All of us consistently strive to keep our finances under control. However, this can prove to be a challenging task. Financial emergencies can strike anytime and disturb your financial planning. Savings done over the years can prove to be useful, but may not be enough to get you through the financial emergency, especially if you require a substantial amount of money. In case of a financial emergency, a mortgage loan can be a good option for raising funds and bringing some financial stability. With the help of a mortgage loan, not only can you tackle your financial crunch, but also improve your finances. But before we tell you more about how mortgage loans help become a person more financially stable, let us first understand the basics of this loan product.
What is a Mortgage Loan?
Against the immovable assets that you own, banks can offer you a loan. To avail of this loan, however, you will have to pledge your asset to the bank as security. Until the mortgage loan is repaid in full, the lender possesses some rights to the collateral property. However, during the repayment years of the loan, the possession of the property remains with the owner. So, the owner keeps the right to use the property or rent it out. In cases where the borrowers fail to repay the loan, the lender can confiscate the property and sell it off for the purpose of compensating the losses incurred.
Types of Mortgage Loan
Based on the type of property mortgaged, a mortgage loan can be of two types:
- Loan Against Property: Money received through a loan against property comes without any usage restriction, which makes this mortgage loan a unique financial product. One can avail of a loan against property for any kind of personal fund requirement. For availing of this type of loan, individuals need legal ownership of the property, which can be used as collateral.
- Commercial Property Loan: for buying or constructing office or business spaces, this loan can be used. The approval of this loan is subject to the borrower fulfilling bank norms of eligibility, which include the income and the creditworthiness of the applicant.
How Can a Mortgage Loan Help an Individual Become Financially Stable?
Through a mortgage loan, financial stability can be achieved. The features of mortgage loans establish a connection between the loan and financial stability. Explained below are the features through which you can enhance your financial stability:
- Compared with other types of loans, all types of mortgage loans are available at a cheaper interest rate. The benefit of this for the borrower is that even after availing of a significant loan amount, the interest burden remains manageable.
- At times, you may require a substantial amount of money to manage your finances. Managing to obtain a big amount can be difficult. With mortgage loans, however, receiving hefty funds is not an issue. If you avail of a loan against property, lenders can approve up to 80% of the market value of the property as a loan.
- Another way in which mortgage loans help a borrower achieve financial stability is by allowing a borrower to use the funds for business purposes. If you are looking to set up a business or expand your existing business, you can use mortgage loan funds.
- A mortgage loan is one of the easiest ways of raising money. You can use the money raised through a mortgage loan to pay off other loans, such as a personal loan or consumer loan. These loans are more costly as compared to mortgage loans because lenders charge a higher interest rate on these loans. By doing this, you can save a significant amount of money.
- For repaying the mortgage loans, borrowers receive enough time. The availability of a long repayment tenor assists in managing finances. As a borrower, you can choose to repay the loan as per your repayment capacity. Also, as your income grows, part payments towards the loan repayment can be done to clear off the loan.
Together, these aspects help in managing and boosting finances. Even in difficult times, personal finance can be made better with the help of a mortgage loans.
Mortgage Loan EMI Calculator
If you are planning to take a mortgage loan, know that you will be required to pay your EMIs. Being consistent with EMI payment is not just needed but is necessary. Therefore, make sure to take a loan that you can afford. By carefully selecting your EMIs, you can reduce the risk of defaulting on loan payments. A recommended tool that can assist borrowers in EMI selection is the mortgage loans EMI calculator. All the calculations related to a mortgage loan can be carried out with the mortgage loan EMI calculator.
If used appropriately, mortgage loans have the potential to help you deal with financial troubles as well as improve your finances and achieve financial stability. As a borrower, your endeavor should be to put this financial product to its best use.