If you have been trying to find a home that you can call your own or would like to liven independently, getting a new house can be exciting. Whether designing a bare house or acquiring a fully furnished unit, many people look forward to doing this to their new space. However, the financial aspects could be hard to get unnoticed, especially when the new house owner is living on a budget.
What is a mortgage?
Unless paid in cash, buying a house may involve getting a mortgage. If you are unfamiliar with what is a mortgage, it is a contract between you and a lender that provides the lender the right to repossess your home if you don’t repay the loan plus interest. It can also be called ‘mortgage loans,’ a way to buy a house when you don’t have the cash upfront.
Are loans and mortgages the same?
Based on the earlier explanation, a mortgage is considered to be a type of loan that is used to finance a property. This would also mean that not all loans can be considered as a mortgage. Any financial transaction in which one party receives a lump sum and promises to repay the money is referred to as a loan.
Where can I get a mortgage?
Mortgage loans can be availed through banks or financial institutions. Depending on the country or even the city you are in, there could be different documentations and requirements in availing of a mortgage. There are only two parties involved in this kind of loan – the lender and the borrower. The lender is most likely to be the financial institution that will shoulder the amount agreed for the property. In return, the borrower is an individual or a group of people that will repay the said amount with interest. As mentioned, in case of nonpayment before the agreed date and unable to meet the payment terms, the lender may take ownership of the said property.
What is the basic stuff that I need to know?
If you’re totally clueless about what other terms you might encounter when taking a mortgage, here are some of them that you may need to know. First is Amortization – it refers to how the payments are spread out throughout the agreed loan period. The higher portion of the amortization for the first few years typically goes towards the interest that goes lower towards the end of the loan period. Next is Down payment – which refers to the amount you have to pay upfront. This is usually done for security purposes, that the borrower is sure about getting the property. The other one is Interest, which is obviously the ‘profit’ of the lender that serves as the fee for the borrowed amount.
Where can someone get more information about mortgages?
Aside from a trusted financial advisor and experts, the internet is a great source of information that explains more than just how mortgages work. Some websites can be a go-to source for basic information like mortgagecalculator.uk. Aside from having an ad-free page and the calculator itself, the site can also provide basic information on amortization and remortgages. In case you are curious about how mortgages are computed through the website, they also have manual formulas that may test your mathematical skills.