Mortgages differ in terms of their size, maturity, interest rates, and methods of paying. Although all the major banks do offer essentially the same products, they do however try to differentiate their offerings by adding little changes here and there, without changing the main product too much.

They are usually sold by agents on behalf of the banks, because the market has matured to an extent that banks have realised that they need to enlist the help of specialist institutions to help with selling them as they themselves are too big and unable to always give proper attention to this aspect of the business.

Mortgages are usually used by property or home buyers, because they are suitable for people who do not have enough savings or funds to be able to buy property outright; hence the contract will usually be for a number of years, about 30 years, in order to enable the borrower to have enough time to pay it back. But they can chose to repay the loan in less than 30 years if they can, which means they would have decreased the amount of interest they were going to pay.

Should they chose to repay the loan in less than the 30 years or so, it means the amount of the monthly instalments will be modified and become a little bit more than the original agreed amount, but you must keep in mind that you might also have to make a down payment at the beginning of the contract; which means that if you take the two factors into consideration, you might have to spend a bit more money, for the overall transaction, in a shorter period than originally planned.

One might need to have the property they wish to get finance for evaluated by a licensed professional evaluator. Sometimes the lending institution will need this information to guide it in terms of which product, and of what value, to offer the borrower. It will also determine the terms and conditions of the contract.

One of the crucial aspects about mortgages is the fact that the property which has been bought by the borrower through the mortgage can be repossessed by the bank with the intention of reselling it to try to recoup the loan.

Ideally, the government regulates many aspects of mortgage loans, in order to protect borrowers against dishonest and unscrupulous lenders. They also need to intervene because they want to make sure that, in case people lose their homes, they are then provided with alternative accommodation. For example, the government will usually compel the bank to hand over the house to minors in an instance that both parents should die.

Something else that one needs to keep in mind is that banks are not the only institutions that grant mortgages. There are other financial institutions that offer these products, and it is perhaps a good idea to also look at them and see if you can find a product and terms that would be suitable for your personal circumstances.

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Category: Real Estate
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