Sometimes larger purchases are required, even though you do not have the necessary capital. Even urgent bills often have to be settled immediately – but what if you are not liquid at the moment? Fortunately, there is the opportunity to access cash at short notice: A mortgage loan is a great way to fulfill a wish or make a purchase. What exactly this is and how this loan works, you can find out here.
The mortgage loan – what exactly is that?
In principle, the mortgage loan refers to those loans which are protected by land registry law. This means that a loan in this case can be secured by a mortgage – which is a real estate lien. The borrower thus provides the property to the bank as collateral when applying for a loan.
Usually, however, not only the mortgage as a loan, but also the associated mortgage. Above all, it is important that the lender demands payment from the borrower for a certain sum of the house or land as stipulated in the contract – even if a compulsory auction must be carried out in case of need if he can no longer pay the loan installments.
If you compare different types of loans, it quickly becomes clear that the mortgage loan is one of the cheapest options for the borrower. Because: The bank can secure itself by the lending of the property excellent.
If, for example, the mortgage lending value is 60%, you will already receive a very attractive interest rate as a customer – on the other hand, if the mortgages are higher, the financial risk for the bank will increase. Here then higher interest rates are set, which the customer has to pay.
Also important is:
Borrowers should be aware that, in most cases, a mortgage loan is not a short-term thing, but a long-term liability that can not easily be terminated prematurely. Although a termination is generally possible, but the borrower must expect high costs, the so-called prepayment penalty. In order to hedge against this, it is advisable to have the additional prepayment protection, which is best concluded in parallel with the loan agreement. Here, the borrower has the opportunity to change the debtor for free, to swap the pledge or to transfer the mortgage loan.
What advantages does a mortgage loan offer?
The mortgage loan offers great security above all for the bank, because it has the right to simply seize the mortgaged property or building in the event of the borrower’s insolvency in order to obtain money lent to it.
But even the borrower benefits by taking out a mortgage loan: he receives through the valuable security that he makes available to the bank, particularly favorable interest rates that can not be compared with those of a normal installment loan.
What should be considered when concluding a mortgage loan?
Precisely because there is such a large selection of banks now, borrowers should not easily decide on the first offer. It is always advisable to compare the various loan offers in advance, which works best over the Internet. Such a credit comparison is completely free and only takes a few minutes. It is necessary to enter some relevant data in the credit calculator, such as the desired amount and the duration – then the comparison calculator can select the best offers and display them directly in a clear table.
Here, borrowers must pay particular attention to the APR, which indicates how high the cost of a mortgage loan actually turns out to be. The pure nominal interest rate already contains the basic interest that accrues for the loan – but there are often other costs that are charged by the bank and only show up in the annual percentage rate.
Record a sum that you can really repay. The loan amount should only be as high as is really necessary. Also, the term should be kept as short as possible, so as not to unnecessarily incur additional costs for interest. Because these are raised each month from the bank and thus increase the total credit costs.