There is a time when we all think about buying our first home but we have a problem: how to finance it? A mortgage loan may be your best option.
You might have been paying a rent and now you want to start investing that rental money in the payment of your own home. You might also have decided to leave your parents’ house and see what options you have to buy or build your own place.
Whether you have decided to buy land, a house or an apartment, it will help you to know that one of your options to finance your next dream is to apply for a mortgage loan.
What is a mortgage?
A mortgage loan is a type of credit granted by financial institutions so that people can buy, expand, repair or build a home. It can also be granted that people can buy land.
The financial institution grants the loan for the amount you need and receives your property as collateral. In this way the bank ensures compliance with the payment of the credit through the mortgage of your property.
Every time you need money you can dispose of the amount that the financial entity has decided to provide you, as long as the total amount you are using does not exceed the credit limit they granted you.
Characteristics of a mortgage loan:
- The term of payment of the debt is usually medium and long term. In Peru, the terms of this type of credit can be up to 20 years.
- Based on your credit profile, your income, the amount of money you need and other factors, you define the interest rate that will be charged for the credit.
- The property you are going to buy or any other property you have been taken as collateral.
Why is it better to use a mortgage loan and not a personal loan?
These types of credits are usually cheaper than personal loans. For example, the interest rate on your credit card may vary between 22% and 150% per year, but mortgage credit rates may vary between 6% and 16% per year.
Why is a mortgage loan cheaper?
A mortgage loan is cheaper because the home you want to buy is given as collateral. The acquired property is mortgaged in favor of the bank until the 100% of the loan is finished. Then in case the payment of the mortgage payments cannot be fulfilled, the bank can appropriate the property.
If everything is clear and you want to know what mortgage loans are, enter here.