Which is Better, Home Loans or Mortgage Loans?
By Space Coast Daily // February 3, 2021
The need for money is paramount in a globalized world. Taking this need into consideration, the banks and a lot of other money lending institutions have started providing different types of loans to the citizens of a nation. For different needs, for instance, if you wish to construct a home or buy an apartment, you could avail of a home loan.
In case you wish to construct a home by selling off a property that you already own then you could go for a mortgage loan. A mortgage loan is nothing but a loan that is provided to the user against a property.
These are two different kinds of loans and some people tend to agree that comparing mortgage loans and home loans is like apples to oranges comparison, but there are certain terms and conditions which connect the two types of loans.
It is vital to understand what each of the loans means and how to acquire them.
Home Loans are sanctioned only to construct homes. The loan-to-value ratio for home loans is generally ninety percent of the total value of the home.
The interest rates of the home loan are less when compared to that of the mortgage loans.
The repayment tenure for home loans is about 30 years. The processing fee for home loans is just one percent of the total loan amount being sanctioned.
Mortgage Loans are provided for any property that is being mortgaged in a bank or a financial institution.
The loan-to-value ratio of a mortgage loan is about seventy percent. The processing fee for the mortgage loan is about 5%. The repayment tenure for the mortgage loan is about 15 years.
The interest rates of mortgage loans are pretty high when compared to that of home loans.
The quantum value of the loan amount for a home loan is quite high when compared to that of the mortgage loan. It is because any government around the world wants its citizens to home at least one home. Also, the amount that can be sanctioned for a home loan is higher than the mortgage loan.
The top-up plan is not provided to the home loan seekers. However, there are some instances where based on the credit rating and the loan repayment capacity of the loan seeker, top-up sanctions are also provided to the loan seekers.
In the case of mortgage loans if 50% of the total property value is already provided as a mortgage loan then in the second top-up one can avail the remaining 20% of the mortgage loan value. The top of loans for mortgage property is based on the current market value of that respective property.
If you wish to know more details on the market trend it is suggested to get mortgage assist from a reputed organization.
What plenty of information available it is very easy to get lost and confused. It is really important to spend a significant amount of time in deciding the banking company or the non-banking financial institution that lends money to the customers. One must take care of the fact that the interest rates shouldn’t gobble up the initial principal amount which in turn puts an extra burden on the customer.