In life, there comes a time that one urgently requires funds, especially when you want to own a home. Most people find it hard to purchase a home without a mortgage. Putting a large sum of money together is not possible for everyone.
WHAT IS MORTGAGE?
Mortgage refers to a large amount of money taken as a loan for purchasing a home. Banks and non-banking firms give mortgages. Lenders tend to give principal loan amount, and charge interest. You can pay your mortgage loan in monthly installments.
The property you buy with the principal loan amount acts as collateral and remains in possession of the lender until you repay the loan in full. The lender holds a legal claim over the property during the loan repayment period. If you default paying your mortgage as a loanee, the financial institution has the right to seizing and auctioning your property.
VARIOUS INTEREST RATES THAT MORTGAGE ACCRUE
When paying for your mortgage, you can opt for a floating interest or fixed interest rates.
FLOATING INTEREST
The rates of floating interest keep adjusting according to the current market rate. You can’t anticipate the interest rate, but you can get information on the render’s current interest rate.
FIXED INTEREST
The fixed interest rates remain constant during the repayment period. If you decide to repay the mortgage within a short period, you might be given the fixed interest rate option. If you are going for a long tenure mortgage, then a fixed interest rate may not be available for you.
INSIGHTS PERTAINING MORTGAGES
Here are the benefits that you will experience with a mortgage loan;
You will enjoy a flexible repayment period
You will pay a lower interest rate on a mortgage compared to a personal loan.
A mortgage loan is secured; thus, it’s approved quickly
You become the legal owner of the property as you use the funds to meet your needs.
