interest rate: Interest rates are adjusted to current market rates. You cannot predict the interest rate, but you can check the current interest rate on the lender's website. It is an interest rate that can change periodically and is directly related to the marginal cost of funds borrowing rate, or MCLR. Characteristics of a mortgage loan: Now that we know what a mortgage loan is and its interest rates, let's take a look at its main characteristics.

Lenders do not accept all types of property, real estate or otherwise.

Lenders generally accept fully constructed assets, such as your home or business venture.

The property must have commercial value and be an owner-occupied property, ie. h ownership which gives the owner full legal rights to transfer ownership of the property.

Since the lender provides the loan amount by taking your property as collateral, a home loan is considered a secured loan.

Mortgages are available for longer terms, up to 30 years, and can be paid off in affordable monthly installments or EMIs.

A home loan can be customized to meet your needs

  Reasons for taking out a mortgage A mortgage can be taken out for many reasons, such as:

Funding for a medical emergency

Pay for your children's college education

Pay for your children's wedding

business expansion

home renovation

  Benefits of a Home Loan Now that we have covered what a home loan is and its important features, let's take a look at the benefits of getting this loan.