Mortgage Loan – Meaning, Tenor, Repayment, Ways to Secure the Loan
Mortgage Loan – Meaning
A mortgage loan is a secured long-term loan in which a Bank or Financial institution helps a borrower to purchase an Immovable and fixed assets such as Buildings, Commercial Property or house, as a collateral to the lender. The security on Mortgage loan is the legal mortgage on the property financed and the Property being purchased is comprehensively insured against fire, earthquake, flood and other natural disasters that might affect loss or destruction of the property.
The mortgage loan consists of an agreement between the Lender (Banker or Financial Institution) and the Borrower to purchase a home. In the agreed terms, the Lender has the right to take back the property if Borrower fails to meet the financial obligation of the loan.
Mortgage Loan – Tenor and Repayment
The average tenor for mortgage loan usually ranges from 5 years to 30 years.
Repayment Options
The repayment options are flexible depending on the agreed terms between the Lender and the Borrower. The repayment options can be
1 Equal monthly repayment comprising of the Principal and Interest
2 Annual, Semi-annual, quarterly or yearly Principal repayment with interest been serviced.
Ways to secure a mortgage loan
The following are ways to secure a mortgage loan;
1. Have a confirmed and verifiable means of income
2. Have a good credit rating
3. Save up your Initial Deposit
4. Review all Documents, Agreement, Charges and T & Cs.
5. Review the Interest Rate allocated to the Loan
6. Approach a Lender (Bank or Financial Institution) to apply for the Mortgage loan
7. Get an agreement and all your paperwork in place
8. Establish the type of mortgage loan and the tenor
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