You had your eyes on a certain property for a long time but buying it seemed impossible because it was already in someone’s use. Now that it is finally on sale, your desire has awakened once again but this time around, you realise that you may not have the kind of money required to buy that handsome property. If money is the only issue though, you can go for a mortgage loan. This will not only let you have the property but will provide several other advantages as well.
What is a Mortgage Loan?
A mortgage is a form of loan that is secured by a real estate or a property. You borrow the money from a bank or a lender to buy the property in exchange of giving them the title of the property until you return their money in a pre-fixed time period. If you fail to return the loan, you will have to give up the property.
There are a few feature and advantages of mortgage loans that set them apart from other types of loans. Here are some of the major reasons why opting for mortgage can prove to be a great idea:
No Effect on the Property Value
The most common reason for buying a property is when you hope that its value will increase in the future. If you were sure that the property’s value would not rise, you would have rented it instead. If you are afraid that having a mortgage will affect the property value, then don’t be. It will rise or fall independent of the mortgage.
A Mortgage Does Not Stop the Owner from Building Equity
Another major reason for owning a house or any property for that matter is to build equity. This equity can be used for paying for retirement, college, and marriages. However, many people propagate the idea that mortgage loans are bad since bigger mortgages mean lower equity. However, this is only a myth and you are free to build and let your equity grow irrespective of the mortgage. This is the reason that mortgage is favoured by most of the people looking for a loan. Not only will you be getting a property on less interest rate but also you can actually earn from that property.
Lower Interest Rates on the Mortgage Loan
The biggest benefit mortgages provide is that of the low interest rates. In fact, they provide you with a huge amount of loan with very little interest for the longest period of time when compared against any other form of loan.
When you offer your house as collateral, the amount of risk involved in lending you the money decreases automatically. Since the risk is the major factor in determining the interest rate, in this case you get a low interest rate because the bank has the surety that if you failed to pay in time, they can have your home.
The only other way you can get a loan at cheaper interest rate is on credit cards. Although you get that loan at zero percentage interest but you can get the kind of money needed for buying a property using credit cards since they are only suitable for a small amount of money.
Paying the Mortgage gets easier with time
Here is the biggest advantage of going for a mortgage—it will be easier to pay over time. The fact is that the monthly loan that you will be paying for several years will be fixed. While you may struggle to pay that initially, you will notice that over a period of time, it becomes easier. This is because your income may rise while the monthly loan is fixed. Moreover, the property value keeps on increasing and if you are renting it for any other purpose, you can make more money on that. Your monthly payments are not increasing but your income is.
Mortgages provide you with a Better credit Score
Mortgages are a great way to provide you with a good credit score history. Making your monthly mortgage instalments is not that hard and if you keep doing that, it will show on your credit report. Therefore, a good mortgage status will help you in the long run as well. Punctually paying the mortgage instalments will make it easier for you to get other loans as well and that also, at a lower credit score. A good credit history builds the trust of the lender and they feel that there is less risk in lending you the money and that too, at lower interest rates.
Mortgage Has Tax Benefits As Well
Another major advantage of going for the mortgage is that you become eligible for the benefits of income tax as well. Your tax amount will be reduced and you will be paying fewer amounts to the government as tax. In fact, the money you are paying as interest on your mortgage will result in exclusion from the tax you will be paying to the government. This is the major reason that some people opt for another mortgage on another property when the first mortgage has been paid off completely.
Are you ready for opting for a mortgage now? These great advantages mentioned above are sure to persuade you on that matter. What are you waiting for? Go check out that property you had been dreaming of buying for such a long time and then apply for a mortgage on low interest rates. It will be cost effective and easier to repay as well.
One way to find the best lender for your mortgage loan is to compare the available lenders on a reliable site and then opt for the one offering the best deal. If you are looking for just such a service, then visit quiddicompare.co.uk/mortgages.