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Various Characteristics of Home Loan and Mortgage Loan
A home loan or a home mortgage loan is any loan which has a property attached to it as collateral. A builder, developer or a home buyer can take financial assistance in the form of a loan for purchase of a given piece of land of a completely built structure. In laymans language mortgage is tantamount to a mortgage loan. A home mortgage loan has characteristic like most other loans in that the method of repayment, interest rate, maturity period and size may vary to some degree on a case by case basis.
In contemporary times, most home purchases are done with the help of a home loan with few exceptions as very few households can muster enough money to purchase a property outright. In geographies where the demand for property is high, there is an equally strong domestic for home loans.
The word Mortgage is lifted from a French term which means “dead pledge”. This implies that if the obligation is left unfulfilled then the property would be taken into foreclosure.
There are many different types of loan which are disbursed worldwide. But there are several factors which broadly defines the feature of any mortgage. These characteristics and features are subjected to legal and local regulation of the land. Lets look at some of the broad characteristics of a loan.
Prepayment: a few types of mortgages completely restrict or limit prepayment of a portion or the entire loan. In certain cases even a penalty is imposed on the lender in lieu of prepayment. EMI: it is the amount which has to be paid on a regular basis as decided between the lender and the borrower. The amount can be altered by the lender or by the borrower as per their mutual understanding.
Term: home loans typically have a maximum term. This is the number of years after which a loan has to be repaid. Some of the loan has no amortization or some of the loans require repayment or even still negative amortization.
Interest: Interests are of 2 types, fixed and variable. These may or may not change at pre-defined periods. Depending upon the financial health of the country the interest rates of a home loan could be high or low.
In a fixed rate home loan, the periodic payment as well as interest rate are fixed fir the entire life of the mortgage. In an adjustable rate home loan, the interest rate fluctuates after a given period of time in accordance with some market index.
Unsecured Loans- Money without security
Unsecured Loans do not require you to pledge any of our assets as security against the loan procured. Tenants, self-employed, students, non-homeowners, and those living with parents are the ones who normally go for unsecured loans. However, those who own a home but do not wish to risk it also apply for these loans.
The risk associated with the unsecured loan deal for the lender is generally higher than that with secured loan. So, unsecured loans are available at comparatively higher APRs. But these loans are a safer and easy option for the borrower. Unsecured loans get processed fast because of the legal formalities concerning to the property evaluation.
Cited below are the different kinds of unsecured loans:
- Unsecured debt consolidation loans: This loan is ideal for those who do not have any property to back up but are tired of managing their multiple debts. This loan can pay off their running debt and covert them into a single monthly payment. Unsecured Debt consolidation loans carry a high interest rate.
- Unsecured home improvement loans: Unsecured loans that are availed for home improvements like renovating the kitchen, designing the garden, home expansion, landscaping etc and do not require any security to back up are called unsecured home improvement loans.
- Unsecured holiday loans: Planning to go for a holiday but do not have the required money? Avail unsecured holiday loan to plan the holiday for the lifetime. Though unsecured loans come with high interest rates, with increased competition in the loan market, one can always look for a competitive loan deal.
- Unsecured business loans: These are best for those who need to fund commercial needs, start a new business or expand the existing one. Unsecured business loans are generally taken to fund small monetary needs like buying machinery, paying suppliers and others.
Apart from these, there can be other online unsecured loans as well. The greatest advantage of unsecured loans is that they give mental peace to the borrowers since no property is at risk.