A mortgage loan is a loan which is borrowed by pledging the rights you have on a property. In today's world, the word mortgage is used as a generic term for everyday usage. The loan is given at a certain rate of interest which is usually charged on a per annum basis. The property which is pledged is called as collateral to your loan. If you fail to pay the loan within the specified period of repayment and the extended grace period, the mortgage lender retains the right to acquire the collateral and sell it in order to cover for the money that he has lent. This provides a sense of security for the lender also and he is well within his/her right to do it within the realms of law.
Rate of interest
Rate of interest for a mortgage loan will be charged in a percentage basis. It is charged on a yearly basis. For example, if you have taken a loan of $1000 at an interest rate of 2%, you will have to pay $20 per year as interest. This is not an indication of the interest rate in today's market. It is a simple example to demonstrate how much you pay if you are charged a certain interest.
Different lenders charge different rates of interest. In the same way, it will vary depending on the type of mortgage that you have taken. Make use of the internet or anyone who is familiar with the finance market to research the varying rates offered. Choose the one which is the lowest in the group. A difference of 1% will save you thousands of dollars if you consider a repayment period of 25 years.
Types of mortgages
Conventional mortgage: The simplest form of mortgage that is preferred by people who are buying a house, it has very simple terms and conditions. The interest rate charged is also low compared to other mortgage. It is given in either long term of 20 to 25 years or short term of 10 to 15 years.
Portable mortgage: This is a clause that can be added in some types of mortgages. This enables the borrower to shift his/her mortgage from one place to another in the case of emigration. This mortgage is suitable for people who constantly move from one place to another due to work or business commitments. The mortgage loan at the place from which you are moving will be settled by the lender. The amount that you have paid at the place you were previously staying will be used as the initial payment for your new property. The same terms and conditions will be used for the new mortgage also.
Bridge mortgage: This is a mortgage that is taken for a very short duration. The rate of interest will be comparatively high. You will be asked to pay only the interest and the principal amount will be paid in bulk at the end of the amortization period.
It is left to the discretion of your mortgage loan vendor, the terms, conditions and the rate of interest that is charged. Make sure you strike the best deal that is available and succeed in your endeavors with minimum financial strain.
Rate of interest
Rate of interest for a mortgage loan will be charged in a percentage basis. It is charged on a yearly basis. For example, if you have taken a loan of $1000 at an interest rate of 2%, you will have to pay $20 per year as interest. This is not an indication of the interest rate in today's market. It is a simple example to demonstrate how much you pay if you are charged a certain interest.
Different lenders charge different rates of interest. In the same way, it will vary depending on the type of mortgage that you have taken. Make use of the internet or anyone who is familiar with the finance market to research the varying rates offered. Choose the one which is the lowest in the group. A difference of 1% will save you thousands of dollars if you consider a repayment period of 25 years.
Types of mortgages
Conventional mortgage: The simplest form of mortgage that is preferred by people who are buying a house, it has very simple terms and conditions. The interest rate charged is also low compared to other mortgage. It is given in either long term of 20 to 25 years or short term of 10 to 15 years.
Portable mortgage: This is a clause that can be added in some types of mortgages. This enables the borrower to shift his/her mortgage from one place to another in the case of emigration. This mortgage is suitable for people who constantly move from one place to another due to work or business commitments. The mortgage loan at the place from which you are moving will be settled by the lender. The amount that you have paid at the place you were previously staying will be used as the initial payment for your new property. The same terms and conditions will be used for the new mortgage also.
Bridge mortgage: This is a mortgage that is taken for a very short duration. The rate of interest will be comparatively high. You will be asked to pay only the interest and the principal amount will be paid in bulk at the end of the amortization period.
It is left to the discretion of your mortgage loan vendor, the terms, conditions and the rate of interest that is charged. Make sure you strike the best deal that is available and succeed in your endeavors with minimum financial strain.