6 Benefits of Getting a Mortgage
Lien has found her dream property; however, she lacks adequate funds to buy the property. Her bank came to her rescue by offering her a mortgage loan, which falls under the category of secured loans. This means that Lien’s property now serves as collateral to secure the mortgage loan, and the bank will have the rights to the property till Lien repays the loan in full. Since mortgage loans have a lower lending risk due to the presence of the collateral, lenders usually charge a lower rate of interest on them in comparison to unsecured loans. The repayment of mortgage loans is usually fully amortized and can be done via Equated Monthly Installments (EMIs) for a fixed period.
Benefits of Getting a Mortgage
Here are 6 primary benefits that you can look forward to when you take on a mortgage loan:
Purchase a property without cash
Purchasing a property requires a considerable amount of cash you may not have on hand. With a mortgage loan, you can purchase your desired property without forking out cash by pledging your property as collateral.
Build equity on purchased property
The value of the property you purchase by taking a mortgage loan will continue to increase over time, enabling you to build equity and make a profit on the purchase. You may even opt to refinance the property when interest rates are low in the future.
Continue using the property
Mortgaging a property does not end your ownership of the property, provided you continue to pay the EMIs on time. However, the bank may have certain rights on the property, and in case of default (failure to pay EMIs on time), the bank may take over the mortgaged property and recover the outstanding loan amount.
Interest paid may be eligible for tax deductions
The interest paid on the mortgage loan may be eligible for a tax deduction, which you may claim every year when you file your taxes.
High loan amount
You may be eligible for a mortgage loan of up to 90% of the property value at attractive interest rates, allowing you to own your dream home while significantly reducing your downpayment.
Low EMI
Mortgage loans have a long tenure, typically at least 15-20 years, so you may conveniently repay the borrowed amount with lower EMIs.
Final Thoughts
When you apply for a mortgage loan , the bank typically considers both your and your spouse’s income, age, and the value of the property to be mortgaged. If you intend to own a property by taking a mortgage loan, compare different mortgage options, look around for the best offers and familiarize yourself with the terms and conditions before you take the plunge.
Notice: Opinions, analyses, reviews, or recommendations expressed in this article are those of the select editorial staff alone and have not been reviewed, approved, or otherwise endorsed by any third party.
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Sonakshi Murze
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sonakshi.murze@iquanti.com
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