Mortgages or a mortgage loans are a particular type of debt,
which arises when a borrower pledges landed
property or real estate as a security against the loan
Having collateral such as a landed property against the amount of loan that has been borrowed lowers the risk for the creditors as there exists an assurance that the money could be had back by disposing the collateral through auctions and such. The loan amount is usually much less than the value of the property which also lowers the risk to the creditor considerably.
The value of the real estate is usually determined by employing the services of a suitably qualified and licensed surveyor. These surveyors base their calculation on past purchases and current acquisitions. The market value of a landed property is arrived at through comparison with similar types of real estate or by taking into account current market prices and inflation rates.
A mortgage is usually procured for the purchase of landed property or house. The provision of such loan depends on the credit rating or credit worthiness of the applicant in most countries. Most banks and lending organization have access to these credit scores and use them to evaluate the eligibility of an individual for a mortgage loan.
Mortgage loans are classified into different types based on the term of the loan, the interest rates being either floating or fixed and the payment schedule and frequency. The term usually extends over a period of 20 years or more and though the interest rates are lower owing to the low risk factor associated with secured loan, most debtor end up paying much more than they borrowed by the time they manage to pay up the loan.
These loans are also required to be repaid over a long period of time, usually twenty or thirty years and early repayments are discouraged by prospective money lenders and may result in a punishment.
The risk involved for a creditor in a mortgage loan is minimal owing to the fact that the loan advanced, would be for a part of the value of the property that has been pledged as a collateral. In the case of non repayment or default, the creditor can seek legal recourse to attach the property and liquidate it to realize the debt.
Get a lot of home quotes and prices before you decide to buy. You don't want to choose the first home that comes along, it's a critical decision -- take your time and get it right.
Get a mortgage loan for bad credit -- you might pay a higher interest rate, but you will get a home.