October 4, 2022

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Buying a Home, What Changes Between a Mortgage and a Loan: There Are Important Differences

If we intend to buy a home, at this time of rising interest rates, we are probably asking ourselves: Is the mortgage or loan worth it to buy the home?

Let’s see in the article what are the pros and cons Buying a house without a mortgage loan application.

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Real estate loan or loan? There are differences, what are the changes

What is the difference between a mortgage and a loan? There are three basic differences between the two

Property guarantee: While the asset is requested as collateral for a loan loan, this is not the case for a loan.

Period: While the mortgage can go upEven at the age of 30-40 yearsRarely exceeds the loan 120 months.

amount: The mortgage usually covers up to 80 percent of the property value, and sometimes up to 100 percent; So they are there too Mortgages 200-250 thousand euros. Provides loan for smaller amounts, Even less than 100 thousand euros.

What are the collaterals between a mortgage and a loan?

Buying a home with a mortgage or loan It implies a different type of collateral required by a bank or financial institution. It should also be evaluated to determine how to purchase a home.

The Guarantees required to grant a mortgage I:

Mortgage On the basic property, having Revenues Regular, possibly coming from a permanent contract. In the absence of these conditionsa guarantor That he takes care of repaying the loan in the event that it is impossible for the holder to repay it;

Policies Insurance policies that protect against loss of business or even in the event of death, an event that puts the repayment of the loan at risk.

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to order personal loanOn the other hand guarantees required milder: Basically it is enough to have a demonstrable income e Its bad payers have not been reported.

When is a Mortgage or Loan Really Worth It?

So when is it appropriate to apply for a mortgage and when to get one?

In general, it depends on our country Starting Financial Availability. Loan can be beneficial If we already have part of the amount to spend And we just have to combine them, making sure to pay off in short order. On the other hand, a mortgage is more advantageous for long-term projects And when we have a little cash to progress.

You can also decide Buying a home with a mortgage If you want to keep the cash for other investments, decide instead to take out a mortgage loan at still reasonable rates.

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However, to determine whether it is It is better to buy a house with a mortgage or financing There is also the ability to provide the required guarantees and items that They depend on an individual’s income and job position.