A home loan is simply an amount of cash that an individual lends from a private money lending organization or a bank at a specific rate of interest to be repaid every month with the EMI. The money lending organization takes the home as collateral for the loan. Most home loans are used for major expenditures such as home improvements and/or debt consolidation. Many people choose to take home equity loans to fund education of their children. It is important to understand the different home loan options available. Choosing the right home loan can help you to get the best rates and terms.
A person can apply for a home loan from any private money lender or from the government. The Home Loan involves two distinct categories: first home loans and second home loans. First home loans are for the purchase of a home. They can be secured (e.g. mortgage) or unsecured (e.g.
The amount sanctioned under a residential property loan depends on many factors. One of these is the down payment made by the borrower. In case of a mortgage loan, the down payment is considered a mortgage debt. This means that it will be recovered when the borrower defaults on his payments. A residential property can also be mortgaged against the equity of the home. The equity of a home loan is the difference between the appraised value and the outstanding mortgage loan amount.
The second category of home loans includes the second home loans. These are unsecured home loans. The loan amount can also be higher than the first mortgage loan. Sometimes, these second home loans are secured by a collateral asset. For example, a house could be mortgaged against an asset (e.g. car).
The third category of home loans include the payday and top-up home loans. Payday and top-up home loans are unsecured. In a payday loan, the repayment date of the loan is determined upon your next pay day. In case of a top-up home loan, on the other hand, you would repay your home loan before your next salary pay date. It is possible to get approval faster for payday and top-up home loans than for any other type of mortgage loans.
If you want to save time in processing home loan applications, you should look for online lenders who give home loans to people on the basis of their credit worthiness. Online lenders usually lend at a lower rate of interest. This is because they do not have the added cost of running the business. You can compare home loan quotes from online mortgage loan lenders to choose the best deal.