Owning a house is probably the most common dream that all of us have. It apparently takes a lot of our time, effort and money to purchase that dream house. Time and effort are factors that are within our means and ready for disbursal with proper planning. But what most of us need is that amount of money to be able to own a house. Not many people have that kind of accessible funds and securing a mortgage loan would be the most realistic option. A mortgage loan is a loan that is secured by the collateral of your house property. There are numerous banks and financial institutions that are available if you want to obtain a mortgage loan. Mortgage loans can be used to buy a new property for the first time or remortgaging. There are many advantages to opting for a mortgage loan:

Realistic:

Getting a mortgage loan on your first property might be the most realistic option for you to become a homeowner. The monthly repayment options make it the best choice for people with a steady monthly income. Mortgages usually come with an overall tenure of 25 years, but longer terms like 30 years are also available to suit the current retirement age and improved life expectancy. However, opting for long term loans will tie you to debt longer. So, it is prudent to opt for the shortest term that is reasonable to repay. This will help to reduce your debt period and also save money that will otherwise be going towards the interest.

Economical:

Compared to other borrowing options, mortgage loans tend to be cheaper as it is secured against your property. Banks and financial houses are more than willing to provide mortgage loans because of the risk component which is very limited or non-existent. They can always sell your property in case you default on repayment. The sales proceeds will help them to reclaim their money. So it is important for home owners to plan their loan repayment and diligently pay it month on month. They are economical, also because of the different interest types to choose from. One can opt for a mortgage loan with fixed interest rates, variable interest rates, discounted interest rates or just interest only payments.

Assures legality of the property:

In case of a mortgage loan, banks and financial institutions take utmost care in ensuring that the property obtained as collateral is legally clear of any constraints. If you are a first time home buyer, this validation done by the banks go a long way in giving you the necessary confidence to go ahead with the purchase and also providing credibility to the property you are purchasing.

Banks will conduct detailed assessments to check if the property’s current worth is in line with the loan requirement, if it is properly surveyed by a licensed land surveyor, if it is an acceptable property that meets the zonal requirements, if there are any encroachments etc.

Cash flow:

A Mortgage on an already purchased house property lets you obtain a home equity loan.

Much like a personal loan a home equity loan can be used for any purpose such as a personal emergency, medical expense, travel, home renovation etc. The only difference is that a home equity loan is secured against the collateral of your property as against a personal loan which is unsecured. As this is a secured loan, the interest rates are also lesser compared to a personal loan.

So before you decide to go for a mortgage loan, it is important to understand your requirements, know the different options available, consider if this is the right type of loan for you, check the rate of interest to see if you are getting the best deal in the market and work out the repayment period according to your earning capacity.