Let’s take it step by step! First, what is a mortgage? It is a secured loan against a property through the use of a legal instrument called mortgage. This involves a legal document which states the creditors’ or other party’s contractual rights to the property in case the conditions of the legal obligations are not kept by the borrower. But in everyday speech when we say ‘mortgage’, we usually refer to the loan a property buyer can get. The size and maturity of this loan, the interest rates and the repayment method depend on the type, as well as on the financial institution that provides it, and on the personal and financial circumstances of the debtor. Are you curious about the details? If yes, then go on!
Moreover, you can choose not only from many loan types, but also from many interest rate types as nowadays these are very flexible. You can choose stability, namely fixed rates for the whole repayment period, but these are more expensive, or more instability with lower costs and with variable interest rates. But there are mixed types as well. The borrower may also have the chance to decide on the frequency of the payments as well as the amount to be paid monthly or for any other time span. There might also be a possibility to change this predefined amount over time. So another benefit is the flexibility of mortgage repayments, as you might choose between the various methods ranging from regular or irregular repayments, to paying interest rates with or without repaying the capital. In the latter case capital is repaid only at maturity, and the loan is called investment-backed mortgage. The previous on the other hand is called an interest-only mortgage. More than this, mortgage loans have the lowest interest rates compared to other types of credits. Also, your monthly payments’ taxes are capable of being deducted during the interest-only period, so you will end up paying much lower amounts. Isn’t it great? You can save a lot of money! Moreover, with a mortgage loan you can easily manage to lower the duration of the repayment period therefore you can become free of all your debt in a shorter time than with other options.