If you want to know what a mortgage loan is and how it works, this article will explain all the details. You will also learn how to take advantage of the mortgage simulator.
Knowing what a mortgage loan is and how it works will allow you to choose the most suitable one when you need it. These loans are medium or long term and are granted for the purchase, extension or construction of a home. They can be used to purchase new or used properties, offices, commercial establishments or other constructions.
The term of the loan is from five to 30 years and an interest rate is applied that can be fixed, variable or mixed, in addition to a series of associated charges that you should consider to know what a mortgage loan is and whether it suits you.
What is a mortgage loan?
One of the main characteristics that defines what a mortgage loan is is that the property remains as collateral for the bank in case you do not make all the corresponding payments. Therefore, it is important that, before applying for the loan, you analyze whether you can face the dividend and whether it is better to lower the amount you ask for and take it easy over the years.
More information about what is a mortgage loan: what is the purpose of applying?
There are two possible destinations for credit. On the one hand, there is housing, which only individuals can use as residential properties, and on the other hand, there is general-use housing, which legal entities (companies) can also access.
There are different options for applying for credit and how to give the money. The classic option is the purchase and sale of credit, which consists of buying your own home. This transaction can be carried out between an individual or through a real estate agency.
Similarly, you can apply for a mortgage loan to leave your home as collateral and use the money for other purposes, that is, give a freely available use to the loan.
If you already have a mortgage loan and want to refinance, you have the option of acquiring a portfolio or renegotiating. This operation consists of a new loan that brings together all the outstanding debts with that institution or others. In this way, a new rate and quota are managed. The idea of the agreement is that you access a new payment method that suits you best.
Types of mortgage credit
In addition to knowing what a mortgage loan is, you need to know the types that exist:
Letters of credit:
This is a type of mortgage loan financed with an instrument issued by the bank, called “mortgage bonds”. These bonds can be traded on the stock exchange by the bank or acquired by the financial institution or third parties in order to obtain the resources that finance the loan. Currently, it is not very common to find these loans on the market.
Endorsable mortgage loan:
In this case, the loan is financed with funds from the financial institution. This type of mortgage loan can be transferred by bank guarantee, so that the loan applicant pays his debt to the entity endorsing the loan. These types of loans are granted by mutual insurance companies and some banks.
Non-endorsable mortgage loan:
The mortgage loan is financed with the entity's own resources, but cannot be endorsed so that someone else can pay it. The regulation depends on what is agreed in the respective contract, and based on the General Banking Law and on monetary credit operations. This is the most common option within what is a mortgage loan in general.